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InvestmentsMortgage

Feds appeal decision to release #FannieGate memos

Claim that court made severe, irreversible error

The government invoked an emergency procedure on Wednesday to appeal a judge’s order to release 56 documents concerning the nationalization of Fannie Mae and Freddie Mac, according to an article by Roger Parloff for Fortune.

According to the U.S. Justice Department, which is appealing the order, Federal Claims judge Margaret Sweeney’s judgement, which rejected the government’s claims of executive privilege, was “cursory” and “uncritical, rote analysis,” and rested on a “misunderstanding of the principles that govern the privileges,” according to the article.

Sweeney made the decision in July of last year to order the release of the documents. If that happens, the public may finally know if the Treasury took over Fannie and Freddie despite the secondary mortgage market firms being adequately capitalized. Investors have long argued this point.

Here are more details from from the Forbes article:

Because Judge Sweeney’s order is not subject to ordinary appeal, the government is taking the issue to the appellate court—the U.S. Court of Appeals for the Federal Circuit—by means of a procedural mechanism known as “mandamus.” Mandamus is considered an extraordinary remedy reserved for instances in which a judge has committed clear error or an abuse of discretion that will have severe, irreversible consequences. The device has sometimes been used successfully in the past to challenge orders rejecting privilege claims.

Of course, Fairholme Funds, a group of mutual funds that was founded by activist investor Bruce Berkowitz and has led the charge to wrest the documents into the open, agreed with the courts original ruling, saying it will “strenuously oppose the government’s petition for mandamus.”

Fairholme, represented by law firm Cooper & Kirk, claims that their ownership stake was illegally taken from them by the government during conservatorship.

Again, from Forbes:

By merely bringing the mandamus petition, however, the government has already made it more challenging for Fairholme’s attorneys to achieve one of their objectives. Ideally, they would like to get their hands on the documents in time to show them to a different federal appeals court—the U.S. Court of Appeals for the D.C. Circuit—before the latter issues a ruling in a related set of cases challenging the same 2012 event.

Click the link below to read much more.

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