Whats the government hiding from the Taxpayers?
Presenting those issues to the Court in a manageable form is complicated bythe sheer scope and magnitudeof Defendant’s privilege assertions and withholding of responsive documents; Defendant’s current privilege logs, which taken together exceed 1,200 pages, cover more than eleven thousand documents withheld in whole or in part. Complicating matters further, Defendant has revised and supplemented its purportedly “final” privilege logs on numerous occasions, including as recently as November 19. Given the enormous number of withheld documents and the very general—and in many instances clearly inadequate—document descriptions in Defendant’s privilege logs, it is virtually impossible for Plaintiffs to identify all documents that may have been improperly withheld
Defendant has also improperly asserted the deliberative process privilege—a privilege that belongs exclusively to the Executive Branch—over documents produced by or shared with FHFA, despite Defendant’s litigating position that FHFA is not the United States. There is also serious reason to doubt that all of the documents Defendant has withheld are deliberative and predecisional, for some of the documents listed in Exhibit 1 appear to discuss the Net Worth Sweep and were created after the Third Amendment to the Preferred Stock Purchase Agreements was implemented. Furthermore, even where the documents withheld by Defendant are genuinely deliberative and predecisional in nature, they are not privileged to the extent that they are directly probative of Defendant’s motives for adopting the Net Worth Sweep.
If this is true,it would demonstrate that the reason why the Government effectively nationalized Fannie and Freddie was not, as the Governmenthas claimed in its briefing, to prevent a “death spiral” in which the enterprises would “fai[l] to generate enough revenue to fund the 10-percent dividend obligation” and be required to “dra[w] on the Treasury commitment to pay Treasury its fixed dividend, which, in turn, [would] increase Treasury’s total investment and the next quarterly dividend.” Def.’s Mot. to Dismiss at 9–10 (Dec. 9, 2013), Doc. 20 (“Def.’s MTD”). Rather, these documents would demonstrate that the Government’s decision was driven by the fact that Fannie and Freddie were poised to generate tens of billions of dollars in profit over andabove their existing dividend obligations—money that could go toward rebuilding Fannie’s and Freddie’s capital reserves for potential exit from conservatorship and that could benefit shareholders other than Treasury.
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