PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

_______________

No. 17-3794

_______________

DAVID JACOBS; GARY HINDES,

Appellants

v.

FEDERAL HOUSING FINANCE AGENCY, 

IN ITS CAPACITY AS CONSERVATOR OF THE 

FEDERAL NATIONAL MORTGAGE ASSOCIATION

AND THE FEDERAL HOME LOAN MORTGAGE

CORPORATION;

UNITED STATES DEPARTMENT OF THE TREASURY;

FEDERAL NATIONAL MORTGAGE ASSOCIATION;

FEDERAL HOME LOAN MORTGAGE CORPORATION

_______________

On Appeal from the United States District Court

for the District of Delaware

(D.C. No. 1:015-cv-00708)

District Judge: Honorable Gregory M. Sleet

_______________
2

Argued September 7, 2018

Before: HARDIMAN, KRAUSE, and BIBAS, Circuit Judges

(Filed: November 14, 2018)

_______________

Christopher N. Kelly, Esq.

Michael A. Pittenger, Esq. [ARGUED]

Alan R. Silverstein, Esq.

Potter Anderson & Corroon

1313 North Market Street

6th Floor

Wilmington, DE 19801

Myron T. Steele, Esq.

Potter, Anderson & Corroon

800 North State Street

Suite 401

Dover, DE 19901

Counsel for Appellants

David B. Bergman, Esq.

Howard N. Cayne, Esq. [ARGUED]

Ian S. Hoffman, Esq.

Dirk Phillips, Esq.

Asim Varma, Esq.

Arnold & Porter Kaye Scholer

601 Massachusetts Avenue, N.W.

Washington, D.C. 20001
3

Robert C. Maddox, Esq.

Robert J. Stearn, Jr., Esq.

Richards Layton & Finger

920 North King Street

One Rodney Square

Wilmington, DE 19801

Counsel for Appellee Federal Housing Finance 

Agency

Gerard J. Sinzdak, Esq. [ARGUED]

Abby C. Wright, Esq.

United States Department of Justice

Civil Division

950 Pennsylvania Avenue, N.W.

Washington, D.C. 20530

Counsel for Appellee United States Department of 

Treasury

Robert C. Maddox, Esq.

Robert J. Stearn, Jr., Esq.

Richards Layton & Finger

920 North King Street

One Rodney Square

Wilmington, DE 19801

Meaghan M. Vergow, Esq.

O’Melveny & Myers

1625 I Street, N.W.

Washington, DC 20006

Counsel for Appellee Federal National Mortgage 

Association
4

Michael J. Ciatti, Esq.

King & Spalding

1700 Pennsylvania Avenue, N.W.

Suite 200

Washington, D.C. 20006

Robert C. Maddox, Esq.

Robert J. Stearn, Jr., Esq.

Richards Layton & Finger

920 North King Street

One Rodney Square

Wilmington, DE 19801

Counsel for Appellee Federal Home Loan Mortgage 

Corporation

_______________

OPINION OF THE COURT

_______________

BIBAS, Circuit Judge.

In 2008, the U.S. government strove to rescue the collapsing economy. Its extreme measures helped many, but others 

suffered as a result. One of the rescue measures, the Housing 

and Economic Recovery Act, authorized the government to act 

as conservator for Fannie Mae and Freddie Mac, two government-sponsored enterprises with critical roles in the homemortgage market. Under that conservatorship, Fannie and 

Freddie made a deal with the Department of Treasury. The deal 

guaranteed Fannie and Freddie access to hundreds of billions 

of dollars. But in return, they had to give their net profits to the
5

Treasury—in perpetuity. Fannie’s and Freddie’s junior shareholders had expected to share in those future profits, but the 

deal wiped out that expectation. So some of those junior shareholders now challenge that deal.

We reject the shareholders’ challenge on all fronts. First, 

the Recovery Act gave the government broad, discretionary

power to enter into the deal. Second, the deal complies with the 

requirements of the Recovery Act, as well as Delaware and 

Virginia corporate law. And third, the relief sought would “restrain or affect the exercise of [the government’s] powers” as 

conservator, which the Recovery Act forbids. 12 U.S.C. 

§4617(f). That relief, even the monetary relief, would unwind 

the whole deal. So we will affirm the District Court’s dismissal.

I. BACKGROUND

A. Statutory framework

1. Fannie Mae and Freddie Mac. In the wake of the Great 

Depression, Congress created Fannie, and later Freddie, to support the home-mortgage market. Pub. L. No. 91-351, 84 Stat. 

450, §301(b), as amended by Pub. L. No. 101-73, 103 Stat. 

183, §731(a) (codified at 12 U.S.C. §1451 note) (Freddie 

Mac); 12 U.S.C. §§1716-17 (Fannie Mae). Fannie and Freddie

do so by borrowing money, buying home mortgages, packaging them into guaranteed mortgage-backed securities, and selling those securities to investors. 12 U.S.C. §§1454-55, 1719.

By buying mortgages and then guaranteeing the resulting 

securities, Fannie and Freddie make the mortgage market both 

more liquid and more stable. Perry Capital LLC v. Mnuchin, 
6

864 F.3d 591, 599 (D.C. Cir. 2017) (Perry Capital), cert. denied, 138 S. Ct. 978 (2018). They relieve mortgage lenders of 

the risk of default and free up their capital to make more loans. 

As a result, lenders can keep lending to home buyers who meet 

Fannie’s and Freddie’s underwriting standards, secure in the 

knowledge that Fannie and Freddie will buy those mortgages.

By 2008, Fannie and Freddie owned or guaranteed five trillion

dollars’ worth of mortgages and mortgage-backed securities—

nearly half of the market. Id. In short, they are the backbone of 

the U.S. residential-mortgage market.

Fannie and Freddie are government-sponsored enterprises;

they were created by congressional charter but are owned by 

private shareholders. 2 U.S.C. §622(8). Although Fannie and 

Freddie are privately owned and publicly traded companies, 

the public has long viewed their securities as implicitly backed 

by the federal government’s credit. That perceived government 

guarantee has helped them to borrow money and to buy mortgages more cheaply than they otherwise could have. Perry 

Capital LLC v. Lew, 70 F. Supp. 3d 208, 215 (D.D.C. 2014), 

aff’d in part, 864 F.3d 591. All that borrowing, lending, and 

buying propelled the housing market to record highs by the 

mid-2000’s.

2. The Housing and Economic Recovery Act of 2008. Then

the housing bubble burst. House prices plunged, slashing the 

value of Fannie’s and Freddie’s mortgage portfolios. Fannie’s 

and Freddie’s guarantees put them on the hook not only for the 

mortgages they owned, but also for many mortgage-backed securities based on loans gone bad. Congress feared that they

might default, threatening not only the housing market but the 
7

precarious national economy as a whole. Perry Capital, 864 

F.3d at 599.

To ward off that threat, Congress passed the Recovery Act. 

The Recovery Act created the Federal Housing Financing 

Agency and empowered it to supervise and regulate Fannie and 

Freddie. 12 U.S.C. §4511. The Recovery Act gives the Agency 

many enumerated, mostly discretionary powers. For instance, 

it authorizes the Agency’s Director to “appoint the Agency as

conservator ... for the purpose of reorganizing [or] rehabilitating ... the affairs of” Fannie or Freddie. Id. §4617(a)(1)-(2). 

As conservator, the Agency inherits all the “rights, titles, powers, and privileges” of Fannie, Freddie, and their officers, directors, and shareholders. Id. §4617(b)(2)(A)(i). The Recovery 

Act also authorizes the Agency as conservator to exercise any 

“incidental powers as shall be necessary to carry out [its enumerated] powers.” Id. §4617(b)(2)(J)(i). 

3. Section 4617(f) of the Recovery Act. Having given the 

Agency sweeping authority and discretion, the Recovery Act

strictly limits judicial review: “[N]o court may take any action 

to restrain or affect the exercise of powers or functions of the 

Agency as a conservator or receiver.” Id. §4617(f). This case 

turns in part on how to interpret and apply that subsection.

B. Factual background

In 2008, the collapse of the housing market cost Fannie and 

Freddie billions of dollars, threatening the U.S. mortgage market. The Treasury quickly took steps to prop up Fannie and 
8

Freddie. But the mortgage and financial markets remained perilous, and the financial crisis grew worse. So the Agency put

both Fannie and Freddie into conservatorship.

Under the Agency’s direction, they entered into funding 

agreements with the Treasury. The Treasury gave each enterprise a funding commitment. When Fannie’s or Freddie’s liabilities exceed their assets, they can draw on that funding commitment to keep their net worth in the black.

In return, the Treasury received one million shares of senior 

preferred stock in each of Fannie and Freddie. These shares 

gave the Treasury a liquidation preference in each enterprise 

equal to $1 billion plus all the money drawn from the Treasury’s funding commitment. The shares also gave the Treasury

an annual dividend equal to 10% of the liquidation preference,

if paid in cash.

The Treasury initially capped its funding commitment at 

$100 billion per enterprise. That was not enough, at least for 

Fannie. Two amendments to the funding agreement more than 

doubled that cap, and Fannie and Freddie wound up drawing 

$116.1 billion and $71.3 billion from the Treasury. But as Fannie and Freddie drew more and more money from the Treasury, 

they owed it larger and larger dividends. In a vicious cycle,

they sometimes had to draw money from the Treasury just to 

pay the Treasury’s dividends.

In 2012, the Treasury and the Agency renegotiated the 

funding agreements and agreed to the Third Amendment. The 

Third Amendment replaced the 10% annual dividend with a 

quarterly variable dividend. It set that variable dividend equal 
9

to Fannie’s and Freddie’s positive net worth above a capital 

buffer, which was set to decrease with each dividend payment. 

The capital buffer is now down to zero. So each quarter, the 

dividend consumes each enterprise’s entire positive net worth.

The challengers call this arrangement the Net Worth Sweep.

In other words, under the Third Amendment, if Fannie or 

Freddie has a positive net worth, it pays all that worth out as a 

dividend to the Treasury. If its net worth is zero or negative, it

pays nothing. Fannie and Freddie pay only what they can. That

way, they need never again draw from the Treasury to pay the 

Treasury’s dividends. But they also have no money left over to 

pay dividends to junior shareholders or to redeem the Treasury’s shares, exit conservatorship, and return to private control.

C. Procedural history 

David Jacobs and Gary Hindes filed this class-action suit 

against the Agency, Treasury, Fannie, and Freddie to challenge 

the Third Amendment. Their original complaint asserted 

claims for breach of contract, breach of fiduciary duty, breach 

of the implied covenant of good faith and fair dealing, and violations of Delaware and Virginia corporate law.

The challengers later amended their complaint, voluntarily 

dismissing their claims for breach of contract, breach of fiduciary duty, and breach of the implied covenant of good faith 

and fair dealing. The amended complaint contains four counts: 

two asserting that the Third Amendment violates Delaware and 

Virginia corporate law, and two new claims against the Treasury for unjust enrichment. It seeks declaratory, injunctive, and 
10

monetary relief, including damages, restitution, and disgorgement.

The Agency, Treasury, Fannie, and Freddie moved to dismiss. The District Court granted that motion, holding that 12 

U.S.C. §4617(f) barred all the challengers’ claims. Jacobs v. 

FHFA, No. 15-708-GMS, 2017 WL 5664769, at *1 (D. Del. 

Nov. 27, 2017). It reasoned that the Agency acted within its 

statutory powers, that the Recovery Act did not incorporate 

state law, and that §4617(f)’s “sweeping limitations ... on judicial review” deprived it of jurisdiction. Id. at *3-5. The court 

also refused to take judicial notice of certain documents that 

allegedly undermined the Agency’s and Treasury’s assertions, 

because it did not rely on those assertions in reaching its decision. Id. at *7.

This appeal followed. Like the District Court, we do not 

rely on those assertions, so we will affirm the refusal to take 

judicial notice of the challengers’ documents. We review the 

District Court’s dismissal de novo. Hindes v. FDIC, 137 F.3d 

148, 153 (3d Cir. 1998).

II. THE RECOVERY ACT EMPOWERED THE AGENCY TO 

ENTER INTO THE THIRD AMENDMENT

Section 4617(f) bars claims when 1) the government acts as 

a conservator, 2) it does not exceed its statutory authority, and 

3) the remedy sought would affect the exercise of that authority. So to figure out whether §4617(f) bars the challengers’ 

claims, we first identify “the powers or functions of the Agency 

as a conservator.” In this part of the opinion, we hold that the

Act empowers the Agency to enter into the Third Amendment. 
11

In Part III, we go on to hold that the Third Amendment does 

not contravene any other limitations in the Recovery Act. And 

in Part IV, we hold that the relief requested by the challengers 

would “restrain or affect” the Agency’s exercise of its powers. 

So the District Court properly dismissed this suit.

The Recovery Act defines the Agency’s “powers ... as a 

conservator.” 12 U.S.C. §4617(f). Those powers are many and 

mostly discretionary, including:

• the power to take over Fannie’s and Freddie’s assets. 

Id. §4617(b)(2)(B)(i).

• the power to operate Fannie and Freddie, using all 

of the officers’, directors’, and shareholders’ powers. Id.

• the power to “preserve and conserve” Fannie’s and 

Freddie’s assets. Id. §4617(b)(2)(B)(iv).

• the power to “take such action as may be ... necessary to put [Fannie and Freddie] in a sound and solvent condition,” and appropriate to carry on their 

business. Id. §4617(b)(2)(D).

These powers authorized the Agency to enter into the Third 

Amendment. To begin, the Third Amendment is an exercise of 

the Agency’s power to take over Fannie and Freddie’s assets 

and operate their businesses. Id. §4617(b)(2)(B)(i). To operate 

their businesses, Fannie and Freddie must secure ongoing access to capital, manage debt loads, control cash flow, and decide whether and how to pay dividends. Perry Capital, 864 
12

F.3d at 607. The Third Amendment is in essence a renegotiation of an existing lending agreement (albeit with equity rather 

than debt). Saxton v. FHFA, 901 F.3d 954, 960-61 (8th Cir. 

2018) (Stras, J., concurring). That is a traditional power of corporate officers or directors. Id. And the Agency, as conservator, inherits those powers. 12 U.S.C. §4617(b)(2)(B)(i).

Next, the Third Amendment falls within the Agency’s 

power to “preserve and conserve [Fannie’s and Freddie’s] assets” and to do what is “necessary to put [Fannie and Freddie] 

in a sound and solvent condition.” 12 U.S.C. 

§4617(b)(2)(B)(iv), (D)(i). The Agency “may” exercise those 

powers “as appropriate,” so we ask only whether the Agency 

picked a suitable action, not the best alternative. Saxton, 901 

F.3d at 961–62 (Stras, J., concurring).

Before the Third Amendment, the challengers admit, Fannie and Freddie sometimes had to draw funds from the Treasury just to pay the Treasury’s dividend. App. 51-52. That dug 

Fannie and Freddie deeper and deeper into the hole, increasing 

their future dividend obligations while also reducing their

available funds. “The Third Amendment permanently eliminated” that Catch-22, as well as the associated “risk that cashdividend payments would consume [Fannie’s and Freddie’s] 

lifeline.” Roberts v. FHFA, 889 F.3d 397, 404-05 (7th Cir. 

2018). So the Agency could reasonably conclude that the Third 

Amendment would “preserve and conserve [Fannie’s and 

Freddie’s] assets” in the long run, putting them on a “sound 

and solvent” footing. 12 U.S.C. §4617(b)(2)(B)(iv), (D)(i).
13

Any of these powers alone would have authorized the 

Agency to enter into the Third Amendment. Indeed, every federal court of appeals to address this issue has held that adopting 

the Third Amendment “falls within [the Agency’s] statutory 

conservatorship powers.” Perry Capital, 864 F.3d at 606; accord Saxton, 901 F.3d at 959; Collins v. Mnuchin, 896 F.3d 

640, 653 (5th Cir. 2018); Roberts, 889 F.3d at 403; Robinson

v. FHFA, 876 F.3d 220, 232 (6th Cir. 2017). We agree. The 

Recovery Act empowered the Agency to enter into the Third 

Amendment.

III. THE THIRD AMENDMENT IS CONSISTENT WITH THE 

RECOVERY ACT’S LIMITATIONS

The Third Amendment does not violate any other provision 

of the Recovery Act. The challengers assert that it violates Delaware and Virginia corporate law, as supposedly incorporated 

by two provisions of the Recovery Act (known as the succession clause and the repudiation-of-contracts clause). They also 

assert that it violates the Act’s liquidation-of-assets procedures 

and its alleged requirement to serve Fannie’s and Freddie’s interests, rather than the government’s. But that is not so.

A. The Recovery Act’s provisions supposedly incorporating Delaware and Virginia law

Federal regulation required each enterprise to pick a state’s 

laws for its corporate governance. 12 C.F.R. §1239.3(b)(1).

Fannie chose Delaware law; Freddie chose Virginia law. The 

chosen state’s laws govern each enterprise to the extent that

they are consistent with the enterprise’s authorizing statute and 

other federal law. Id.
14

The challengers contend that the Recovery Act’s succession clause and repudiation-of-contracts clause incorporate and 

require the Agency to follow Delaware and Virginia corporate 

law. So, they reason, if the Agency violates those laws, it also 

violates the Recovery Act itself. Because the Agency supposedly violated Delaware and Virginia law, it violated the Act 

itself and acted ultra vires. The Agency responds that the Recovery Act does not incorporate those state-law requirements 

and that, even if it did, they would be preempted.

The challengers’ argument fails because the Third Amendment is consistent with both states’ laws. So we need not decide whether and to what extent the Act itself requires the 

Agency to follow Delaware and Virginia law. We also need not 

decide whether federal law preempts these states’ laws.

1. The Third Amendment complies with Delaware law. The 

challengers claim that the Third Amendment does not specify 

a rate at which to pay the Treasury’s dividend. They also claim 

that it does not pay the Treasury in preference to or in relation 

to other classes of shareholders. Both arguments miss the mark.

a. The dividend rate. Delaware’s corporate law entitles 

“holders of preferred or special stock ... to receive dividends 

at such rates ... as shall be stated in the certificate of incorporation or in the [board] resolution or resolutions providing for 

the issue of such stock.” Del. Code Ann. tit. 8, §151(c) (2017).

The Treasury receives all of Fannie’s and Freddie’s positive 

net worth in perpetuity, the challengers argue, not just a specified dividend rate. 
15

But the Third Amendment does specify a rate: 100%. The 

challengers cite no Delaware authority holding this rate unlawful. So the rate argument fails.

b. The dividend preference. That same provision of Delaware law authorizes dividends “payable in preference to, or in 

such relation to, the dividends payable on any other class ... of 

stock.” Id. The challengers claim that the Third Amendment 

does not create a preference, but rather permanently eliminates 

all other shareholders’ dividends. And it cannot be payable in 

relation to another dividend that does not exist.

This argument fails too. The Treasury’s dividend is payable 

in preference to all other classes of stock. It is always paid first 

and with all available funds. The challengers cite no Delaware 

authority suggesting that this preference is unlawful or that it 

must reserve funds to pay junior stockholders. Indeed, §151 

contemplates that preferred shareholders’ dividends may absorb all funds and leave none for junior shareholders: once preferred dividends have been paid out “to the extent of the preference, ... a dividend on the remaining class or classes or series 

of stock may then be paid out of the remaining assets of the 

corporation available for dividends.” Id. (emphases added). So 

common shareholders are not guaranteed dividends. They may 

receive the dividends only if the board approves, only if preferred shareholders are paid, and only if assets remain available 

for dividends. Here, after paying the Treasury’s dividend, no 

assets remain. So even if Delaware law applies, the Third 

Amendment complies with it.

2. The Third Amendment complies with Virginia law. The 

challengers reiterate their dividend-preference argument for 
16

Freddie, this time under Virginia law. Virginia statutory and 

case law, they argue, forbids the Third Amendment’s preferred-dividend arrangement.

Virginia law authorizes corporations to issue classes of 

stock that have preference over other classes. Va. Code Ann. 

§13.1-638(C)(4) (West 2018). The challengers again claim 

that the Treasury does not merely have a preference, but excludes other classes of stock entirely. But that is a preference, 

just an extreme one. Nothing in the statute forbids that preference.

The challengers also rely on two century-old Virginia 

cases. One of them described the “common understanding” 

that preferred shareholders get first dibs on earnings through 

“limited dividends,” while common shareholders get the “hope 

of unlimited gain” through the company’s “surplus profits.” 

Johnson v. Johnson & Briggs, Inc., 122 S.E. 100, 103 (Va. 

1924). But a “common understanding” is not a rigid rule. And 

nothing about this case is “common.” Fannie and Freddie are 

public-private entities in conservatorship under an intricate 

statutory scheme tailored to respond to an economic catastrophe. The ordinary case does not control.

The challengers’ other case is likewise inapt. That case held 

that a corporation may not agree to pay preferred dividends 

when it lacks earnings with which to pay them. Drewry, 

Hughes Co. v. Throckmorton, 92 S.E. 818, 819 (Va. 1917). But 

the Third Amendment abides by this rule. Fannie and Freddie 

pay Treasury a dividend only when they have funds to pay.
17

In short, the Third Amendment comports with both Delaware’s and Virginia’s laws. No authority even puts the matter 

in doubt, so we see no need to certify the issues to the Delaware 

or Virginia Supreme Court. The challengers’ claims under the 

Recovery Act’s succession and repudiation-of-contracts 

clauses fail. See Fairholme Funds, Inc. v. FHFA, Nos. 13-

1053, 13-1439, 13-1288, 2018 WL 4680197, at *17 (D.D.C. 

Sept. 28, 2018).

B. The Recovery Act’s priorities for liquidating assets

Next, the challengers argue that the Third Amendment violates the Recovery Act’s specified priorities for distributing assets on liquidation, codified at 12 U.S.C. §4617(b)(3)-(9), (c).

As common shareholders, the challengers would have had certain claims upon Fannie’s and Freddie’s assets if the enterprises had been put into liquidation. But as the District Court 

explained, these provisions do not apply because neither Fannie nor Freddie is in liquidation. Jacobs, 2017 WL 5664769, at 

*6.

Perry Capital is not to the contrary. Though it allowed a 

liquidation-preferences claim to go forward, it did so because

the stock certificates themselves guaranteed a liquidation preference. The wording of the certificates gave the plaintiffs there 

a claim for anticipatory breach of contract. Perry Capital, 864 

F.3d at 632-33. 

But here, there is no claim that the stock certificates create a 

liquidation priority; the challengers’ liquidation claim rests entirely on the Recovery Act. And the challengers voluntarily dismissed their breach-of-contract claim. So Perry Capital is inapt.
18

C. The Agency’s multiple constituencies and additional 

powers

The challengers next assert that the Agency as conservator 

should have focused solely on maximizing Fannie’s and Freddie’s financial returns. They charge the Agency with “acting in 

Treasury’s interest, and not [Fannie’s and Freddie’s] interest, 

and acting in a manner [in which Fannie and Freddie] themselves had no power to act, when implementing the” Third 

Amendment. Jacobs Br. 49. But the Recovery Act authorizes 

the Agency to do just that.

1. The Agency’s multiple constituencies. When the Agency 

acts as conservator, it need not act solely in Fannie’s and Freddie’s interests, as a traditional conservator would. It may also 

act to protect its own interests and those of the public.

At common law, a conservator could not “act[ ] for the benefit of [himself] or a third party.” Perry Capital, 864 F.3d at 

641 (Brown, J., dissenting). But the Agency is no “commonlaw conservator.” Id. at 613 (majority opinion). The Recovery 

Act authorizes the Agency to use its powers as conservator in 

whatever way it “determines is in the best interests of [Fannie 

or Freddie] or the Agency.” 12 U.S.C. §4617(b)(2)(J)(ii) (emphasis added). As the D.C. Circuit explained, this provision reflects Congress’s “deliberate choice” to let the Agency “act in 

its own best governmental interests, which may include the 

taxpaying public’s interest.” Perry Capital, 864 F.3d at 608.

That authorization implements the Recovery Act’s mandate 

that the Agency “ensure that” Fannie and Freddie “operate[]

[in a manner] consistent with the public interest.” 12 U.S.C.
19

§4513(a)(1)(B), (B)(v). In the same vein, the Act instructs the 

Treasury not to buy Fannie’s and Freddie’s securities unless 

doing so would “provide stability to the financial markets” and 

“protect the taxpayer.” Id. §§1455(l)(1)(B)(i), (iii), 

1719(g)(1)(B)(i), (iii).

While the Agency must consider the public interest, it need 

not consider the interests of Fannie’s and Freddie’s shareholders. That becomes clear when we compare the Recovery Act 

with its predecessor. Much of the Recovery Act is closely patterned on an earlier financial-institution-rescue law, the Financial Institutions Reform, Recovery, and Enforcement Act 

(FIRREA). For instance, the Recovery Act’s limitation on judicial review is copied almost verbatim from the one in 

FIRREA. Compare id. §4617(f), with id. §1821(j). Because 

“Congress use[d] the same language in two statutes having 

similar purposes,” we “presume that Congress intended that 

text to have the same meaning in both statutes.” Smith v. City 

of Jackson, 544 U.S. 228, 233 (2005). So our sister courts of 

appeals all interpret §4617(f) by looking to their precedents on 

§1821(j). See, e.g., Perry Capital, 864 F.3d at 605-06; Robinson, 876 F.3d at 227; Roberts, 889 F.3d at 402. We will too.

FIRREA permits the Federal Deposit Insurance Corporation to act as conservator “in the best interests of the [bank], its 

depositors, or the [FDIC].” 12 U.S.C. §1821(d)(2)(J)(ii) (emphasis added). So the FDIC could take into account the interests of depositors. But the Recovery Act omits the analogue of 

depositors—shareholders—from its list, referring only to the 

best interests of Fannie, Freddie, and the Agency. Id.
20

§4617(b)(2)(J)(ii); see Perry Capital, 864 F.3d at 608. Particularly because Congress modeled the Recovery Act on 

FIRREA, the Recovery Act’s omission of shareholders’ interests is telling. In short, the Agency is supposed to act in its own 

interests (which reflect the interests of the government and the 

public), not in the interests of Fannie’s and Freddie’s shareholders.

The Third Amendment thus threw Fannie and Freddie a 

$200-billion-plus lifeline to safeguard not just their own interests, but also the government’s and the public’s interests. These

other constituencies benefit from a risk-averse approach. Even 

if the economy collapses again, the Agency, the government, 

and the public will be assured that Fannie and Freddie can continue to stabilize the housing market. 

The Third Amendment also serves Fannie’s and Freddie’s 

own interests. They did not give away their future net worth 

for nothing. In consideration, the Treasury gave up its right to 

an unconditional 10% dividend, which sometimes cost Fannie 

and Freddie more than their positive net worth and forced them 

to borrow even more. The Third Amendment thus insured Fannie and Freddie against downturns and “death spirals,” preventing unpayable dividends from ratcheting up their debt 

loads to unsustainable levels. Saxton, 901 F.3d at 962 (Stras, 

J., concurring).

2. The Agency’s powers extend beyond Fannie’s and Freddie’s powers. Finally, it does not matter if the Agency acted in 

a way that Fannie and Freddie could not have. The Recovery 
21

Act gave the Agency not only powers inherited from those enterprises, but also a host of other powers. And the Agency acted 

within those statutory powers.

IV. SECTION 4617(f) BARS THE REQUESTED RELIEF

The Recovery Act empowered the Agency to enter into the 

Third Amendment. And the Third Amendment does not violate 

any of the Recovery Act’s limitations. So entering into the 

Third Amendment was a legitimate exercise of the Agency’s 

powers as conservator.

The only remaining issue is whether the challengers’ requested relief would “restrain or affect the exercise of [the 

Agency’s] powers ... as a conservator.” 12 U.S.C. §4617(f).

The challengers concede that it would. And §4617(f) applies 

to all forms of relief that would do so, not just injunctions or 

equitable relief. So that subsection bars all the relief requested 

here.

A. The challengers concede that they seek to undo the 

Third Amendment

At oral argument, the challengers admitted that the relief 

they seek would undo the entire Third Amendment. They 

would have us void it and force the Treasury to disgorge all the 

dividends that it received under the Third Amendment. Undoing the Third Amendment would restrain the Agency’s powers.

So the challengers’ concession dooms their case.
22

B. Section 4617(f) applies to monetary relief that would 

restrain or affect the exercise of the Agency’s powers as 

conservator

The challengers argue, however, that their concession does 

not bar their claims for monetary relief. They claim that

§4617(f) applies only to “equitable and injunctive relief,” not 

damages claims. Appellants’ Br. 41-43. They even call that 

subsection an “anti-injunction clause.” Id. at 19. But that label 

is inaccurate.

Their argument has some support. Some courts of appeals 

likewise call §4617(f) an “anti-injunction” clause. E.g., Saxton, 901 F.3d at 957; Robinson, 876 F.3d at 227. And some 

interpret §4617(f) as barring only equitable relief, not damages 

claims. E.g., Saxton, 901 F.3d at 957; Perry Capital, 864 F.3d 

at 606, 613-14.

We decline to adopt this interpretation for two reasons. 

First, the text of §4617(f) is not limited to declaratory, injunctive, or other equitable relief. Second, our FIRREA precedent 

suggests that §4617(f) also bars some monetary claims.

1. The text of §4617(f) extends to monetary relief. Section 

4617(f) reads, in full: “Except as provided in this section or at 

the request of the Director, no court may take any action to 

restrain or affect the exercise of powers or functions of the 

Agency as a conservator or a receiver.”

Nothing in that text refers to the type or form of remedy a 

plaintiff seeks. It says nothing about law versus equity or damages versus injunctions. Rather, the text forbids courts to take 
23

“any action” that seeks to “restrain or affect” the Agency’s exercise of its powers as conservator. The focus is not on the form

of requested relief, but its effect. If monetary relief would have

that effect, then it is barred. If not, then it is permitted.

2. Our FIRREA precedent supports applying §4617(f) to 

some monetary relief. That interpretation accords with our 

cases interpreting FIRREA’s parallel provision. In Rosa v. Resolution Trust Corp., we held that §1821(j) barred monetary relief granted as part of an injunction. 938 F.2d 383, 399 (3d Cir. 

1991). We did not rely on the equitable nature of the relief. 

What mattered was that the relief would have impeded the Resolution Trust Corporation’s powers as “conservator promptly 

to perform its important functions in dealing with the savings 

and loan crisis.” Id. The plaintiffs were limited to seeking a

“remedy that would not ‘restrain or affect’ the exercise of the 

receiver’s or conservator’s powers or functions.” Id.

Our later precedent continued to apply Rosa’s approach. 

Hindes, for example, recognized that §1821(j) leaves open “a 

judicial remedy for an appropriate damages claim.” 137 F.3d 

at 161 (emphasis added). But not all damages claims are appropriate. Courts have suggested that appropriate damages 

claims might include constitutional claims, breach-of-contract 

claims, claims authorized by FIRREA or the Recovery Act 

through the administrative process, claims based on ultra vires

Agency action, and other damages claims that do not restrain 

or affect the Agency’s exercise of its authorized powers. See 

id. (constitutional claims); Perry Capital, 864 F.3d at 614

(same, as well as breach of contract); Saxton, 901 F.3d at 960

n.8 (Stras, J., concurring) (constitutional challenges to the 
24

Agency’s structure); Collins, 896 F.3d at 659 (same); Gross v. 

Bell Sav. Bank Pa SA, 974 F.2d 403, 407-08 (3d Cir. 1992)

(administrative claims authorized by FIRREA and claims of 

ultra vires agency action); Rosa, 938 F.2d at 399 (other claims 

that would not restrain or affect the exercise of authorized powers).

Here, the challengers’ claims fall into none of these categories. They are not constitutional. They have not gone through 

the Recovery Act’s administrative process. They do not flow 

from ultra vires agency action. And they are not claims for 

breach of contract.

Their claims would also restrain or affect the Agency’s exercise of its statutory powers. The Recovery Act empowered 

the Agency to enter into the Third Amendment. And all parties 

agree that §4617(f) bars declaratory and injunctive relief. But 

granting the challengers’ claims for damages, restitution, or 

disgorgement would require us to find the Third Amendment 

unlawful. The challengers cannot evade the bar on declaratory 

relief by asking for such a declaration as the basis for awarding

damages. No matter how we label the relief, striking down the 

Third Amendment would interfere with the Agency’s exercise 

of its powers as conservator.

Even apart from the declaratory aspect, awarding monetary 

relief would restrain or affect the Agency’s conservatorship. 

The request for damages, disgorgement, and restitution, 

against both the Agency and the Treasury, would (as the challengers concede) unravel the Third Amendment, reverse the 

monetary payments made under it, and prevent or at least deter 

the Agency from implementing it further. Those are the same 
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consequences that would flow from granting an injunction or a 

declaratory judgment. So the monetary relief sought here 

would restrain or affect the exercise of the Agency’s powers as 

conservator. All of it is barred by §4617(f).

* * * * *

The challengers are in an unfortunate spot. They invested 

in Fannie and Freddie, expecting regular dividend payments in 

return. The Third Amendment destroyed those expectations.

But the Recovery Act is clear. It empowered the Agency to 

enter into the Third Amendment. That deal complies with Delaware law, Virginia law, and the Recovery Act itself. And the 

challengers’ requested relief would effectively unwind the 

Third Amendment. Doing so would restrain or affect the 

Agency’s exercise of its powers as conservator.

This we cannot do. So we will affirm.