An interesting battle is playing out in a Federal Court as media outlets try to gain access to 11,000 documents pertaining to a lawsuit between investors in Fannie Mae and Freddie Mac and the Government. For those not familiar, the Federal Government pumped billions of dollars into the mortgage giants in an effort to stem the tide of home foreclosures after the housing market bubble burst in 2008. They were also used as “toxic investment dump sites”–taking over the properties that were hopelessly underwater that were held by the “too big to fail banks” that also got bailout cash from the Government.
Those “too big to fail banks” eventually paid back the money the Fed gave them to stay afloat–and have gone back to impressive profits again. But Fannie Mae and Freddie Mac have not paid back a single penny of what they “owe”–despite the Treasury collecting $228-BILLION from the two entities in just three years. And that is why the investors are suing–because they aren’t seeing any dividends. Initially, the Fed was going to collect just 10% of profits to “pay back” their investment–but now they have decided to keep 100% of the profits–or about $40-BILLION.
Documents detailing why Federal officials decided to renege on their initial agreement, where all of that money is going, and what plans they have for Fannie and Freddie (there is a belief that they will be sold off to the “too big to fail” banks themselves–giving them almost exclusive control of the mortgage markets) are currently blocked from public view by the Obama Administration. The White House is using claims of “executive privilege”, “attorney-client privilege” and “deliberative process” to keep all 11-thousand documents secret. However, a Federal Judge did find that none of those excuses hold water–as the documents would only cause “embarrassment” for the Administration and the Fed–not a financial crisis. This is where it should be pointed out that President Obama promised to be the “most open and transparent administration in history”.
It’s too bad Hillary Clinton never served as Treasury Secretary–then we could have just hacked her private server and we’d have all of these documents already.
