Business

Bruce Berkowitz – De-Designation of Additional GSE Documents

From Bruce Berkowitz

Fifty-three additional documents obtained through legal discovery in Fairholme Funds, Inc., et al. v. United States have been unsealed and made available to the public this week. In conjunction with the seven documents unsealed last month, the newly released information is further evidence of Fairholme’s contention that the Federal Housing Finance Agency and the United States Treasury violated the law when they decided to expropriate all of the capital from Fannie Mae and Freddie Mac. Among other things, these documents expose that the defendants’ decision to seize Fannie Mae and Freddie Mac and operate them for the exclusive benefit of the government was premeditated and wrongful.

Bruce R. Berkowitz, Founder and Chief Investment Officer of Fairholme Capital Management, stated: “Most of us spend our lives believing that our government will speak the truth even when we don’t necessarily like or agree with what we hear. With respect to the government’s treatment of Fannie Mae and Freddie Mac, it is quite disheartening to find such rampant deceit and intentional dishonesty perpetrated at the highest levels of government. One can only imagine what we will eventually discover in the almost 12,000 documents that the government continues to keep secret. Sooner rather than later, we hope to be reassured that no one is above the law.”

In a New York Times article published today, Gretchen Morgenson explains that the newly unsealed documents “demonstrate the perils of allowing the government to act in secrecy.” She highlights excerpts showing how “the new materials cast further doubt on arguments made in court by government lawyers that the profit sweep came about because Fannie and Freddie were in a death spiral and taxpayers needed protection from future losses,” and notes that, “documents unsealed last month also served to undermine that legal stance.”

Bruce Berkowitz