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Extraordinary filing shows banks are on the ropes in FHFA cases

Extraordinary filing shows banks are on the ropes in FHFA cases

 

There’s a cloud of desperation over most petitions for a writ of mandamus. These are, by definition, extraordinary filings, asserting that trial judges have committed such egregious abuses of discretion that their appellate overseers must immediately step in and undo the damage. Mandamus petitions are a last resort. They present the downside risk of inciting a trial judge who’s already ill disposed toward you and compromising your credibility at the appeals court. The upside, meanwhile, is remote. Appeals courts grant mandamus very, very rarely.

You can be sure that all of these considerations were taken into account by the 15 banks that filed a stunning joint mandamus petition late Tuesday night, asking the 2nd Circuit Court of Appeals to reverse “gravely prejudicial” pretrial discovery rulings by U.S. District Judge Denise Cote in the Federal Housing Finance Agency’s mortgage-backed securities litigation. It’s my understanding that the banks and their lawyers have been debating the pros and cons of a mandamus petition for months and have been honing the language of the filing for weeks. (Can you imagine the billable hours expended on the conference calls for this joint filing?) Certainly, the banks knew that the odds of succeeding with their petition only got longer in January, when the 2nd Circuit denied mandamus to Arab Bank, reiterating the appeals court’s “expressed reluctance to issue writs of mandamus to overturn discovery rulings” – which is exactly what the banks are asking the court to do in the FHFA cases.

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