Consider this, the US government is seeking to withhold over 11,000 documents from investors suing them over 2012’s net worth sweep (they are saying 77,000 can never be seen by the public). Why? Clearly whatever is in those documents undermines or even destroys the defense they have laid out.
Now, further consider the reasoning they are giving for doing this. They are saying the documents fall under the “deliberative process” and “executive privilege” …
Additionally consider those two defenses are only reserved for the government. If the GSE’s are deemed not government entities but private ones and the FHFA “stepped into their shoes” in 2008 (meaning they stepped into a private company’s shoes) then consider the government’s sole defense for withholding those 11,000 damaging documents is now gone
Keep that in mind when you read the below and consider the utter and total absurdity of it….
The government’s sole defense for keeping damaging documents hidden has been rejected by two courts now……..and this is bad for shareholders??????????
Judge Sweeney has said the government “can’t have it both ways” as they’ve argued that FHFA is both the government and private entity. These courts are making her decision to force the government to turn over damaging docs very easy. The government actually had settlement negotiations last fall with plaintiffs, just watch how fast they re-engage when Sweeney rules against them here. The government had been paid back in full with a hefty profit and still owns 79% of the GSE’s via warrants ( when they exercise them). Settling is the far better choice vs explaining away what is in those documents they desperately want to hide
I’ve said it for some time now gang, the WSJ is just trolling for page views in its coverage of the GSE litigation. If the below does not dispel any doubts you might have had……..god help you. I’ve ignore them for the past 6 months or so but this was just too easy to respond to…
I’ve disagreed plenty with the tripe they penned on the litigation to date but this is the first time I thought I was reading an “Onion” article….
By JOHN CARNEY
March 6, 2016 12:55 p.m. ET
The U.S. government keeps racking up wins in legal cases involving Fannie Mae and Freddie Mac. That is bad news for investors challenging terms of their bailouts, namely a profit-sweep arrangement with the Treasury Department.
A crucial question in many cases brought in various federal courts is the independence of the Federal Housing Financial Authority in dealings with the mortgage companies and the Treasury Department. Shareholders’ lawyers have said statutory provisions barring courts from second-guessing the FHFA’s decisions as a conservator should be ignored if the agency was acting at Treasury’s behest.
But two different federal courts recently handed down rulings rejecting similar claims that the FHFA is an agent of the U.S. government.
Full article here