Freddie Mac and Fannie Mae were two of the biggest culprits participating in the housing bubble that launched our nation into a massive economic downturn, the likes of which we haven’t fully recovered from.
Much of what went down in 2008 was the result of bleeding heart liberal policies working to artificially lower the interest rate and make it easier for folks to get loans to buy homes with.
Many ended up getting loans they couldn’t afford due to the low criteria, and when time came to pay back what they borrowed, many defaulted, causing the bubble to burst.
It seems the government is doing all they can to protect Fannie and Freddie, making it difficult to hold them accountable for their part in the mess.
According to Reuters:A federal appeals court on Monday narrowed the range of documents that the U.S. government must turn over to investors suing over its August 2012 decision to seize the profits of mortgage giants Fannie Mae (FNMA.PK) and Freddie Mac (FMCC.PK). The Federal Circuit Court of Appeals said four documents could be withheld from Fairholme Funds and other investors on the basis of presidential privilege, and four other documents were protected by privilege of the deliberative process. It said eight other disputed documents were not privileged.
Monday’s decision is a mixed ruling for investors suing the government over its sweeping of the mortgage companies’ profit to the U.S. Treasury Department, which they called an unconstitutional taking of private property.
The government seized Fannie Mae and Freddie Mac in September 2008 as mortgage losses mounted, and put them into a conservatorship under the Federal Housing Finance Agency.
Both have since become profitable, and according to court papers have returned roughly $68 billion more to the government than they drew down during the financial crisis.
Fairholme, overseen by Bruce Berkowitz, said such profit belonged to stockholders such as itself. Its 2013 lawsuit focused on the companies’ preferred stock, which threw off 10 percent dividends before being eliminated.
In October, Judge Margaret Sweeney of the Court of Federal Claims ordered the government to turn over 56 documents sampled from roughly 12,000 it had withheld on privilege grounds.
The Obama Administration’s appeal focused on 16 of these documents. It said Sweeney’s ruling “casts a cloud” over whether all 12,000 documents were properly withheld, and in practice could chill White House deliberations on sensitive subjects.
Whenever the government is involved, you can be sure it’s not going to end well.
Their involvement in the housing bubble caused headaches for Americans across the country, and, unfortunately, many still haven’t fully recovered all they lost.
You’d think the government would learn its lesson about meddling in these sorts of affairs, but alas, they are repeating the same mistakes with student loans, creating the education bubble that, sooner or later, will burst with equally disastrous consequences.
Let’s hope the Trump administration is able to find some way to reverse course before that happens.
[Note: This article was written by Michael Cantrell]