Why Fairholme Is Likely To Win Discovery In Fannie Mae Case

Updated on

This is pending in the DC District Court, Fairholme Fund (MUTF:FAIRX) has already won discovery in the DC Court of Federal Claims in the cases of Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) FANNIE MAE (OTCBB:FNMA)

As you read through this motion about Mortgage Assctn Fnni Me (OTCBB:FNMA) FANNIE MAE, it is really quite stunning. I’ve gone ahead and marked it up for you to make is easier…

FHFA produced 4300 pages for this case….only 25 were previously not public and they ADMIT they did not keep an administrative record in their actions here. This is unfathomable that a gov’t agency dealing with the issues it was dealing with kept no record……none.

If you throw out every other argument here, just this fact along give the Judge a reason to permit discovery

Further releasing only 25 previously non public documents is laughable. For the record, Treasury was better, releasing 205 of 4200 pages that were previously not public…..but it is still pathetic.

This is a slap in the face to the entire process and proof either the gov’t just assumes they will win, or has a hell of a lot to hide here. My guess it is a little of both.

The entire case from the gov’t still boils down to “we said we could do what we did so this case should be thrown out”. It’s absurd.

Plaintiffs claim that FHFA and Treasury worked together in placing the bet worth sweep in place and thus FHFA breached its fiduciary duty thus the sweep is invalid (boiled down to the most simple).

The gov’t response is “no we didn’t…case over”. They produced no documentation to back this claim at all……not anything. Check that, they produced one affidavit from a Mr. Ugoletti (council at FHFA) that states the action taken at FHFA were entirely appropriate. The only issue here is that this affidavit was dated two month AFTER the suit was filed….rendering is useless at best.

Fannie Mae –  I fully expect Fairholme to be victorious here

Here is the motion for Fannie Mae and the proposed order:

motion with notes

prposed-order with notes

Via: valueplays

Leave a Comment