The head of the Senate Judiciary Committee wants to know why the government is so adamant about keeping 150,000 pages of evidence related to the controversial 2012 “third amendment sweep” confidential – and regardless of whether you support GSE recapitalization or the status quo – it’s a question that needs answering.
If it’s a good, legal, moral and fiscally sound idea for the government to lay claim to all of Fannie Mae and Freddie Mac’s profits at the expense of shareholders, then the reasoning and framework that went into it should be public.
That’s simply not a negotiable point, no matter where you land on this.
The only good reason to cover all this up is… well, to cover it up.
Claiming presidential and executive privilege just doesn’t cut it. What is this, a Russian kleptocracy?
First a little background: GSE shareholders have been demanding to know why the government in 2012 arbitrarily decided to divert all of the GSE profits to the Treasury, rather than fulfilling their obligation to repay taxpayers, as required by the original bailout agreement that put them in conservatorship. The Third Amendment changed the 10% cash dividend paid to Treasury to a system where the GSEs pay all of their quarterly profits to Treasury.
The third amendment sweep has been shrouded in government-mandated secrecy from the outset.
The government sued to block the plaintiffs like Fairholme Funds from viewing some 800,000 pages of documents. Only the attorneys can view the documents. Last fall even managed to block plaintiffs from bringing in J. Tim Howard, the former Fannie CFO, from serving as an advisor to the plaintiffs’ attorneys.
In short, the government wants to keep everything related to their decision to sweep GSE profits tighter than Dick’s hatband.
There’s simply no excuse for this. Not even for this notoriously secretive White House. (This isn’t some sort of partisan, anti-Obama spin on my part. An analysis by the Associated Press published just last month found that, “The Obama administration set a record again for censoring government files or outright denying access to them last year under the U.S. Freedom of Information Act.”)
Maybe there will be some high-level pressure to break the stalemate. Back to what started this, Senate Judiciary Committee Chair Charles Grassley of Iowa sent a letter Tuesday to the Department of Justice and to the Treasury demanding details about the decision and an explanation for all the secrecy.
“The taxpayer has a right to know what has transpired. But, instead of transparency, there appears to be an invocation of executive privilege. If true, this is cause for concern,” Grassley’s letter to Attorney General Eric Holder and Treasury Secretary Jack Lew says.
Here are the questions that Grassley wants answered – and frankly, anyone who believes in honest and open government should demand be answered. Because this is important for GSE shareholders, but it’s downright critical if you believe in transparency in government and in limiting government abuse.
Has the President personally invoked executive privilege over documents related to the Fannie Mae, Freddie Mac and Treasury Third Amendment agreement? If so, when? If not, why are DOJ attorneys citing that privilege as a reason to withhold those documents?
Does the Third Amendment cause a breach of any of FHFA’s statutory duties to ensure that each regulated entity operates in a safe and sound manner? Please explain.
During the negotiation of the Third Amendment between Treasury and FHFA, did DOJ communicate with any of the entities involved regarding its legality? If so, please describe those communications in detail.
Under what legal authority was the Third Amendment authorized?
Prior to litigation, did DOJ discuss with Treasury and/or FHFA the need to assert privileges, including executive privilege, over certain documents?
Grassley now joins a coalition of 17 conservative and free-market public policy groups who have demanded these records be opened.
Last fall the informal alliance sent a letter to the ranking members of the House Finance Services Oversight and Investigative Subcommittee urging them to demand more transparency and accountability.
This shouldn’t be an issue just for partisans on the side of Fannie and Freddie shareholders.
This is an issue that transcends GSE reform. This is about holding government accountable for its actions, and putting a full stop to the incremental but inexorably increasing veil of secrecy descending on government activities at all levels.