WASHINGTON, D.C. – The U.S. Treasury disappointed investors who filed litigation to stop the “Net Worth Sweep,” an Obama administration policy begun in August 2012 under which the U.S. Treasury has confiscated all Fannie Mae and Freddie Mac earnings, amounting to some $260 billion, in a process that has removed from the two Government Sponsored Entities (GSEs) revenue that otherwise could have been used to recapitalize, while depriving investors from receiving dividends.
An email obtained under a FOIA request provided to Infowars.com by a whistleblower in the continuing controversy over the future of Fannie Mae and Freddie Mac that makes clear a respected attorney in New York who had participated actively in the “Too Big to Fail” bank bailouts in 2008/2009, advised Congress as early as 2013 that continuing the Net Worth Sweep was “bad public policy.”
“The ‘dividend sweep’ amendments have been challenged in court as either an unconstitutional taking of the property rights of the junior preferred and common stock holders or a breach of FHFA’s fiduciary duties to such stock holders as conservator of Fannie and Freddie,” noted Randall D. Guynn, an attorney widely recognized as one of the nation’s leading bank regulatory authorities, in an email dated Nov. 16, 2013.
Guynn made clear he was authoring the email from the position as Head of the Financial Institutions Group at Davis Polk & Wardwell LLP, in New York City, to advise Congress that the “Net Worth Sweep” of Fannie Mae and Freddie Mac earnings, initiated by the Obama administration in August 2012, should be stopped.
“While I have taken no side on these arguments, I believe the ‘dividend sweep’ amendments will undermine the confidence of investors in the rule of law (not only those in Fannie and Freddie, but also in the U.S. financial system more generally) and potentially have an adverse effect on financial stability in the United States, and are therefore bad public policy,” Guynn stressed.
Through phone calls to parties referenced in the email, Infowars.com has confirmed that Guynn’s email dated Nov. 16, 2013 is authentic.
Guynn addressed the memo to Michael Bright, who today is the director at the Milken Institute’s Center for Financial Markets, where he heads the housing program, and was in 2013 a staff assistant, responsible for advising Tennessee Republican Sen. Bob Corker on banking policy, including Dodd-Frank Act implementation.
Bright, after receiving Guynn’s email, sent an email dated Nov. 19, 2013, to Peter Brereton, Associate Director for Congressional Affairs at the Federal Housing Finance Administration (FHFA), and to Jeannie Schroeder, Congressional Affairs Office at FHFA.
In that email, Bright instructed Brereton and Schroeder to ignore Guynn’s advice regarding the “‘half-baked’ wind-down” provisions of S.1217 introduced by Sen. Corker that would have continued the NWS despite provisions under Section 11 of the Federal Deposit Insurance Act that suggest Fannie and Freddie should be allowed to keep their earnings as provided by the terms of the original “conservatorship” under which the Treasury had invested billion into Fannie and Freddie in return for preferred stock.
In 2014, Sen. Corker joined with Virginia Democratic Sen. Mark Warner to propose a Housing Finance Reform and Taxpayer Protection Act (S.1217) that would have closed Fannie and Freddie, replacing them with a privately capitalized system that would have empowered Wall Street and big banks to take over the mortgage finance in the United States.
“We are only interested in his edits [Guynn’s edits] to make sure the transition is done on sound legal footing,” Bright instructed, affirming Sen. Corker’s only interests were to see Fannie and Freddie closed expeditiously, with mortgage finance turned over to Wall Street and big banks, as specified by the provisions of S.1217.
Infowars.com has reported NWS revenues swept into the Treasury’s general fund were diverted to keep Obamacare from failing by providing the financial resources needed to pay the Obamacare low-income insurance subsidies that Congress had refused to allocate funds to pay.
Infowars.com has also warned that the plan to replace Fannie and Freddie, secretly endorsed by President Obama as revealed by leaked Obama administration Treasury Department documents, is a plan to replace home ownership as a key component of the American Dream, with a European model in which the standard transforms to replace middle class homeowners with “well-housed” middle-class renters.
On March 29, 2017, Corker joined Warner and a small bi-partisan group of U.S. Senators in authoring a letter addressed to Mel Watt, the Director of the Federal Housing Finance Agency, arguing that ending the NSW on March 31, 2017, would be detrimental to U.S. housing policy.
The letter insisted that allowing Freddie and Fannie to retain earnings to recapitalize would be counter to legislation Corker and Warner have advanced to close the GSEs, as part of a plan to “overhaul” the U.S. housing-finance system by turning over mortgage finance responsibilities to Wall Street and big banks.