Fannie Mae (FNMA)

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Trump Treasury May Mean Independence for Fannie and Freddie


An easy way to let them rebuild capital would be to end the quarterly transfer of all their profits to the Treasury. This would not require legislation; it could be done administratively with incoming Treasury officials advising the Federal Housing Finance Agency, which regulates Fannie and Freddie, to change the terms of the government’s agreement with the companies. This was supposed to happen anyway while the companies were operating under the conservatorship.

There is another intriguing aspect to the Trump administration’s shift, and it has to do with the lawsuits that have been filed against the government. One such suit was brought by Fairholme Funds, a mutual fund company that owns Fannie and Freddie shares. It contends that the 2012 profit sweep was an improper taking of private property without just compensation

For years, Justice Department lawyers have been stonewalling document requests from the plaintiffs. The government has requested confidential treatment for thousands of pages of materials and has asserted presidential privilege in 45 documents.

Margaret Sweeney, the judge hearing the matter in the Court of Federal Claims, recently opened the door a crack, letting some documents see the light of day. Some of the materials cast doubt on arguments made by the government’s lawyers that the profit sweep came about because Fannie and Freddie were in dire condition and the taxpayers needed protection from future losses.

If Judge Sweeney were to order the release of more documents, the current administration would probably appeal. It is not as clear that a Trump administration would do so, however. This opens the possibility that all those materials that the Obama administration has fought so hard to keep secret might just emerge.

That would be a huge service for anyone interested in holding government officials accountable for their actions.

http://www.nytimes.com/2016/12/02/business/trump-treasury-may-mean-independence-for-fannie-and-freddie.html?_r=0