A Fannie Mae Primer (Or Why My Great Aunt Edna’s Eating Bear Meat 3 Times a Day)

  1. In its motion to dismiss, the government is arguing that FHFA acted alone when it instituted the 3rd Amendment Sweep, therefore the Tucker Act does not apply. As a result, the plaintiffs, including the City of Austin Police Retirement System, would have no standing.
  2. The privilege logs, however, suggest otherwise. The highest level of WH and Treasury officials appears to have been editing the primary 3rd Amendment sweep docs prior to its enactment.

3. If the WH and Treasury were editing these docs, they don’t want the plaintiffs to know it.

4. Why don’t WH and Treasury want plaintiffs to know what’s in these docs? Because it blows the government’s case out of the water.

5. It’s important to remember that not once, ever, anywhere written or spoken in these dockets, has the government argued that the WH or Treasury had or has the right to make the type of changes that the 3rd amendment sweep makes.

6. If this suppossed right is a silver bullet defense (as some, including the WSJ, have suggested), why hasn’t the government argued it? Simple, because it’s not a defense at all. In fact, it’s the exact opposite. If the government utters these words in court, they’re toast.

7. Judge Sweeney felt the need to say the following to the government’s lawyers regarding discovery (it’s long but important so I’m going to re-write it in full):

“I will just — and, again, I’m not in any way determining something in a vacuum, something that I have — the specifics I haven’t seen. But the whole purpose of this exercise, what’s before me now, is to allow the Plaintiffs to have their day in court and for them to have the opportunity to explore whether or not the United States Government, whether we’re talking about Treasury or whether it was — and I’m just pulling this out of the air — the White House, whoever it was, whether they directed the conservatorships to take certain actions, whether they were really the guiding force and, so — and, therefore, they really were not independent or they really are for — at least for purposes of the net worth sweep with the third amendment, acting at the direction of the United States Government.

If they were taking — if the conservators were taking their marching orders from within the United States Government, regardless of branch, whether you’re talking about execuitve — so — or, you know, I can’t imagine that — or whether it’s Congress, I just don’t know, working in conjunction with the White House or Treasury, whatever it might be, then that information has to be brought forward.

Now, if the fact that it would be subject to the protective order and it wouldn’t be publicly available, you know, no one can set up a website, click here to find whatever document, no one leaks it to the press, or to anyone, then that information has to be provided to the Plaintiffs because it’s not fair for the Unitied States Government to say to the Plaintiffs, you know, Freddie Mac, Fannie Mae are independent, there was no exercise of control.

And if the Justice Department receives documents from these two agencies, the conservators, showing in fact there was control, that’s hiding the — I mean, I know three very fine attorneys, people of integrity, but I’m just saying, if that’s what you — and you probably haven’t seen all the documents. But if you’re — I don’t want instructions to be given to clients or to these entities that they don’t have to produce certain documents if, in fact, it’s going to answer the question, were these entities part of the United States Government. Were they controlled by Treasury? If that’s what the documents show, I realize I’m preaching to the choir saying that, you have to turn it over to the Plaintiffs.

So, if you’re invoking privilege to block the Plaintiffs’ entryway into the courthouse door, you can’t do it. I know you know that, but you can go back and tell your clients I said so, and that might either make their life easier or more difficult or perhaps both, depending upon which issue you’re discussing.

But, Hopefully, that will help your discussions with the Plaintffs — excuse me, with the United States, and it — hopefully, that helps. If it doesn’t, I’ll see motions, and that’s fine.

Note: Italics and bold are mine.

8. Louise R, a retired nurse who resides in California, owns 36,000 shares of Fannie Mae common stock, some of which she and her late husband purchased over 25 years ago.

9. Josephine R. is a retired psychiatric social worker and inner-city school counselor who owns 1,000 shares of Fannie Mae purchased 15 years ago.

10. This is arguably the largest taking in US history ($40 Billion+), and Louise and Josephine and thousands of other “normal” people like them can’t afford to sue the government for years on end, especially when the government’s using every trick in the book to run delay.

11. The administration is fighting tooth and nail to keep the relevant GSE docs hidden. They’ve already held up disovery for over a year.

12. FHFA would be considered the worst conservator in the world to give up all profits. Who in the administration made FHFA do it?

What were the administration’s motives for the 3rd Amendment Sweep? Some possibilites: 1) Debt ceiling negotiation breathing room 2) Padding defecit reduction figures 3) Funding programs Congress wouldn’t approve

If you or anyone you know can help, please do. My Great Aunt Edna can only feed bear meat to so many people.

Some helpful articles: