Bruce berkowitz Responds To The TreasuryVW Staff
The Government’s factual claims that the future profitability of the Companies is “speculative and conjectural,” and that it “is unknown” when or how the Companies will emerge from conservatorships, directly contradict the allegations of Plaintiffs’ complaint.
Plaintiffs have alleged that Fannie and Freddie are expected to enjoy strong profitability for years to come, and that the Government knows as much. Compl. ¶ 12 (“[I]f the Net Worth Sweep is allowed to stand, it is anticipated that the Companies will be required to make similarly large dividend payments in subsequent quarters”); id. ¶ 60 (quoting the Acting Director of FHFA as stating in May 2013 that the Companies “[a]re each beginning to show regular, strong profitability”); id. ¶¶ 74-75.
Plaintiffs have also alleged that the Government will wind down the Companies before it allows them to exit the conservatorship. Id. ¶ 64 (quoting a Treasury statement that the Government will “expedite the wind down of Fannie Mae and Freddie Mac” and “make sure that every dollar of earnings each firm generates is used to benefit taxpayers”).
Indeed, the Government’s factual claims flatly contradict not only the allegations in Plaintiffs’ complaint, but also the Government’s own prior public statements. Although the Government now represents to the Court that the future profitability of the Companies is “purely speculative and unknown,” it neglects to point out that, as alleged in the Complaint, earlier this year it represented the exact opposite state of affairs to the Securities and Exchange Commission and to the public.
For example, in March 2013, Fannie, under FHFA’s control as conservator, announced in a 10-Q form that “we expect our annual earnings to remain strong over the next few years” and that “[w]e expect to remain profitable for the foreseeable future.” Compl. ¶ 57 (emphasis added) (quoting Fannie Mae, First Quarter Report (Form 10-Q) at 1, 2 (March 31, 2013)).
And in May 2013, the acting director of FHFA told the public that “it is clear [Fannie and Freddie] are each beginning to show regular, strong profitability.” Id. ¶ 60 (emphasis added) (quoting Edward J. DeMarco, Acting Director, FHFA, Remarks as Prepared for Delivery at Federal Reserve Bank of Chicago’s 49th Annual Conference on Bank Structure & Competition 2 (May 9, 2013))