Fannie Mae Common Securitization Platform Fannie Mae Mortgage Insurance

Fannie Mae, Freddie Mac: Fairholme Vs United States

We have been posting some of the court documents in the Fannie Mae saga. Below is a new one we found in one of the cases between Fairholme and FHFA/Treasury.

Our motion for protective order and supporting declarations demonstrate that the discovery sought by plaintiffs would interfere with the functioning of the conservatorships of Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC), impair ongoing deliberations about the future of the Enterprises, and go far beyond the limited discovery contemplated by the Court’s February 26 order.

Fannie Mae, Freddie Mac: Fairholme Vs United States

Granting the relief that we request – a cutoff date of August 17, 2012 for one discovery category and reasonable limitations on the other two categories – will allow for the production of documents pertaining to the issues contemplated by the Court while addressing the very serious concerns implicated by plaintiffs’ requests.

With respect to plaintiffs’ discovery requests that probe into the Government’s internal views as to the future of the Enterprises (Requests 1 and 6-10), we seek a protective order that provides a cutoff date of August 17, 2012. Our motion explains that compelled disclosure of these documents with no cutoff date would adversely “affect the exercise of powers or functions” of the Federal Housing Finance Agency (FHFA) as conservator in direct contravention of 12 S.C. § 4617(f), and would threaten the integrity of the Government’s ongoing internal deliberations. See Decl. of Melvin Watt, ¶ 3 (Watt Decl.) (A1-7).

Plaintiffs’ response is to claim that whether disclosure would have a significant adverse effect on the conservator’s exercise of its powers and functions is irrelevant because plaintiffs seek only damages in this case. However, they offer no reason why the bar in 12 U.S.C. § 4617(f) applies only to suits seeking injunctions and not to suits seeking damages. The statute contains no such limitation and its purpose would be undermined if litigants could impair the operations of the conservatorships by filing a damages action and making discovery demands into processes at the core of the conservator’s responsibilities. Congress provided a comprehensive bar against such action because of the extreme circumstances contemplated by the imposition of the conservatorships. The FDIC cases on which plaintiffs rely do not involve conservatorships of open and operating financial institutions and therefore implicate none of the concerns raised by their own demands.

Plaintiffs offer no basis for their assertion that a court order compelling the discovery sought by plaintiffs would not “have extraordinarily deleterious consequences on the Conservator’s conduct of the ongoing and future operations of the conservatorships.” Watt Decl. ¶ 3 (A2). Their response disregards the nature of their requests, which target the ongoing assessments of the Enterprises’ future profitability and potential courses of action available to the conservator.

Plaintiffs do not seriously dispute that the requests also implicate the deliberative process, but ignore the extraordinary nature of their demands. Instead, they seek the production of documents relating to present and future assessments of the Enterprises’ profitability and the ongoing thinking as to the future of the Enterprises without citing any precedent for such demands.

Our motion further asks for a protective order that sets appropriate limits with respect to plaintiffs’ requests that exceed the scope of this Court’s February 26 order. In its order, the Court authorized discovery with respect to the solvency of Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) at the time of the 2008 conservatorship decision. The Government has agreed to produce nonprivileged financial projections of Fannie Mae and Freddie Mac in connection with the conservatorship decision (Request 1(a)), and documents related to the decision to leave the Enterprises’ capital structure in place during the conservatorships (Request 4). The remainder of Request 1 (Requests 1(b) through 1(k)), along with Requests 2, 3, and 5, go well beyond the discovery permitted by the Court by seeking over six years of comprehensive financial information with no limitations.

The Court also authorized discovery regarding whether “FHFA was an agent and arm of the Treasury” when it entered into the Third Amendment, such that FHFA may be treated as the United States for purposes of Tucker Act jurisdiction. Requests 11, 14, and 16, in part, bear on this question, and the Government has agreed to produce responsive, non-privileged documents. However, by their plain terms, the requests plaintiffs group under the subtitle “Requests Relating To Whether FHFA Is The United States” (Requests 11-19) far exceed the scope of the issue as described by plaintiffs in their motion and by the Court in its order.

See full Fannie Mae, Freddie Mac’s Reply In Support Of Motion For Protective Order in PDF format here.

Comments (3)

  • Anthony Ellis

    The fact that the government has been paid back the funds used by Fannie and Freddie for carrying out the governments mandates of their operations. The companies should be released from conservator-ship and allowed to serve, maybe this time the government can order some reasonable mandates for the companies to follow so we don’t wind-up like the year 2008.

    June 23, 2014 at 8:53 pm
    • Blue Hoss

      To the
      entire Black race living in America, we, the Adamic, pink complexioned race
      (better known to you as the White race) that came to these shores from Europe,
      England, Scotland, Ireland, and Iceland, apologize for freeing you from slavery
      by fighting a horrible war among ourselves that cost the lives of almost two
      million of our own race. We apologize for continuing to fight among ourselves
      over that very issue, even though you’ve never told us you appreciate our freeing
      you.

      We
      apologize for splitting to pieces our entire race the world over to take sides
      with you to help you survive and become a freer race. We apologize for forcing
      the rest of the world to outlaw the slavery which your ancestors had practiced
      for thousands of years, even though many nations on your home continent still
      practice it today.

      We
      apologize for thinking we could civilize you when you have proven that it is
      indeed an impossible feat, a feat beyond anything we could have ever imagined.

      We apologize
      for introducing Christianity to you and dragging you away from the Voodoo you
      previously followed, although you have managed to sneak that religion back into
      cultic Christianity and our people have accepted it, which is witnessed by
      their animalistic whooping and hollering and stomping and screaming instead of
      respectfully worshiping our God as they ought to.

      We
      apologize for teaching you to add and subtract (what little you can), thereby
      enabling you to run a household and pay your bills (what few you will) and
      count your children other than on your fingers and sometimes toes when you have
      so many you run out of fingers.

      We
      apologize for providing you with medical care instead of leaving you under the
      witch doctors you used before we arrived, as a result of which you have been
      able to survive all sorts of diseases to multiply in massive numbers beyond
      what you could have without these aides.

      We
      apologize for building schools for you which we have had to repair over and
      over after you vandalized them beyond use. We apologize for inventing computers
      and the Internet, neither of which you use very much, but when you do use them
      it’s mostly to bash our race.

      We
      apologize for building factories and businesses that employ you, if you so
      desire to work. We apologize for creating millions of bureaucratic jobs within
      our government system simply to give you employment, instead of leaving you to
      find work on your own.

      We
      apologize for promoting and buying your music, although you refuse to buy ours.
      We apologize for talking and acting as you do, although you refuse to talk and
      act as we do.

      We apologize for placing you in our movies and TV shows and
      elevating you to a fictional, heroic level that you have never reached in real
      life. We apologize for creating this false image of yourselves in your minds,
      for we realize after 400 years of trying to help you that you cannot solve
      problems and provide leadership and create original thoughts; and the image
      we’ve placed in your minds causes you to live in a delusional world. For that
      we truly apologize.

      June 25, 2014 at 2:34 pm
  • Daniel Hutcheson

    The Government needs to Man-Up and do the right thing. The tax paying citizens of this country should never be forced to sue the Government just to get them to obey the Constitution.

    June 24, 2014 at 5:02 pm

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