by David Fisher, Cause of Action Senior Counsel
Three truisms will collide this Friday in a Federal courtroom in Washington DC. The first two truisms – “secrecy breeds corruption” and “follow the money” – make the failure to disclose documents relating to an under-the-radar agreement that has generated billions of dollars for the United States Treasury exceedingly troubling. Cause of Action, and others, think the public has a right to know about this deal and its genesis.
During the 2008 financial crisis, taxpayers bailed out Fannie Mae and Freddie Mac at a cost of $187.5 billion. This bailout was styled as a loan and for several years Fannie and Freddie paid the interest due on this loan. By 2012 Fannie and Freddie were again profitable. In August 2012, Fannie, Freddie, the Department of Treasury and Federal Housing Finance Agency (FHFA) amended their deal with what is called “the Third Amendment.” Under the Third Amendment, the government began sweeping all the companies’ profits into the Treasury. As of last December 2014, the Treasury had received a total of $225.4 billion from the companies – $40.8 billion more than they borrowed from taxpayers.
Congress charged the FHFA with conserving Fannie and Freddie’s assets and stabilizing the institutions with, as the agency states, “the objective of returning the entities to normal business operations.” Instead, it appears to be allowing all of Fannie and Freddie profits to be funneled to the US Treasury rather to be used to stabilize the companies.
The government is taking what the New York Times called “extraordinary measures” to hide documents relating to the Third Amendment, and has even claimed “Presidential Privilege” to keep secret several documents.
What is our government hiding? Cause of Action believes that Americans deserve a government that is fair and open; preventing disclosure of documents relating to the government bailout of Fannie and Freddie hinders citizens from evaluating their elected officials and holding them to account.
This Friday, Judge Margaret Sweeney should apply a third truism, one credited to former Supreme Court Justice Brandeis, sunlight is the best disinfectant and make documents relating to the Third Amendment public.
