Plaintiffs expect that these and other documents listed in Exhibit 1 would corroborate Ms. McFarland’s testimony that
45:11–13 (A057) (McFarland:
13
See Ex. 9 at
Case 1:13-cv-00465-MMS Document 272 Filed 12/07/15 Page 21 of 46
. If this is true, it would demonstrate that the reason why the Government effectively nationalized Fannie and Freddie was not, as the Government has claimed in its briefing, to prevent a “death spiral” in which the enterprises would “fai[l] to generate enough revenue to fund the 10-percent dividend obligation” and be required to “dra[w] on the Treasury commitment to pay Treasury its fixed dividend, which, in turn, [would] increase[] Treasury’s total investment and the next quarterly dividend.” Def.’s Mot. to Dismiss at 9–10 (Dec. 9, 2013), Doc. 20 (“Def.’s MTD”). Rather, these documents would demonstrate that the Government’s decision was driven by the fact that Fannie and Freddie were poised to generate tens of billions of dollars in profit over and above their existing dividend obligations—money that could go toward rebuilding Fannie’s and Freddie’s capital reserves for potential exit from conservatorship and that could benefit shareholders other than Treasury. Defendant, however, was determined to keep Fannie and Freddie under government control and to ensure that shareholders other than Treasury would be wiped out. See
Thus, we believe that the withheld documents will likely show that the purpose of the Net Worth Sweep was to expropriate for the government every last dollar of the substantial profits and massive deferred tax asset valuation allowance releases that were anticipated in the near future, to prevent Fannie and Freddie from rebuilding capital and exiting conservatorship, and to ensure that Fannie’s and
Freddie’s private shareholders received no value whatsoever for their investment.
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