Fannie Mae: Is the Butler Gonna Claim Privilege Next?

Fannie Mae: Is the Butler Gonna Claim Privilege Next?

Fannie Mae

Photo by NCinDC

Fannie Mae: Is the Butler Gonna Claim Privilege Next? by Todd Sullivan, ValuePlays

So it seems as though everyone in Washington was involved in the drafting and implementation of the 3rd amendment (NWS) to Fannie Mae’s and Freddie Mac’s conservatorship. Want proof?

Play Quizzes 4

Attached is Fairholme’s filing challenging the government’s designation of certain documents as “protected”(and by “certain” I mean “every single one”).

Go to appendix A,B,C and you’ll note there are 62 pages.

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The usual names are there, Obama, Geithner, DeMarco, Ugoletti, Lockhart, Miller, DeLeo, Mudd, Deese, Bowler, Stegman etc….

After that the scope of the number of people involved is staggering (all of them are also claiming privilege). One has to assuredly wander down into the bowels of Treasury/FHFA to find out who these folks are. It is becoming far clearer now why Treasury is stonewalling and desperately trying to limit information and access. There is no conceivable way all these folks give the same narrative under deposition. No way…… once holes in stories start to appear, things unravel pretty quickly.

Peter Chapman opines:

Cutting through the parties’ gamesmanship — which refers to both the Government and Fairholme — we now have a copy of the Government’s Privilege Log dated Jan. 16, 2015 (reproduced at pp. 61 through 81 of the attached document).  I would anticipate that Fairholme wants to depose virtually every person named in the privilege log about what they knew and what they perceived as the Third Amendment was crafted, deliberated, evaluated, presented to FHFA, negotiated, revised, and finally executed.  I’m personally surprised by how many people were involved and how many documents actually exist.

Fannie Mae: Fairholme Filing


Plaintiffs Fairholme Funds, Inc., et al. (“Plaintiffs” or “Fairholme”) respectfully move, pursuant to Paragraphs 17 and 19 of the Protective Order (“P.O.”) entered in this action (Doc.
73), for entry of an order requiring the Government to remove the “Protected Information” designation it has affixed to its fourth privilege log, which was produced to Plaintiffs on March 20, 2015 (the “March 20 Log”). Because the March 20 Log contains no information that meets the Protective Order’s definition of Protected Information, the Government’s designation of the log as protected was inappropriate.

In seeking this relief, Plaintiffs ask that this Court treat the Government’s March 20 Log in the same way that the Government itself treated the first three privilege logs that it served in this case. The Government did not designate its first three privilege logs for protection. Nor could it have done so; those logs contained no proprietary, confidential, trade secret, or marketsensitive information. Although the March 20 Log is no different, the Government nevertheless chose to designate it as Protected Information. Notably, the Government has not even attempted to explain why the March 20 Log qualifies as Protected Information; nor has it attempted to explain how that log differs from its earlier, unprotected, logs. As far as Plaintiffs can tell from their own comparison of the logs, the March 20 Log appears to differ from the first three logs only in that the Government has now elected, on its own initiative, to include the government email addresses of the senders and recipients of several catalogued documents. The unrequested addition of such email addresses does not suffice to render the March 20 Log as Protected Information, but even if it did, those email addresses could easily be redacted from the log.

Even without this fundamental and irreconcilable disconnect between the Government’s treatment of the March 20 Log and its very different treatment of its previous logs, the Government’s effort to shroud the March 20 Log in secrecy would be unprecedented. In fact, Plaintiffs are aware of no reported decision holding, over another party’s objection, that a run-of-the-mill privilege log like the March 20 Log should be treated as a protected document. When one adds in the fact that the log that the Government seeks to treat as confidential is essentially indistinguishable from the multiple unprotected logs that the Government had previously produced, the unprecedented and inappropriate nature of the Government’s actions is obvious. The courts have already criticized litigants’ increasing tendency to over-designate discovery materials as confidential. The Government has now taken that practice to new, and disturbing, heights.

See full PDF below.

Updated on

Todd Sullivan is a Massachusetts-based value investor and a General Partner in Rand Strategic Partners. He looks for investments he believes are selling for a discount to their intrinsic value given their current situation and future prospects. He holds them until that value is realized or the fundamentals change in a way that no longer support his thesis. His blog features his various ideas and commentary and he updates readers on their progress in a timely fashion. His commentary has been seen in the online versions of the Wall St. Journal, New York Times, CNN Money, Business Week, Crain’s NY, Kiplingers and other publications. He has also appeared on Fox Business News & Fox News and is a contributor. His commentary on Starbucks during 2008 was recently quoted by its Founder Howard Schultz in his recent book “Onward”. In 2011 he was asked to present an investment idea at Bill Ackman’s “Harbor Investment Conference”.
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  1. Senator Elizabeth Warren received the same “privileged” label when FHFA lawyers were grilled in recent Senate hearings about the specific release of the list of homeowners who were wrongfully foreclosed and evicted. It is obvious when one looks at the Court system itself concerning homeowners who are suing to have their property returned. FHFA has a list from the banks of those folks. So why are they blocking the suits in all courts is an obvious question and answer. For starters, let us say that there are 4 Million Home owners lined up to sue the banks and Fannie Mae need I say more?? MONEY THE BANKS DON’T WANT TO PAY.

  2. One has to love the GSE “legal wrangling” and how the recent Federal response to Senator Grassley’s questions about executive privilege (in reference to the Fairholme case), went something like this (heavily paraphrased). “Well, we can’t tell you if the president will claim executive privilege yet, so we wanted to reserve the right to do so. We felt that the best way to handle it was to just sort of say that they are privileged, since they could become that way at some future point, if we decide it becomes necessary. We also haven’t finished reviewing all the discovery documents we have delivered and not delivered, so how can we possibly say if they may need to be privileged at some future point?

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