Monday, December 7, 2015

11,000 documents withheld from taxpayers by US government in Fannie Mae cases.

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

https://www.dropbox.com/s/qjg2ign307chipm/2015-12-07%20Fairholme's%20Public%20Redacted%20Motion%20to%20Compel%20Production%20of%20Certain%20Documents%20Withheld%20for%20Privilege.pdf?dl=0

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.

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 and above their existing dividend obligations

“Two of the documents Defendant produced only after it became apparent that Plaintiffs were about to file this motion to compel are particularly noteworthy. First, Defendant produced a memo Ex. 12 at A081, UST00556835.
That fact utterly discredits Defendant’s “death spiral” explanation for why it imposed the Net Worth Sweep, and it is revealed in a memo that is clearly responsive to document requests that Plaintiffs propounded in April 2014. Even though it is clearly not privileged, Defendant did not produce this highly damaging document until last week.
Also in anticipation of this motion to compel, Defendant belatedly produced
Here again, it was only when threatened with a motion to compel 19 months after first receiving Plaintiffs’ document 8
Case 1:13-cv-00465-MMS Document 272 Filed 12/07/15 Page 16 of 46
requests that Defendant produced a clearly responsive document that it now concedes is not privileged and that directly undermines the basic narrative it has used to defend the Net Worth Sweep.”
Quote:
Plaintiffs expect that these and other documents listed in Exhibit 1 would corroborate Ms. McFarland’s testimony that 45:11–13 (A057) (McFarland:
13 See Ex. 9 at Case 1:13-cv-00465-MMS Document 272 Filed 12/07/15 Page 21 of 46
. If this is true, it would demonstrate that the reason why the Government effectively nationalized Fannie and Freddie was not, as the Government has 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 and above 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. Defendant, however, was determined to keep Fannie and Freddie under government control and to ensure that shareholders other than Treasury would be wiped out. See
Thus, we believe that the withheld documents will likely show that the purpose of the Net Worth Sweep was to expropriate for the government every last dollar of the substantial profits and massive deferred tax asset valuation allowance releases that were anticipated in the near future, to prevent Fannie and Freddie from rebuilding capital and exiting conservatorship, and to ensure that Fannie’s and
Freddie’s private shareholders received no value whatsoever for their investment.
Liked by 4 people
  • This needs the question of why?
    Why did citibank not get wiped out?
    Why did Bank of america not get wiped out?
    Why did AIG not get completely wiped out?
    Why MUST Fannie and Freddie be the only two Large corporations wiped out by the Governments hands? But Tarp saved every other major accept Lehman. Goldman Sachs did pretty well vs the sure bankruptcy it deserved, did it not?
    GS $200 per share 2007
    GS $60 per share 2009
    Gs $200 per share 2015
    Now imagine that you knew in 2009 that the government was going to make sure GS stayed profitable? You too could of made %350 percent return in 6 years. Not bad deal to be an insider “trader”
    Like
    • One last thing too, What “investment” since 2008 has been the most profitable to the USA government? of all the Tarp and Aig and Fannie and Freddie?
      Fannie and Freddie is the correct answer. over $100 billion in profit to the USA.
      Now We are all taught profit is important to business. But what business is the USA Treasury in? It is not. It prints money. So how can it profit? It cant. Nor can the USA government. The treasury is simply redistributing the money it printed back into circulation. Money is not real, it is only paper. The control of money by government is how it controls its citizens via taxes and what not.
      Once the US Treasury decides to take money from Fannie and Freddie, it is deciding on that moment that the US treasury can distribute that corporations profits better than Fannie or Freddie can.
      Anyway My point is that if you think Fannie and Freddie will be turned to crap stock and discarded then you KNOW that it will be the way future bailouts will be done. Citibank WILL be taken over next time and bankrupted. Goldman will be taken over and bankrupted. And so on. Why? Fannie and Freddie are setting the precedent for government takeover and conservatorship of any institution in america with NO court having power to stop it. The writing is on the wall, may want to sell JPM chase soon? One law and precedent is all it takes to take Apple and IBM and wipe out their shareholders and TAKE the profits. Apparently our courts are not up to the task of saying simply “no law can be written that would not allow courts to act” ! Who loves communism? Not most of us, and that is why Trump is winning.

treasury changing tune 12/2015, and Big Banks’ Quiet Campaign to Muscle Out Fannie and Freddie

THEN:
https://www.treasury.gov/press-center/press-releases/Pages/jl2261.aspx

Remarks Of Counselor To The Secretary For Housing Finance Policy Dr. Michael Stegman Before The ABS Vegas 2014 Conference


While we support the repeal of GSE affordable housing goals, we would incorporate affordability standards for multifamily housing into the new system to help ensure that the beneficiaries of guaranteed mortgages use their funding advantage to produce or preserve broadly affordable rental homes.

NOW:


US Treasury: Remarks by Counselor Antonio Weiss at The Consumer Federation of America’s Annual Financial Services Conference
Posted on December 4, 2015

in addition, Treasury was pleased to see FHFA Director Watt instruct Fannie Mae and Freddie Mac to allocate money to the Housing Trust Fund at HUD and the Capital Magnet Fund at Treasury. Over the next five years, we expect these programs to generate more than $1.2 billion for community development and low income households, including homeless families.

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Treasury went from repeal of affordable housing to "we are pleased with housing trust fund...for low income households"
Interesting.

A Revolving Door Helps Big Banks’ Quiet Campaign to Muscle Out Fannie and Freddie


http://www.nytimes.com/2015/12/07/business/a-revolving-door-helps-big-banks-quiet-campaign-to-muscle-out-fannie-and-freddie.html