Fannie Mae-No Politics (FNMA)

[955]

Prior thinking of Agency personnel

- So, there HAS BEEN a change in thought at the FHFA regarding conservatorships.

the Agency may follow
a different course during my tenure

- Prior DeMarco course was to wind down

changes to Agency policy

- self explanatory

disclosure of deliberations of my
immediate predecessor and during my tenure could have adverse
impact to the Enterprises and market consequences.

- Adverse in whose view?

testimony of Director Watt’s predecessor, Mr. DeMarco, concerning, among other things,
the future of the conservatorships and the wind down of Fannie Mae and Freddie Mac.
The conservatorships have not ended, nor have Fannie Mae and Freddie Mac been wound down.
These are exactly the type of ongoing policy issues in which Director Watt’s approach could differ
from Mr. DeMarco’s and the risk of second-guessing by stakeholders impairing FHFA’s ability
to direct the conservatorships (and consequential harm to the markets) is very real.

- DeMarco's plan was to wind down F&F while in conservatorship through gradual reduction
of their capital cushions to zero in 2018, a "conceivership" if you will. Director Watt, I suggest,
has a different approach. No wind down, but at the same time wants a solution where shareholders
do not benefit, as in shareholders benefiting would cause "harm to the markets".

The protective order assures
confidentiality of sensitive material and the United States has reasonably relied on this protection
in producing the voluminous documents in this action and providing deposition testimony. This
reliance applies specifically to the testimony the Times currently seeks to obtain. In his
declaration, Director Watt asserted that:

The release of documents that reflect prior thinking of Agency
personnel concerning matters about which the Agency may follow
a different course during my tenure as Director are likely to lead to
the public and market participants second-guessing every decision,
and will make any changes to Agency policy more difficult at both
the deliberation and implementation stages. Thus, the disclosure
of such documents and information would substantially impair my
ability to direct the operations of the conservatorships in the
manner I believe to be in the best interests of the conservatorships
and the Agency. Accordingly, disclosure of deliberations of my
immediate predecessor and during my tenure could have adverse
impact to the Enterprises and market consequences.

Watt Decl. ¶ 13. The Times seeks public access to the deposition testimony of Director Watt’s
predecessor, Mr. DeMarco, concerning, among other things, the future of the conservatorships
and the wind down of Fannie Mae and Freddie Mac. The conservatorships have not ended, nor
have Fannie Mae and Freddie Mac been wound down. These are exactly the type of ongoing
policy issues in which Director Watt’s approach could differ from Mr. DeMarco’s and the risk of
second-guessing by stakeholders impairing FHFA’s ability to direct the conservatorships (and
consequential harm to the markets) is very real. See also Howard Order at 6 (acknowledging
“the grave harm to the nation’s economy that would result from the disclosure of information
subject to the protective order, inadvertent or otherwise”). The potential harm to FHFA in its
ability to operate the conservatorships, and the grave market consequences should sensitive
information be made public vastly outweighs the concededly non-existent “right” to access
discovery material.