Wednesday, April 13, 2016

New Deposition Testimony Cuts The Legs Out From Under The 2012 Net Worth Sweep

New Deposition Testimony Cuts The Legs Out From Under The 2012 Net Worth Sweep


Don't let the truth get in the way of a good cover up!


The deposition of Susan McFarland, who had served as the CFO of Fannie Mae testified that on August 9, 2012, eight days before the net worth sweep, she informed high-level officials at Treasury that Fannie was, in fact, “now in a sustainable profitability, that we would be able to deliver sustainable profits over time.” Those are not the words of impending insolvency, and they were made to and known by Treasury three days before it did the sweep. How can Treasury officials claim that they had no knowledge of the bright prospects of Fannie and Freddie when they had this information in hand.

Documents Undercut U.S. Case for Taking Mortgage Giant Fannie Mae’s Profits

http://www.nytimes.com/2016/04/13/business/fannie-mae-suit-bailout.html

Documents Undercut U.S. Case for Taking Mortgage Giant Fannie Mae’s Profits

Bove On Fannie Mae News – This Is Truly an Outrage

Bove On Fannie Mae News – This Is Truly an Outrage



2. The depositions make clear that the government knew that Fannie Mae did not have to make cash payments on its senior preferred issue but that it could make a payment in kind or in stock. When the government forced the net profit sweep on the company it stated that the company did not have the cash to make the payment on the dividend. This was not a requirement of the preferred and the government knew it.

3. At the time, the Treasury forced the company into the net profit sweep it was evident that management of the company did not agree. The reason is that it had just shown the Treasury that it would be profitable for the next 10 years; that it was about to get $50 billion in equity by reversing its deferred tax asset arrangement; and that it was about to start collecting refunds from banks on bad loans. It had the money to make the payment the government claims it could not make.

4. Despite having been told that Fannie Mae was going to have its deferred tax asset returned to the company (the $50 billion mentioned) a Treasury official signed an affidavit stating that it had no such knowledge.

5. The decision rendered in the case before Judge Royce Lamberth was made without the benefit of having any of this information. The Judge simply did not want to know so he would not even listen to the lawyers making presentation in his court. His decision was rendered with no knowledge of the facts and no contact with the disputants in the case.