Fannie Mae-No Politics (FNMA)

[obiterdictum]

Judge Wheeler's 75 page report, analyses and decisions are important for GSE cases.

A first importance lies in Wheeler's use of the given facts and events involved in the case to reconstruct an authoritative retelling of what transpired between AIG, FRB, FRBNY, Treasury and the body of attorneys and consultants that participated in the forced choice nationalization of AIG. Included is the the illegal exaction of preferred voting stock, AIG company ownership and control and the attempt to hide this in a trust that was designed to exclusively serve the monetary interests of the US Treasury. This reconstruction demonstrates that Timothy Geithner, Henry Paulson and Ben Bernanke and their associates, attorneys and consultants engaged in a planned takeover of AIG (and the GSEs) during September 2008.

A second significance is the revealing of the general approach taken in the nationalization of private, shareholder owned companies by the US Government. There was bullying and replacement of the the boards, the firings of top management, the exertion of direct and indirect control over company operations, the making of offers that could not be refused (loans, credit agreements, trust, SPSPAs, amendments), the intentional exclusion of shareholder votes, obtaining at a pittance AIG series of preferred stock (79.9% equity interest and voting control-no warrants) and GSE preferred stock and warrants, established onerous terms (usurious interest or dividend rates, commitment fees, net worth sweep) and all of these treatments were quite different from other institutions that were bailed out and that were more responsible for the September financial crisis than either AIG or the GSEs.

The two points above indicate a particular US Government pattern that was established in 2008. The pattern links AIG and the GSEs and Judge Sweeney would do well to notice the pattern of stretching and disregarding the laws of the United States (Federal Reserve Act, HERA 2008, The 5th Amendment, Administrative Procedure Act 1946) in order to achieve goals of the US Treasury and Executive Branch of Government.

The laws violated in the AIG case are Section 13(3) of the Federal Reserve Act, 12 U.S.C. § 343 (2006) and the 5th Amendment.

For the GSE the laws violated are various sections of HERA 2008, the 5th Amendment, and the Administrative Procedure Act (APA-1946), Pub.L. 79–404, 60 Stat. 237.

It is important to note the circumstances, facts, events, allegations, legal violations, prayers for relief and actual and potential outcomes are different in these cases. There is not a one to one correspondence between the cases wherein AIG's legal outcomes are directly positive to the GSEs ongoing cases.

What was pointed out is the distinctive pattern of the US Government's use of its power and resources to obtain its end using similar tactics and methods to do so and regardless of the law or private nature of the companies involved.

Read the decision here:
https://s3.amazonaws.com/s3.documentcloud.org/documents/2102164/ruling-in-a-i-g-bailout-lawsuit.pdf

Full detail here: http://www.nytimes.com/interactive/2015/06/15/business/dealbook/document-ruling-in-aig-bailout-lawsuit.html