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Freddie Mac Executes Its Third Sale in 2015 of Seriously Delinquent Loans From Its Investment Portfolio
MCLEAN, VA--(Marketwired - May 26, 2015) - Freddie Mac (OTCQB: FMCC) today announced that on May 21st it sold via auction 1,052 deeply delinquent Ocwen serviced non-performing loans (NPLs) from its mortgage investment portfolio as part of its Standard Pool Offerings (SPO). The loans have an aggregate unpaid principal balance (UPB) of $201 million. The transaction is expected to settle in July 2015. This is the third SPO offering 2015 year-to-date.
These loans have been delinquent for approximately three years, on average. Given the deep delinquency status of the loans, the borrowers have likely been evaluated previously for or are already in various stages of loss mitigation, including modification or other alternatives to foreclosure, or are in foreclosure. Mortgages that were previously modified and subsequently became delinquent comprise 29% of the aggregate pool balance.
The loans were offered as a single pool of mortgage loans. LSF9 Mortgage Holdings, LLC was the winning bidder. The cover bid price (the second highest bid) was in the mid 70s percent of UPB. Weighted average BPO LTV, average loan size and note rate are 93%, $191,177 and 5.28%, respectively.
Freddie Mac, through its advisors, began marketing the transaction on April 28, 2015 to potential bidders, including minority and women-owned businesses (MWOBs), non-profits, neighborhood advocacy funds and private investors active in the NPL market.
The transaction is subject to the Federal Housing Finance Agency (FHFA) NPL sale requirements and guidelines announced on March 2nd. Requirements on winning bidders' servicers include:
Servicer must be approved by and in good standing with Freddie Mac, Fannie Mae, Ginnie Mae, or FHA.
All servicers must agree to service in accordance with applicable law.
Servicers must prioritize loan modifications over short sales or deeds in lieu of foreclosure, and foreclosure must be the last option; and for loans that transition to REO (Real Estate Owned), servicers must encourage sales to owner occupants and non-profits.
Servicers must comply with the requirements of the U.S. Department of the Treasury's Making Home Affordable programs, including the Home Affordable Modification Program (HAMP), and evaluate eligible borrowers for such programs.
Servicers must evaluate all borrowers who are determined ineligible for HAMP (other than those with an imminent foreclosure sale date or vacant property) for a proprietary modification.
Servicers must honor completed modifications, and those in trial or applications in process at the time of sale, and continue to close in-process modifications unless they are able to offer terms more favorable to borrowers.
Subsequent servicers must agree to assume the responsibilities of the initial servicer.
Advisors to Freddie Mac on the transaction were Bank of America Merrill Lynch, Wells Fargo Securities and CastleOak Securities
Freddie Mac was established by Congress in 1970 to provide liquidity, stability and affordability to the nation's residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders. Today Freddie Mac is making home possible for approximately one in four home borrowers and is one of the largest sources of financing for multifamily housing. Additional information is available at FreddieMac.com, Twitter @FreddieMac and Freddie Mac's blog FreddieMac.com/blog.
"You pretty much have more than you'll ever be able to use and your family will ever be able to use. There's a fairness issue involved here."
http://www.cnbc.com/id/102700183
@fanofred_: OTC Markets Group Welcomes Newly Verified OTCQB Companies = $FNMA http://t.co/wspDLvHUeI
http://t.co/FyFwGTwtfA
However, I am concerned about the legislation's controversial provisions relating to Fannie Mae and Freddie Mac, which have little if any nexus to regulatory reform. Deciding what to do with Fannie and Freddie is an extremely important public policy task for the government, and the next step should not be tucked away in an unrelated regulatory reform measure. Disturbingly, some provisions contained in the proposed Senate bill would undermine the Housing and Economic Recovery Act of 2008, the statute that governs the government-sponsored entities.
In 2008, when Fannie and Freddie fell into distress, Congress passed HERA and established the Federal Housing Finance Agency as an independent conservator for them. As conservator, the FHFA is required to "preserve and conserve" Fannie and Freddie for their shareholders. But that's not at all what has happened.
In 2012, the Treasury Department changed the terms of the conservatorship to take 100% of Fannie and Freddie's profits into the Treasury's general fund, with no accountability to Congress or the public as to how this money is spent. Treasury's illegal profit sweep has had the perverse effect of keeping these institutions, which are SIFIs by any definition, permanently undercapitalized and in limbo. For Congress to lock in this arrangement until it decides what to do with Fannie and Freddie — which is what Title VII of the current bill would do — is terrible public policy, harmful to investors, taxpayers, and the financial markets.
It's clear that Congress needs to take action to determine the fate of Fannie and Freddie. These institutions are now entering the seventh year of a conservatorship that was intended to be temporary. But deciding what to do with Fannie and Freddie merits an entirely separate policy discussion and should not be a quick-and-dirty afterthought to an important regulatory relief bill.
The goal of our housing policy should be to get more private capital into housing finance. Sen. Shelby made this point recently, stating on Bloomberg TV that "we need to get Fannie and Freddie back running on their own, without the government's help." But in order for private capital to show up, the government must honor the law and live by the agreements it makes.
A sensible path forward would be to remove Title VII completely from the Senate bill and to take up GSE reform separately. Given the indications that the Treasury and FHFA have not acted as required by HERA in administering the conservatorship, the Senate Banking Committee should begin the process by conducting hearings on HERA oversight.
http://www.americanbanker.com/bankthink/shelbys-bill-is-the-right-way-forward-on-financial-reform-1074390-1.html
Denver housing: Rocky Mountain high and HOT
Diana Olick | @DianaOlick
6 Hours Ago
CNBC.com
Denver's hot housing market sparks bidding wars
When Christopher Simmons began shopping for a home in Denver six months ago, he had no idea the risk and the frustration it would take to get one. The 27-year-old had good credit and cash to put down, but that was not enough in this red-hot market.
"One of the hardest parts is that I travel for work often and am typically out of town on the weekends, and houses are being listed Thursday afternoon, offers due by Sunday afternoon and responses back on Monday," said Simmons.
He lost eight houses he liked, simply because he was out of town. He lost two others in bidding wars, one of which had 18 bidders. Finally, Simmons went under contract on a small home in a transitional neighborhood, but only after beating out five other bidders. He wrote a letter to the owners, describing how he had grown up in the neighborhood, and then he added a risky tactic.
"I waived the inspection and the appraisal contingencies on all of the offers I made and on this one as well," said Simmons.
The supply of homes for sale in Denver is down 15 percent from a year ago, the number of days on the market for homes has fallen 31 percent and the median home price is up 11 percent, according to the real estate company Live Urban Real Estate. Homes are flying off the shelves, and bidding wars are the new normal.
"Prices are going crazy. Multiple offers, love letters, videos, all kinds of things to appeal to a seller in order to make yours stand above all the others," said Denver real estate agent Jill Schafer.
Supply here is low for a number of reasons. Employment is growing at more than 4 percent versus a year ago, home builders really didn't ramp up production after the recession and land prices in the Denver area are at an all-time high, according to John Burns Real Estate Consulting. Most of the available land is out by the airport, where sales are not particularly strong.
Another issue plaguing the market is a lack of condominiums. Demand for condos was weak after the housing crash and foreclosure crisis, and then a Colorado law passed in 2010 making it easier for homeowners' associations (HOAs) to file class-action lawsuits against developers for even the smallest construction defects.
"If you can't put a project-specific insurance policy in place to protect yourself against inevitable lawsuits, you won't build condos," said Christopher Waggett, CEO of D4 Urban, a Denver real estate developer, who has been fighting to have the law changed.
Standing in front of a huge construction site of rental apartments, Waggett said there is a multifamily construction boom in Denver, but just 2 percent of it is condos, and those are only on the very high end. That's because in order to afford the insurance policies against litigation, developers would need to build million-dollar units.
Read MoreWater, millennials drive Portland, Oregon, housing
"We've had a situation in Denver for the last five years, where vacancy rates on multifamily have stayed below 5 percent and rental growth has been above 7 percent. That is not a normal market," said Waggett.
Rent growth is great for apartment developers, not so great for Denver renters, many of whom are young millennials coming to town for new jobs with Google and Apple.
"I don't think incomes have been rising at that pace, and I think we all know what happened in 2008-09 where we got an imbalance between incomes and value of property, in this case rent. There is a serious issue," added Waggett.
Over in the tony Cherry Creek neighborhood of Denver, a condo building is going up, and it is more than 80 percent sold, even though it doesn't open until August.
"If we were 50 percent sold, we'd be just outrageously happy, but at 80-85 percent where we are right now, this market is so incredibly tight for all real estate including condos. It's just been amazing," said Roy Kline, managing director of Western Development Group.
Most of the condos at Kline's 250 Columbine list at more than a million dollars, with the penthouse going for $5 million. That, he said, is what it takes to insure his company against litigation, and to test the project vigilantly for any potential defects..
Christopher Simmons has a home under contract in Denver after losing out on others in bidding wars.
"We have peer reviews, have people looking over each other's shoulder continuously to make sure everything gets done right," said Kline, who described going over the top by beefing up the building for sound attenuation and water resistance.
Kline, however, expects there still may be lawsuits, even though not one owner has moved in a suitcase. Lawyers, he says, target new condos, hoping to find anything wrong.
"The HOA will be approached by a litigation firm, and they'll ask them, maybe we can help you if you have some issues with your building, and they'll go in and literally end up taking a unit apart and looking for all the little defects in it," said Kline.
Some say the lack of condos is less about the law and more about lack of demand, but that argument is losing steam, as home prices soar amid stiff competition.
With rents continuing to rise, it is already cheaper to buy in this market than to rent, according to Schafer, and that will only put more pressure on single-family home builders and condo developers to ramp up production. Until then, buyers will continue to bid.
http://www.cnbc.com/id/102698380
Sen. Pat Toomey, R-Penn., also plans to file a handful of amendments, including one to repeal Dodd-Frank's orderly liquidation authority for troubled institutions and another to increase the threshold for Consumer Financial Protection Bureau examinations from $10 billion to $50 billion. A third would allow Fannie Mae and Freddie Mac to build capital, reversing an earlier Treasury Department agreement that sweeps all earnings to the government and ratchets capital levels down over time.
http://www.americanbanker.com/news/law-regulation/what-to-watch-for-at-senate-bankings-reg-reform-vote-1074451-1.html
Lew was in that long, time ago. He's not going to give that up.
Their bold stance seems to be their confidence that their pawns will cover until the end of this administration. Courts could shake that up at any moment though!!!
Administration is making their stance very clear again. Hope to hear from the courts soon!
May 22nd after hours, holiday weekend.
Just joking. Everyone knows that it will be when Wheeler himself is GOOD and READY!!! That's how it's supposed to be, right? :)
I'm blaming it on the usual slow volume waiting for the Fed minutes to come out. That's my excuse for today!
That was just in case you want to listen in on Lew, Yellen, Watt, SEC, FDIC, etc all in one meeting. These are the members, Lew is chairman.
· Jacob J. Lew, Secretary of the Department of the Treasury (Chairperson of the Council)
· Janet L. Yellen, Chair of the Board of Governors of the Federal Reserve System
· Thomas Curry, Comptroller of the Currency
· Richard Cordray, Director of the Consumer Financial Protection Bureau
· Mary Jo White, Chair of the Securities and Exchange Commission
· Martin J. Gruenberg, Chairman of the Federal Deposit Insurance Corporation
· Timothy G. Massad, Chairman of the Commodity Futures Trading Commission
· Melvin L. Watt, Director of the Federal Housing Finance Agency
· Debbie Matz, Chairman of the National Credit Union Administration
· S. Roy Woodall, Jr., Independent Member with Insurance Expertise
· Richard Berner, Director of the Office of Financial Research (non-voting member)
· Michael T. McRaith, Director of the Federal Insurance Office (non-voting member)
· Adam Hamm, Commissioner, North Dakota Insurance Department (non-voting member)
· John Ducrest, Commissioner, Louisiana Office of Financial Institutions (non-voting member)
· David Massey, Deputy Securities Administrator, North Carolina Department of the Secretary of State, Securities Division (non-voting member)
FSOC meeting 2:30pm
I think about half of Berkowitz portfolio is AIG, so good news for him!!! Good for us, since Fairholme is paying legal fees, as we sit by and wait for news. :)
As far as the Greenberg case, I don't expect to see much reflection in the AIG stock either way, IMO, but I'll still keep an eye on it!
AIG 725,000 shares @ $59.00 [11:36:06]
That title is classic! :). To think, that even this, is just a slice of it all, just a slice!!!
DEFENDANT’S RESPONSE TO PLAINTIFFS’
MOTION TO REMOVE THE “PROTECTED INFORMATION” DESIGNATION FROM DEFENDANT’S PROVISIONAL PRIVILEGE LOGS
The Court should deny the motion by Fairholme Funds, Inc. (Fairholme) to remove the “Protected Information” designation from provisional privilege logs produced by the United States.1 The provisional privilege logs contain confidential information meeting the definition of “Protected Information” under the protective order. Moreover, the provisional logs represent the Government’s preliminary judgments about privilege claims and were provided to plaintiffs as an accommodation and in the interests of expediting the discovery process. The logs have changed from week to week as the Government continues reviewing documents initially identified as potentially privileged. Thus, many of the entries are now obsolete and inaccurate.
Fairholme cannot articulate any legitimate, litigation-related rationale for the relief it seeks where (1) Fairholme counsel has access to the provisional logs under the protective order, and (2) the Government intends to produce a public version of the final privilege log. There is no legitimate justification or proper purpose for permitting Fairholme to publicize provisional logs containing preliminary and now obsolete information. For these reasons, Fairholme’s motion is not only without merit, but is also a waste of the Court’s and the parties’ time.
1 Fairholme identifies the March 20, 2015 provisional log in its motion, but states that it expects the Court’s ruling to apply to subsequent provisional logs. Pls. Mot. at 2 n.2.
BACKGROUND
After the Government filed its motion to dismiss Fairholme’s complaint pursuant to
Rules 12(b)(1) and 12(b)(6) of the Rules of the Court of Federal Claims (RCFC), Fairholme requested limited, jurisdictional discovery regarding three issues for the purpose of responding to the Government’s motion. The Court granted Fairholme’s request. To date, the Government has produced over 600,000 pages of documents, and the parties have completed two depositions.
To facilitate the production of documents, the Court issued a protective order on July 16, 2014. Prot. Order (July 16, 2014), ECF No. 73. The protective order defines “Protected Information” to include any “proprietary, confidential, trade secret, or market-sensitive information, as well as information that is otherwise protected from public disclosure under applicable law.” Id. ¶ 2. The protective order also incorporates a process for a receiving party to challenge the designation of materials as “Protected Information.” Significantly, the receiving party bears the burden of showing that the designation was improper. Id. ¶ 17.
Separately, as part of the Government’s rolling document production, Fairholme requested that the Government provide provisional privilege logs on a periodic basis. Although the Court’s rules do not contemplate provisional privilege logs, we agreed to Fairholme’s request as a means of providing Fairholme information as quickly as possible while preserving the Government’s right to reassess its privilege designations as discovery progresses. The Government has continued its document review, revisited its initial privilege designations with the relevant agencies, revised our provisional logs, and released documents accordingly. See Pls. Mot. at 6-7. Fairholme correctly states that we have provided six provisional privilege logs pursuant to this arrangement. Id. The production of provisional logs will culminate in the production of a final privilege log in accordance with RCFC 26(b)(5)(A).
Implicit in the arrangement with Fairholme was an understanding that the production of provisional privilege logs was solely for Fairholme’s convenience and to facilitate the parties’ discussions regarding privilege disputes. Although the initial provisional privilege logs provided to Fairholme did not bear the “Protected Information” legend, the parties understood that the Government’s assertions were preliminary and subject to change pending the preparation of a final privilege log after document production is complete. Nonetheless, Fairholme published portions of the Government’s provisional privilege logs in its letter to shareholders. See Ex. 1 (Fairholme Capital Management, L.L.C., Portfolio Manager’s Report For the Year Ended December 31, 2014 (Jan. 28, 2015)).
As a result of ongoing review, a number of privilege assertions have been withdrawn or modified. The Government’s document production is nearing completion, and we intend to provide Fairholme a non-protected version of the final privilege log when complete.
ARGUMENT
It is important at the outset to emphasize the obvious point that Fairholme’s counsel has
all the provisional privilege logs; the Government has withheld no information from counsel and other persons with access under the protective order. Thus, Fairholme cannot identify any actual prejudice in its motion. Rather, Fairholme’s motion merely concerns the academic questions of whether provisional privilege logs may be designated as “Protected Information,” and whether Fairholme has met its burden to show disclosure of the logs should otherwise be allowed.
I. Confidential Information In The Provisional Privilege Logs Is “Protected Information” Under The Protective Order
Because the provisional privilege logs contain confidential information, Fairholme has not established that the logs have been improperly designated under the protective order, or that disclosure otherwise should be allowed.
Pursuant to Paragraph 17 of the protective order, Fairholme must show that the provisional privilege logs are “improperly designated or that disclosure [should be] allowed.” Prot. Order ¶ 17; see also Tr. Of Status Conf. (July 16, 2014) at 17-18. In its motion, however, Fairholme attempts to reverse this standard, insisting that the Government is required to demonstrate that the provisional logs qualify for protection under the protective order. Pls. Mot. at 9 (“None of the information in the March 20 Log even remotely qualifies as protected under the Court’s order, and the Government has not even attempted to demonstrate that it does”). But the burden rests on Fairholme, and it cannot meet that burden.
A. The Provisional Privilege Logs Contain Confidential Information
Fairholme insists that the provisional privilege log does not constitute confidential information, but fails to explain why this is the case. The inclusion of the term “confidential” in the definition of Protected Information was a subject of disagreement between the parties during the negotiation of the protective order and was addressed at the July 16, 2014 status conference. Fairholme counsel contended that confidential information should be excluded from the definition of “Protected Information,” stating that “lanket and general allegations of confidentiality are not sufficient under the rule.” July 16, 2014 Tr. at 9:2-3. Significantly, the Court rejected Fairholme’s contention and issued a protective order that included “confidential” information within the definition of “Protected Information.” Prot. Order ¶ 2.
The information contained in the privilege logs meets the ordinary definition of “confidential information.” Confidential information means “[k]nowledge or facts not in the public domain but known to some.” Black’s Law Dictionary (10th ed. 2014). The provisional privilege logs reflect Government counsel’s preliminary, confidential decisions on what documents may be privileged. In normal discovery, preliminary information such as this never enters the “public domain.” Indeed, it was only made available to plaintiffs in an effort to
compromise and to grant one of their requests. Further, the logs contain information that was sent internally among agency employees, and information that was neither shared nor intended to be shared with the public.2 The logs contain confidential information and were properly designated as “Protected Information” under the protective order.
Fairholme asks the Court to limit “Protected Information” to “sensitive” information whose disclosure would cause “real competitive harm” or “market-distorting effects.” Pls. Mot. at 8. Fairholme’s argument, if adopted, would render the word “confidential” superfluous, because the definition of “Protected Information” already includes information that is “proprietary” or “market-sensitive.” Prot. Order ¶ 2. The separate term “confidential” in the definition, therefore, must mean something distinct from “proprietary” and “market-sensitive.”
B. Production Of Initial Privilege Logs Without A “Protected Information” Designation Does Not Waive The Government’s Right To Designate Subsequent Provisional Logs As “Protected Information”
Fairholme suggests that the Court should find that the Government’s earlier production of unprotected provisional privilege logs operates as a waiver as to all future provisional privilege logs. Pls. Mot. at 8.3 This argument is flawed because it conflicts with the terms of the protective order, which states that a waiver under the protective order “shall not operate as or be used to argue for a waiver with respect to any other documents.” Prot. Order ¶ 15.
Accordingly, even if the production of the initial provisional privilege logs without a “Protected Information” designation waived confidentiality protection as to those logs, that
2 Among other things, the log contains the names of the individuals (including career agency employees) who sent and received the documents listed on the log, the employees’ email addresses, and the subjects of the communications.
3 The Government did not designate its first three provisional logs as “protected” because it did not expect Fairholme would disclose the information publicly.
would not have waived protection as to the provisional privilege logs at issue here. The Court should, therefore, reject Fairholme’s waiver argument.
C. The Cases Cited By Fairholme Do Not Show That The Provisional Privilege Logs Were Improperly Designated Or That Disclosure Should Be Allowed
None of the authorities on which Fairholme relies supports the relief it seeks. Fairholme primarily relies on In re Violation of Rule 28(d), 635 F.3d 1352, 1357-58 (Fed. Cir. 2011). Pls. Mot. at 2, 10. Violation of Rule 28(d), however, is inapplicable here.
In Violation of Rule 28(d), the court of appeals sanctioned counsel for the defendant drug manufacturers who had over-designated appellate briefing material as protected under a lower- court protective order. In particular, the court of appeals questioned whether “case citations, direct quotations from published opinions of the cases cited, and legal arguments” could qualify as confidential under the lower court’s protective order. Id. at 1355-56. The court’s concerns in Violation of Rule 28(d), however, were focused on judicial records – including the legal arguments in appellate briefs – not documents produced and exchanged with an opposing party during the course of discovery.
Indeed, although the court of appeals noted that “[t]here is a strong presumption in favor of a common law right of public access to court proceedings,” it did not address any right by the public to access discovery materials, much less a provisional privilege log. Id. at 1356. The holding does not undercut the Government’s designation of provisional privilege logs as “Protected Information.”
The other cases Fairholme cites are inapplicable because they concern the meaning of “confidential” when considering whether to disqualify experts who may have received confidential or proprietary information from an opposing party during the course of a previous relationship. Pls. Mot. at 10 & n.6; see also Return Mail, Inc. v. United States, 107 Fed. Cl. 459,
468-69 (2012) (denying defendant’s motion to disqualify expert witness in patent litigation when “defendant has not established that relevant confidential, proprietary or privileged disclosures were made to [the proposed expert], or that he was privy to confidential or privileged attorney/client discussions”); Hewlett-Packard Co. v. EMC Corp., 330 F. Supp. 2d 1087, 1098 (N.D. Cal. 2004) (denying defendant’s motion to disqualify expert witness in patent litigation when defendant had not shown that any confidential information had been disclosed to the proposed expert). These cases do not support the relief Fairholme seeks.
Fairholme asks the Court to find that in order for information to be confidential, the
release of the information “must be likely to cause some type of legally cognizable harm to the
producing party or third parties.” Pls. Mot. at 10. There is no basis in the protective order or
relevant case law for such a restrictive definition, which conflicts with the ordinary meaning of
“confidential” cited above. The cases relied upon by Fairholme relate to a party’s request to
limit discovery, not the mere designation of protected information produced in discovery. Id.
None of the cases Fairholme cites concern the propriety of designating a provisional privilege
log or other discovery materials as “Protected Information” under a protective order.
II. In The Absence Of Litigation-Related Prejudice, Fairholme Has Not Met Its Burden To Show That Disclosure Of The Provisional Privilege Logs Should Be Allowed
Fairholme has articulated no legitimate litigation prejudice to it resulting from the Government’s designation of the provisional privilege logs. Fairholme’s counsel has full access to the logs, as do Fairholme’s experts. Designation of the provisional privilege log as “Protected Information” will not affect Fairholme’s ability to respond to our motion to dismiss and does not undermine the purpose of allowing jurisdictional discovery in this case, particularly when the Government will produce a public version of the final log. Instead, Fairholme states that its motion is based on its desire to share the logs with: (1) its client; (2) counsel for other plaintiffs
in other litigation; and (3) non-litigants who might take an interest. Pls. Mot. at 12-13. These rationales do not withstand scrutiny. No court has held that these reasons constitute sufficient need to overcome a party’s designation of documents as protected. More importantly, the Government intends to provide Fairholme a public, non-designated version of its final privilege log that likely will render Fairholme’s motion moot.
First, Fairholme has no litigation need to share the provisional logs with its client. Fairholme claims that designating the logs as protected “prevents Fairholme’s counsel from fully consulting their clients about important questions of legal strategy.” Pls. Mot. at 12. But Fairholme does not explain why the clients must see provisional logs to participate in discussions regarding legal strategy.
The second rationale, the desire to share the provisional log with counsel in other cases, likewise lacks merit. Fairholme has not explained why it needs the assistance of outside counsel to evaluate the Government’s privilege assertions, or stated that the inability to share the provisional log with outside counsel will inhibit Fairholme counsel’s ability to represent its client. Moreover, if the designation is truly affecting Fairholme’s progress by limiting its discussions with counsel in other cases, Fairholme can move the Court for permission to provide the provisional logs to those counsel.
The third rationale has nothing to do with the litigation at all: Fairholme desires to share the provisional privilege logs with persons who Fairholme believes might “take an interest” in the Government’s assertion of privilege. This basis makes no sense where the provisional logs contain obsolete information. The logs only reflect Government counsel’s initial determinations of what documents may be privileged. Fairholme’s desire to make public use of the provisional
logs appears intended to mislead the public by presenting preliminary decisions as the Government’s ultimate positions. This basis cannot support the pending motion.
Fairholme’s previous use of the provisional logs illustrates the improper motive underlying its motion. On January 28, 2015, Fairholme’s chief executive published a letter to Fairholme Fund investors containing verbatim excerpts from the Government’s earlier provisional logs. Fairholme offers no explanation how providing provisional logs to Fairholme’s investors has any role in this litigation. Certainly, courts view unfavorably a party’s use of protected information for its own commercial gain, even when that information – unlike here – has become part of the judicial record. The Supreme Court has stated that “t is uncontested . . . that the right to inspect and copy judicial records is not absolute. Every court has supervisory power over its own records and files, and access has been denied where court files might have become a vehicle for improper purposes.” Nixon v. Warner Comm’cns, Inc., 435 U.S. 589, 598 (1978) (internal citations omitted). Subsequent courts have repeated the sentiment that litigation materials should not be used for private commercial purposes. See In re Knight Pub. Co., 743 F.2d 231, 235 (4th Cir. 1984) (“The Supreme Court has suggested that the factors to be weighed in the balancing test include whether the records are sought for improper purposes, such as promoting public scandals or unfairly gaining a business advantage . . . .”); Newman v. Graddick, 696 F.2d 796, 803 (11th Cir. 1983) (“[D]istrict courts [should] look to whether the records are sought for such illegitimate purposes as to promote public scandal or gain unfair commercial advantage . . . .”). The Court should not sanction Fairholme’s use of provisional privilege logs in this manner.
Further, Fairholme alludes to “public access” and unidentified third parties’ “constitutional rights” to access as grounds for requiring the de-designation of the provisional
privilege log. Pls. Mot. at 11-12. But the cases Fairholme cites merely stand for the unremarkable proposition that a party must have good cause to obtain a Rule 26 protective order. Id. at 12-13 (citing Citizens First Nat’l Bank of Princeton v. Cincinnati Ins. Co., 178 F.3d 943, 944 (7th Cir. 1999) (remanding to district court judge to determine whether parties may file appendix under seal because lower court judge “fail[ed] to make a determination, as the law requires, of good cause to seal any portion of the record” prior to issuing a stipulated protective order); Jepson, Inc. v. Makita Elec. Works, Ltd., 30 F.3d 854, 860 (7th Cir. 1994) (reversing lower court’s imposition of sanctions against party that violated stipulated protective order because lower court had ratified stipulated order without undertaking an independent examination to determine whether good cause existed to grant it); Lakeland Partners, LLC v. United States, 88 Fed. Cl. 124, 137-39 (2009) (denying motion for protective order where the moving party had not met its burden of showing good cause under Rule 26)).
Fairholme’s motion has nothing to do with a Rule 26 protective order. The Government has not sought a protective order to avoid producing a privilege log, but only seeks to produce a provisional log with a protected designation. The Court already found good cause for the designation of “Protected Information” when it issued the protective order. The parties actively negotiated the terms of the protective order, and the subjects on which the parties disagreed were addressed in a status report and a hearing. See Pls. Mot. at A163. Ultimately, the Court issued the protective order in this case, allowing the parties, in these very circumstances, to designate discovery materials as Protected Information.4
Finally, the Court should decline Fairholme’s request for an order instructing the Government to prepare additional public and non-public versions of provisional privilege logs with confidential information redacted for Fairholme counsel to share with members of the public as it sees fit. Pls. Mot. at 13-14. This request serves no purpose other than to further delay discovery. As Fairholme notes, the Government has provisionally identified thousands of documents as potentially privileged. Moreover, we are in the process of: (1) reviewing those documents to evaluate the preliminary privilege assertion; (2) producing those documents that were provisionally withheld but deemed to be not privileged; (3) producing redacted versions of documents that contain non-privileged information; and (4) preparing a final privilege log in accordance with RCFC 26(b)(5). This multi-part effort requires the full-time attention of a team of Government attorneys in consultation with agency counsel. The Government has devoted significant resources to completing these tasks, while at the same time preparing for several depositions on a schedule dictated by Fairholme.
To demand that the Government individually redact thousands of entries containing various personal information and descriptions of subject matter from these provisional logs would greatly hinder the Government’s ability to complete its final privilege log in a timely manner, and would frustrate the Court’s and the parties’ interests in timely completing
jurisdictional discovery. This is especially true given that Fairholme will receive a final privilege log that is not designated as “Protected Information.”
CONCLUSION
For these reasons, the Government respectfully requests the Court deny Fairholme’s
motion.
OF COUNSEL:
PETER A. BIEGER Assistant General Counsel
KATHERINE M. BRANDES Attorney-Advisor
Department of the Treasury
1500 Pennsylvania Avenue, N.W. Washington, D.C. 20220
May 18, 2015
Respectfully submitted,
BENJAMIN C. MIZER
Principal Deputy Assistant Attorney General
s/ Robert E. Kirschman, Jr. ROBERT E. KIRSCHMAN, JR. Director
s/ Kenneth M. Dintzer KENNETH M. DINTZER Deputy Director
Commercial Litigation Branch Civil Division
U.S. Department of Justice
P.O. Box 480
Ben Franklin Station
Washington, D.C. 20044
Telephone: (202) 616-0385
Facsimile: (202) 307-0973
Email: Kenneth.Dintzer@usdoj.gov
Attorneys for Defendant
Here's the first page!
DEFENDANT’S RESPONSE TO PLAINTIFFS’
MOTION TO REMOVE THE “PROTECTED INFORMATION” DESIGNATION FROM DEFENDANT’S PROVISIONAL PRIVILEGE LOGS
The Court should deny the motion by Fairholme Funds, Inc. (Fairholme) to remove the “Protected Information” designation from provisional privilege logs produced by the United States.1 The provisional privilege logs contain confidential information meeting the definition of “Protected Information” under the protective order. Moreover, the provisional logs represent the Government’s preliminary judgments about privilege claims and were provided to plaintiffs as an accommodation and in the interests of expediting the discovery process. The logs have changed from week to week as the Government continues reviewing documents initially identified as potentially privileged. Thus, many of the entries are now obsolete and inaccurate.
Fairholme cannot articulate any legitimate, litigation-related rationale for the relief it seeks where (1) Fairholme counsel has access to the provisional logs under the protective order, and (2) the Government intends to produce a public version of the final privilege log. There is no legitimate justification or proper purpose for permitting Fairholme to publicize provisional logs containing preliminary and now obsolete information. For these reasons, Fairholme’s motion is not only without merit, but is also a waste of the Court’s and the parties’ time.
1 Fairholme identifies the March 20, 2015 provisional log in its motion, but states that it expects the Court’s ruling to apply to subsequent provisional logs. Pls. Mot. at 2 n.2.
Interesting! Thanks Blushing Green!
Expecting they turn it in at the last minute at 6:55pm :)
Ackman could have been referring to his own cases. There is the one in appeals court, that we just gave an updated timeline on for this year. Then, he has one in Sweeney court that is on hold until Fairholme/Sweeney discovery is finished. Once Fairholme/ Sweeney discovery is finished, gov response is then due in 60 days.
Pershing Square Capital Management, L.P.
1Q 2015 Quarterly Conference Call
Event Date: Monday, May 18, 2015
Event Time: 11:00am – 12:00pm EDT; 16:00-17:00 BST
US Toll-Free Participant Event Plus Dial-In Number: (844) 489-4527
Participant International Dial-In Number: (925) 418-7826
Conference ID 46690604
Questions for Bill and the investment team may be sent to ir@persq.com.
Following the call, a replay of the event will be available by audio webcast until Monday, June 1, 2015 at midnight EDT/Tuesday, June 2, 2015 at 5:00am BST.
Conf call starting
JOINT STATUS REPORT REGARDING MAY 20 STATUS CONFERENCE In accordance with this Court’s Order of August 13, 2014 (Doc. 85), the parties hereby notify the Court that they do not believe it is necessary to hold the status conference currently scheduled for May 20.
Pershing Square Capital Management, L.P.
1Q 2015 Quarterly Conference Call
Event Date: Monday, May 18, 2015
Event Time: 11:00am – 12:00pm EDT; 16:00-17:00 BST
US Toll-Free Participant Event Plus Dial-In Number: (844) 489-4527
Participant International Dial-In Number: (925) 418-7826
Conference ID 46690604
Questions for Bill and the investment team may be sent to ir@persq.com.
Following the call, a replay of the event will be available by audio webcast until Monday, June 1, 2015 at midnight EDT/Tuesday, June 2, 2015 at 5:00am BST.
We are watching a part of history be made. Even Stevens says, "It is a massive suit. It's probably one of the, in terms of dollars, one of the greatest risks, costs, that could possibly happen in a lawsuit based on housing that this government is facing today."
At least he knows, this is big!!! :)
Yes, even Carney says he wouldn't be surprised if Greenberg wins now, hee hee.
Interesting how Stevens doesn't talk about his time at Freddie Mac, 7 years VP?
http://m.cnsnews.com/news/article/obama-nominates-former-freddie-mac-executive-housing-commissioner
At the end of this clip, he states the part about not being concerned about shareholders.
http://investorsunite.org/dave-stevens-doesnt-understand-investors-or-the-rule-of-law/
Stevens in that interview starting about 10:23, says, (that morning) We were in the West Wing masses, they call it, talking to some of the key stakeholders in the Treasury and the White House. There is absolutely no chance that there will be a modification to the PSPA to amend the sweep and to recapitalize the GSE's. I just don't see that happening pragmatically.
He seems to not mind the GSE's staying around in some form, (probably because he knows the private market can't completely fill that void), but he doesn't come across in any conversations as shareholder friendly. He always says that he basically doesn't think the shareholders have a case.
FSOC meeting Tues the 19th
Chairman Lew, voting members Yellen, Watt, etc
· Jacob J. Lew, Secretary of the Department of the Treasury (Chairperson of the Council)
· Janet L. Yellen, Chair of the Board of Governors of the Federal Reserve System
· Thomas Curry, Comptroller of the Currency
· Richard Cordray, Director of the Consumer Financial Protection Bureau
· Mary Jo White, Chair of the Securities and Exchange Commission
· Martin J. Gruenberg, Chairman of the Federal Deposit Insurance Corporation
· Timothy G. Massad, Chairman of the Commodity Futures Trading Commission
· Melvin L. Watt, Director of the Federal Housing Finance Agency
· Debbie Matz, Chairman of the National Credit Union Administration
· S. Roy Woodall, Jr., Independent Member with Insurance Expertise
· Richard Berner, Director of the Office of Financial Research (non-voting member)
· Michael T. McRaith, Director of the Federal Insurance Office (non-voting member)
· Adam Hamm, Commissioner, North Dakota Insurance Department (non-voting member)
· John Ducrest, Commissioner, Louisiana Office of Financial Institutions (non-voting member)
· David Massey, Deputy Securities Administrator, North Carolina Department of the Secretary of State, Securities Division (non-voting member)
Tomorrow will be interesting! I'm guessing they won't file their response before 6:55pm. ;) It shows CFO Benson on one of the 2008 emails. I would think he would be a good resource for filling in any of the gaps! :)
I agree!
He asks Stevens about F & F about 8:20 into this video. Stevens says it's not pragmatic to change or end the sweep.
http://thenationalrealestatepost.com/interview-with-mba-president-david-stevens/
Larry Kudlow Op Ed
"Sure, I'd get rid of a few banks: Like the Ex-Im Bank, which makes loans to our enemies and destroys jobs at home. Or Fannie and Freddie, which helped cause the problem in the first place, and are now actually being expanded by Team Obama. They have no capital. Disaster waits all over again."
http://www.cnbc.com/id/102684824
"Last year, Stevens set off a firestorm with his remarks on minority borrowers. Soon after opening the conference last year, a Twitter war developed between Stevens and Josh Rosner, a well-known analyst at Graham, Fisher & Co. HousingWire publisher Paul Jackson recapped the Twitter war here.
Stevens also said last year that the government’s position in the housing industry hadn’t changed in four years.
“Here’s the problem. It is four years later and the government isn’t still just the backbone, but has become the entire central nervous system of the real estate finance market, Stevens said last year. “When the federal government is still backing nearly 90% of the mortgages made in today’s market, it’s apparent that the real estate finance system is stuck in the same place it was when I took this stage four years ago.”
Stevens is set to address the crowd at MBA Secondary at 8:30 a.m. Eastern Monday. "
That is a good thing, because Stevens is out for his own interests!