Fannie Mae: Great Piece By The New York Times’ Gretchen Morgenson by Investors Unite
Six hundred and sixty nine.
That’s how many documents the Justice Department says are subject to various kinds of executive privilege and cannot be disclosed in shareholder lawsuits against the Treasury Department and the Federal Housing Finance Administration over the government’s ongoing sweep of Fannie Mae and Freddie Mac profits, as reported February 15 by Gretchen Morgenson of the New York Times.
The government asserts disclosure would “destabilize the economy and financial markets, and raise interest rates.”
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Wow! Putting aside the irony of this secrecy coming from an Administration that promised to be the most transparent in history, if this kind of damage would result from revealing information today about decisions made three to seven years ago, imagine how terrible the revelations would have been at the time! It certainly makes you wonder if the government’s lawyers know that Treasury was never within its rights when it adopted the so-called Third Amendment to the terms of the Housing and Economic Recovery Act of 2008 and began sweeping the profits of Fannie Mae and Freddie Mac into the government in 2012.
What we do know – that the sweep occurred when the Administration and Congress were in the midst of another of fiscal standoff and the utmost creativity was needed to find money – certainly makes the sweep look like a raw power grab. But were the machinations so dubious and so clearly at odds with the law that they need to be kept under lock and key even now?
Morgenson summed it well when she wrote:
The problem with the apparent involvement by Treasury and White House officials in the decision to commandeer Fannie Mae’s and Freddie’s earnings is that by congressional statute, the F.H.F.A. is supposed to be an independent agency, tasked by law to protect the safety and soundness of the companies. Letting the companies’ profits flow to the Treasury had the opposite effect. Allowing them to rebuild their capital with profits after they repaid the taxpayer seems more like it.
It is time for the government to explain why it believes it is justified in its decision to ignore HERA and unilaterally violate terms of the Fannie Mae and Freddie Mac conservatorship. The documents that the government is claiming to be privileged would probably do just that.