Docs suggest Obama admin looted Fannie and Freddie for billions

Docs suggest Obama admin looted Fannie and Freddie for billions

[Ed. – The enabling mechanism was keeping the two under special conservatorship, even after they had become healthy again following the 2008 meltdown, and steering their profits to the Treasury instead of into investor dividends — the latter required by law.  Brian McNicoll is rightly concerned about shareholder rights and the rule of law.  But we also have to ask: what happened to the money after it got to Treasury?  Is there even accountability on that?]

In response to the mortgage crisis of 2008, Congress passed the Housing and Economic Recovery Act, which provided $187.5 billion in government loans for Fannie and Freddie and placed them in conservatorship under the newly established Federal Housing Finance Agency.

But Fannie and Freddie were not in such bad shape after all, and in just a few years, they were turning profits and on course to pay back the government with interest and still have money to pay dividends to their investors.

In 2012, the Obama administration came up with a plan to divert those profits to the Treasury that became known as the Net Worth Sweep. Officials said the profits had to be diverted back into the Treasury because Fannie and Freddie were in a “death spiral” and would have to return for loans, and this money would be used for those loans. In other words, Treasury would take all the profits from Fannie and Freddie and hold them for future loans when they again found themselves in trouble.

But — the administration knew Fannie and Freddie were healthy for the long term, were unlikely to need any more loans and, in fact, had enough money to pay dividends.

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