Fannie Mae-No Politics (FNMA)

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The unsealing of the documents casts a spotlight on a legal proceeding that has been shrouded in secrecy from the start. The court granted the government’s request for confidential treatment of thousands of pages of materials produced in the case; Justice Department lawyers have asserted presidential privilege in 45 documents.

Last year, The New York Times filed an amicus curiae brief asking that the judge unseal two of the depositions in the case. She released excerpts from one of those depositions on Monday.

Further testimony unsealed on Monday came from Mario Ugoletti, a former Treasury official who was a former special adviser to the director of the Federal Housing Finance Agency, the conservator overseeing Fannie and Freddie. In December 2013, Mr. Ugoletti signed an affidavit for the case stating unequivocally that neither the Treasury nor the Federal Housing Finance Agency envisioned that the companies’ deferred tax assets were about to be reversed in the months leading up to the profit sweep, generating huge profits. He also said that the move was not intended to “increase compensation to Treasury.”

But in the deposition in May, Mr. Ugoletti said he did not know whether the Treasury or the Federal Housing Finance Agency officials knew about the potential for the profits at Fannie and Freddie at the time of the sweep.

Mr. Ugoletti, who left government in the fall could not be reached for comment.

A document produced by Grant Thornton, the accounting firm hired by the government to do financial analysis on the companies, casts additional doubt on the government’s contention that it considered Fannie and Freddie to be in a dire financial condition in 2012, when it changed the terms of the bailout. The document, unsealed on Monday, shows Freddie’s financial results through the first quarter of 2012 alongside handwritten notes from an unknown Grant Thornton employee. That employee noted how Freddie’s profits would require that it reverse the accounting entry, known as releasing the valuation allowance.

The notes on the document state: “3 yrs. of cum. profits, you start to think about releasing the valuation allow. The valuation allow. When probably 2013, 2014.”

Since Fannie and Freddie returned to profitability in 2012, they have sent to the Treasury more than $50 billion over the amount they drew down in the bailout. Their profits continue to be funneled to the Treasury each quarter.

http://www.nytimes.com/2016/04/13/business/fannie-mae-suit-bailout.html?_r=0