DoJ to Sen. Grassley, F--- You Chuck!
In the last two jobs I held before joining Fannie Mae I was a congressional liaison officer for two different federal financial regulatory agencies. I headed the office at one; at the Fed, I worked under someone else.
I feel very comfortable in assessing the role of creating and maintaining good contact/relations with All Senators and MoC’s from both political parties.
The particular communication the Department of Justice sent last Friday to Senator Grassley, responding to his inquiries about transparency and openness in the “third amendment” legal proceedings and excessive protection under executive privilege,
(Link to DoJ letter from the Grassley website.)
IMO, in essence, Justice—in tone and attitude--just told Judiciary Chairman Grassley to do something with his issues that is anatomically impossible.
As with Treasury, a DoJ assistant signed the response to a communication sent to the Attorney General (now succeeded). To me, those underlings’ signatures alone screams dismissive. It says your inquiry is not important enough for the AG/Secretary to respond.
I guess the Department ran out of ink for the agency “middle finger” stamp.
Significantly, these two” screw you” (Maloni’s interpretation) paragraphs from the Justice letter to Senator Grassley--in which DoJ admits to being just a little bit pregnant—says it all for me. The agency just played word games answering the Grassley’s missive.
“In the course of this jurisdictional discovery, we have produced over 500,000 pages of documents to the Fairholme plaintiffs. In accordance with the court's rules, we are compiling logs of all responsive documents that are protected from disclosure on privilege grounds and providing provisional versions of the logs to plaintiffs on a rolling basis. The provisional logs provided to date include a small number of documents that may fall within the scope of the presidential communications privilege. Unless and until the plaintiffs move to compel the production of particular documents listed on the Jog, there is no need for the government to actually assert privilege over any of the documents by filing a declaration by the appropriate government official. In such a motion, plaintiffs would be required to explain why they believe they have sufficient need for the documents to overcome the applicable privileges. At this time, our production of documents is not complete, our privilege logs are not final, and the plaintiffs have not moved to compel. Accordingly, there has not yet been an assertion of the presidential communication s privilege in this case.”
“Our efforts in jurisdictional discovery do not reflect any attempt to withhold the rationales and other bases for the government’s decisions regarding the Third Amendment. We note that Treasury's and FHFA’s decision making processes concerning the Third Amendment have long been on the public record. In the district court litigation, Treasury filed an administrative record containing the documents that informed its decision. FHFA filed a similar document compilation containing the documents that informed its decision. Further, Treasury and FHFA have made public statements explaining their respective rationales for entering into the Third Amendment.”
Somewhere, lawyers being paid $500-$1000 an hour, are reading the Treasury response, looking at the “compel the release of particular documents”… scratching their heads, and asking one another, “Isn’t this what Judge Sweeney ordered Treasury and DoJ to do in her discovery motion?”
One wag wrote me, “I wonder if anyone on Grassley's staff is paying attention to how the court cases are going. The same DOJ that is telling Grassley it's ‘up to the Fannie/Freddie shareholders to compel’ production of the withheld documents also claims that HERA and the conservatorship strip these shareholders of all their legal rights.”
The longer this exercise goes, the more plaintiff’s lawyers get paid, but at some point, those attorneys must feel like they’re engaged a courtroom version of the US Marines repeatedly blasting the deeply entrenched enemy from their caves on Iwo Jima only to face more hostilities each day.
Why do DoJ/Treasury continue to play rope-a dope with plaintiffs, the courts, and the Hill, unless it’s to run out the clock on the Obama Administration, kicking this can down the road to the next President?
My forecast is Grassley isn’t going to be very happy and will strike hard at somebody downtown (remember, he voted against the new AG, Loretta Lynch).
I think we will see more high profile media coverage and new speculation about these official statements compared with action discrepancies and, inevitably, more “leaked documents.”
Indeed, an angry former audit expert--at one of the GSEs--well-armed with information, has contacted various media actively working on GSE issues.
Reporters: If you believe that describes you and you haven’t heard from this person, then I guess—in his/her mind—it doesn’t describe you.
Media people (or plaintiffs’ lawyers?) wanting to hear from this source, cue up on my “blog comment section” and I’ll pass your names to the individual. (Seriously.)
Judge Margaret Sweeney duly warned the world not to interfere with her judicial process, yet jurists and their clerks read the papers and follow the news.
Sweeney and Lamberth—and those hearing the possible Lamberth appeal—might find insulting the Obama Admin’s latest continuance of bureaucratic guerilla warfare.
Carney to the Rescue?
The occasionally maligned Wall Street Journal’s John Carney found a whole bunch of new GSE friends (fickle SOB’s that they are) last week, when he “tweeted’—and quoted verbatim minutes--from an early 2011 Financial Accounting Standards Advisory Board (FASAB) meeting which looked at the innards of the F&F conservatorship conditions and made some bold comments, which six years later can/will be used as evidence against the government or denied or discounted by the meeting participants, if they so choose.
Carney likely is working on a follow up news article to his very helpful find.
But, once again, how the FASAB meeting suggestions about driving down the value of common stock and the Treasury’s later timing and rewriting of the PSPAs could create pain for the defendants.
In the courts, this legal matter will pivot on whether some federal judges believe that Treasury and FHFA executives lied, manipulated HERA, bent or broke parts of the law, and then prevaricated like Hell, to protect the political reputations of Democrat officials still present or long gone with delaying series of CYA actions.
Back to Congress…………….
The GSE community is worked up over actions which might be contemplated by SBC Chairman Dick Shelby (R-Ala.) when he marks up a regulatory relief bill. Rumors of anti-GSE provisions circulated around DC.
Point; there always is a reason to be concerned, since it’s never good for anyone, let alone Fannie and Freddie, to get in the SBC Chairman (any Committee Chairman’s) cross hairs, period.
Too much clout and influence there. With fellow Republican Bob Corker (R-Tenn.) a SBC member—basking in new chamber glory—and goading him, Shelby could allow one or more F&F provisions into his package.
His action will be described as, “Senate tries to fix the GSEs.” (Of what??)
In my view, the best defense against any “camel’s nose under the tent” anti-GSE amendment--since I believe Shelby’s early statement that he’s not going to try for major GSE reform this year. But that leaves a lot of “minor turf” exposed--is for Senate opponents to look beyond the immediate amendment to the bigger picture.
Senators need to ask amendment sponsors, “What’s really next on your GSE list? What replaces F&F? What is your new mortgage system scheme and when will it be ready? Who runs it and who does it favor? Will it guarantee fixed rate financing?”
Force them to answer those macro questions, begged by the amendments, and put the spotlight not just on today but tomorrow, since their amendment (s) all lead to something GSE negative.
When/if they respond, their likely nonspecific–and systemically unworkable-- answers will force reassessment in the face of opposition. But it is important for opponents to challenge and deal with the implications of their actions not the likely descriptor headlines which never will tilt the GSEs way.
Right now, there only is speculation of what might go into the Shelby proposal. But everyone needs to watch the process and quickly raise attention to new developments via the usual grapevines and urge Senators to demand answers to the questions raised above.
I would not bother Senator Elizabeth Warren (D-Mass.)—who seems to be listening to her own drummer--but I would certainly bring concerns to Senators Chuck Schumer (D-NY.) and Sherrod Brown (D-Ohio).
Corker Uses FHFA “comp” Study to…… Praise Himself and draws blogger challenge
Senator Bob Corker (R-Tenn.) took his regular GSE shot last week, when FHFA Director Mel Watt said his agency was going to examine GSE executive salaries, to determine if they were attractive enough for F&F to draw and keep mainline financial services talent. (Yup, you’re right Bob, just get some of those GS-9’s to manage a couple of $Trillion in non-government guaranteed assets; Hell’s the problem with that? Old Herman at my neighborhood bank could probably do it, want me to call Herm??)
Insisting the compensation announcement—which Corker opposed, instinctively, as well as the previous week’s FHFA stress test report--were affirmations of his own insight, Senator Bob declared he had been correct to try and do away with the GSEs and last year.
Unfortunately, the Senator—who, to his credit, later in the week pulled off a bi-partisan legislative coup when the Senate overwhelmingly approved limited congressional approval of any Obama Iran deal—chose to use the hackneyed conservative cheer phrase F&F “private gains and public losses” canard.
Cite one example—before the 2008 takeover--when Fannie or Freddie lost money and didn’t pay it out of their own revenues?
Senator Corker, I think you’re just spewing political bullshit and I am calling you and your team on it.
You and Mark Warner (D-Va.), as well as others, has said it so often, your substantiation must be somewhere handy, right??
Don’t just shout out buzzwords, Senator C., operationalize your allegations explain them to the American people, and don’t throw empty headlines.
Just how was this “heads we win, tails you lose” scheme daily communicated and systemically integrated with 5500 employees in Fannie’s five regional business offices—each location responsible for working with hundreds of different lenders in the geographies they served and multiple other consumer and housing service groups—and the Washington corporate headquarters, where the heavy duty corporate debt activity was managed?
Please show me (us) your proof? Name names, provide dates when this regular “Fannie bet the ranch” mortgage perfidy occurred? Was it constant or episodic, offer examples; was it project specific or corporate culture wide, or are you going to continue slinging around your generalities or project how fecklessly you might have done it, if you were a Fannie executive before conservatorship?
You and the others should think carefully about when the Treasury moved in seven years ago and put F&F into conservatorship, possibly prematurely in Fannie’s case, whose money was lost when those stocks plummeted? It wasn’t Uncle Sam’s.
Shareholders lost tens of billions of dollars.
Most whose stock savings were swept away were not institutional investors, but pension funds, families, and individual shareholders.
Your rhetoric ignores all of their losses, because their pain undercuts your “strike fast, don’t explain” intent.
Until you can prove this major double dealing and flim-flam you assert, stick with that Iran thing, Senator. Your chances of success are better.
(BTW, share this with your Administration buddies, who use the same “public loss, private gain” drek in their GSE talking points, too.)
What Others Are Saying
Wells-Fargo’s lobbying agenda, from the Charlotte-Observer.
Jon Stewart rants about the NFL’s Wells report and Tom Brady (thanks You Tube and CBS News).
Joe Murin, former head of Ginnie Mae, writing in the America Banker.
“Why we need to keep the government in housing”
Cynical observation from a longtime housing lobbyist.
“The greatest irony of the Obama Administration will be how it helped the Mitt Romney constituencies gain greater wealth (bonds, stocks) while preventing its own constituencies from doing the same (home equity).”
GSE earnings back but revenue issues remain.
Fannie and Freddie report profits, down from last year, but still ticking.
First quarter mortgage volume grows, F&F income should as well, although declining portfolio revenue hurts growth.
Freddie earnings report
Fannie earnings report.
Did NYT’s Morgenson catch BoA in a “no-no?”
(Happy 7th birthday Daryn Kelly Maloni; Grammy and Grandpa love you and congrats on scoring the go ahead goal in soccer this past weekend.)