Thats is why Watt kept bring up the PSPA at the hearing on the 27th. IMO. It says in the agreement that the Treasury can end it itself for various reasons. I haven't seen a part where it says the FHFA can end it unilaterally from their side. FHFA should still go ahead themselves and push Treasury to end it. or just end it, let Treasury sue them, because it is not in the best interest of the companies that they are supposed to be overseeing, while under conservatorship. After listening to Watt in November, it was obvious that they needed Lew at a hearing before congress. It seems that no one is able to confront the Treasury, because that path leads to all the high-ranking government officials' involvement. IMO
From Berkowitz February 3rd conference call,
"Fred Fraenkel: Well, Bruce, can you discuss who’s involved on behalf of the government?
Bruce Berkowitz: It’s a long list. In our recent annual letter for The Fairholme Fund, we included examples from one Treasury privilege log that was recently produced. Now, a privilege log spells out documents that the Treasury is unwilling to share even under a protective order. It states the authors, the recipients, the topic, the date, and the reason [they assert] privilege for each communication.
And we expect thousands of such communications to be listed. The common theme of what we have seen among almost all of the cast of characters is their connection to the United States Treasury Department. Senior employees at Treasury who were directly involved [include]: Tim Geithner, the Secretary of the Treasury; Neal Wolin, the Deputy Secretary; Mary Miller, the Under Secretary; Tim Bowler, the Deputy Assistant Secretary; Michael Stegman, the Counselor to the Secretary; and others. All discussing and designing the illegal net worth sweep.
Then there’s Ed DeMarco, the FHFA conservator who signed the Third Amendment in August of 2012. He previously served at the Treasury and ran the Office of Financial Institutions Policy. His responsibilities at Treasury included Fannie Mae and Freddie Mac.
DeMarco’s senior adviser at FHFA, Mario Ugoletti, was a long-serving Treasury employee who had also run the Office of Financial Institutions Policy [and whose responsibilities] included Fannie Mae and Freddie Mac. Ugoletti noted in his court affidavit that he had primary responsibility at FHFA for negotiating and administering the [Preferred Stock Purchase] Agreement, the very agreement that he had helped draft when he worked at Treasury before he departed for FHFA. Can he really be considered independent? Can you really consider negotiating with your former employees and colleagues about documents you helped draft to be independent or arm’s length? If that is not a serious conflict of interest, I don’t know what is.
And we have Gene Sperling, one of the principal architects of the Third Amendment. He served as Counselor to Treasury Secretary Tim Geithner until he moved over to the
Please see the last page of this transcript for important disclaimers and for a list of the Fairholme Fund’s top holdings.
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White House as Director of the National Economic Council. From that perch, Sperling was able to push the unlawful policy amendment through with the help of Brian Deese, now the President’s Senior Advisor in the West Wing of the White House.
We find it interesting that of all the financial advisory firms in America, Treasury hired Moody’s to analyze the GSEs [Government Sponsored Enterprises]. This is the same Moody’s that showed poor judgment in the crisis and is currently under investigation by the Department of Justice. [It is] the same Moody’s that testified as an “independent expert” to Congress on the financial crisis, Fannie Mae, and Freddie Mac.
Clearly, senior Treasury officials exchanged [numerous] e-mails about the relationship between Treasury and FHFA as conservator. But they ask, and they say, “What relationship?” The government has said in court that there is no relationship. This is going to be very interesting correspondence to review when a little bit of daylight shines on these documents.
According to recent Congressional testimony, Mel Watt, our conservator at FHFA, claims that he’s unable to end his own conservatorship. In the history of conservatorships, this is a first. Think about it: a federal conservator unable to end his own conservatorship – that he administers – without the consent of the Treasury Department. That’s his sworn testimony to Congress. And to think that the Treasury has asserted in our court case that it has not directed our conservator’s actions. Time and time again, the cover-up is always worse than the crime."
