Judicial Watch Sues Federal Housing Finance Agency for Fannie/Freddie Documents on Housing Meltdown
MARCH 07, 2012
Obama Administration Stonewalls Request for Records Regarding FHFA Lawsuit Accusing 17 Financial Institutions of Duping Fannie Mae and Freddie Mac
(Washington, DC) – Judicial Watch, the public interest group that investigates and prosecutes government corruption, announced today that it filed a lawsuit in the United States District Court for the District of Columbia on March 5, 2012, against the Federal Housing Finance Agency (FHFA) for documents related to a lawsuit filed by the agency on behalf of Fannie Mae and Freddie Mac (Judicial Watch v. FHFA (No. 1:12-cv-00346)).
The FHFA, which oversees the two agencies, has sued 17 financial institutions alleging violations of federal securities laws in the sale of mortgage loans to Fannie and Freddie.
Specifically, Judicial Watch seeks the following records in its September 20, 2011, Freedom of Information Act (FOIA) request:
Records of, indicating, and/or demonstrating the losses that Fannie Mae and Freddie Mac incurred on private-label mortgage-backed securities (PLS) purchased from 17 financial institutions. The specific financial institutions from which the securities were purchased are identified in the enclosed FHFA press release announcing its lawsuit, as conservator for Fannie Mae and Freddie Mac, seeking damages and civil penalties under the Securities of 1933.
FHFA denied Judicial Watch’s request on October 25, 2011. Judicial Watch filed an appeal on November 1, 2011. The FHFA was required by law to respond to Judicial Watch’s appeal by December 19, 2011. The agency has failed to notify Judicial Watch as to the determination of its appeal. At the date of Judicial Watch’s lawsuit, the FHFA has not produced documents.
On September 2, 2011, the FHFA announced that it had filed a lawsuit against 17 financial institutions, including Bank of America, Countrywide, Citigroup, Morgan Stanley and JP Morgan Chase, among others. With its lawsuit, the FHFA alleges “some portion of the losses that Fannie Mae and Freddie Mac incurred on private-label mortgage-backed securities are attributable to misrepresentations and other improper actions by the firms and individuals named in these filings.” (Private-label mortgage-backed securities were allegedly sold and marketed to Fannie Mae and Freddie Mac.)
FHFA contends these institutions misrepresented the level of risk associated with these financial instruments when selling them to Fannie and Freddie. According to The New York Times, “…financial service industry executives argue that the losses on the mortgage-backed securities were caused by a broader downturn in the economy and the housing market, not by how the mortgages were originated or packaged into securities. In addition, they contend that investors like…Fannie and Freddie were sophisticated and knew the securities were not without risk.”
The Obama administration’s legal position is that the Freedom of Information Act does not apply to Fannie Mae and Freddie Mac documents.
“This is a cover-up about how and why over $150 billion in tax dollars has been spent. The Obama administration says not one document from Fannie and Freddie, through which the federal government runs the nation’s mortgage markets, is subject to disclosure under FOIA to the American people,” stated Judicial Watch president Tom Fitton. “And now that it has a shakedown disguised as a lawsuit against much of the private banking industry, the Obama administration is doubling down on its obsessive secrecy. We hope, through our new lawsuit, the federal courts vindicate the public’s right to know.”