Anyone who thinks the Net Worth Sweep is just another story of inside-the-Beltway politics, ideology, and clever lawyers battling in court should read an open letter from N. Bradford Isbell, a former Fannie Mae employee and shareholder, about the Sweep’s impact on a family’s college plans for their daughter:
“I am a former Fannie Mae employee and long-term Fannie Mae shareholder. While working at Fannie Mae (2001-2011), I invested the bulk of my then 8-year old daughter’s college fund in Fannie Mae common stock, prior to the 2008 conservatorship. (My daughter is 17 now, and hopes to go to college next year; I hope we can afford it.). On the day that the government took over Fannie Mae and Freddie Mac, I lost 80% of the value of my holdings, as the market judged, correctly, that the terms of the takeover (aka “bailout”) were terrible for shareholders.
The letter underscores why Investors Unite continues to fight on behalf of thousands of average people who own shares in Fannie Mae and Freddie Mac. The full text of the letter, which can be read at GSE links, rightly expresses not only shock at the initial action by unelected bureaucrats – rightly described as “the largest financial theft in human history” – but also one parent’s frustration that the Sweep has been allowed to continue for so long:
“I am baffled as to why it has taken so many years to litigate the Net Worth Sweep’s legality. What FHFA and Treasury did is patently self-serving; patently in violation of FHFA’s self-acknowledged, congressionally-mandated duty to preserve and conserve Fannie Mae and Freddie Mac assets; patently constitutes theft from GSE shareholders (I think our Constitution prohibits this); and self-evidently wrong. The desperate efforts by FHFA and Treasury to hide evidence from the courts and American people—more than 11,000 documents—are self-evidently wrong. The false statements told by, and/or on behalf of, Treasury and FHFA to the American people and the courts about the Net Worth Sweep are self-evidently wrong. These actions reek of malice, lawlessness and deceit.”
The letter concludes by expressing justifiable outrage over the trampling on the rights of U.S. citizens – actions more typical of a totalitarian state or a “Banana republic” – along with a plea for the courts to render justice.
Whether it is a ruling by courts or the Administration exercising its authority to fulfill its statutory obligations, it is time to end the Sweep. It is bad policy with real world implications for thousands of people, including Isbell’s daughter.