The U.S. Court of Appeals for the Second Circuit has rejected a challenge to the Federal Housing Finance Agency’s litigation against the banks that sold mortgage backed-securities to Fannie Mae and Freddie Mac. On April 5, the court unanimously threw out an argument by UBS AG, one of the defendant banks, that the agency waited too long to sue. "Congress obviously realized that it would take time for this new agency to mobilize and to consider whether it wished to bring any claims and, if so, where and how to do so," wrote Judge Denny Chin (See Profile), joined by Judge Raymond Lohier Jr. (See Profile) and Southern District Judge Paul Gardephe (See Profile), sitting by designation.
Jay Kasner of Skadden, Arps, Slate, Meagher & Flom, who represented UBS, had maintained that the agency’s suit against his client was barred by the statute of repose provision of the Securities Act of 1933, which says federal securities claims must be brought within three years of the alleged wrongdoing. The agency’s outside counsel, Kathleen Sullivan of Quinn Emanuel Urquhart & Sullivan, countered that the Housing and Economic Recovery Actthe 2008 law establishing the agency as the conservator for Freddie Mac and Fannie Maeclearly gave the agency more time.
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