Reading Room Document

Constitutionality of Legislation Increasing the Size of the Board of Directors of the Federal National Mortgage Association

The document addresses the constitutionality of S\. 1397, a proposed legislation to amend the Federal National Mortgage Association Charter Act. The conclusion reached is that the enactment of S\. 1397 would be a legal exercise of congressional power and within the boundaries of the Constitution. The questions presented for review include whether the charter granted to FNMA created contractual rights, if contractual rights derived from a legislative act are protected by the Constitution, whether stockholders have vested rights to the continuation of FNMA’s charter, and if the proposed legislation would result in a “taking” of FNMA's stockholders’ property without “due process of law” or “just compensation.” The document also discusses the implications of the proposed legislation on the stockholders' rights and the application of the Freedom of Information Act to FNMA.

June 3, 1977