Prepare to be outraged.
When government officials pitched the Fannie Mae and Freddie Mac “bailouts” to the American people, we were told the purpose of this “taxpayer investment” was to bring solvency to two institutions that were simply “too big to fail.”
Nobody ever said anything about forcing the taxpayers to pay the legal bills of the political Fannie and Freddie executives who were key to creating the housing crisis. But that’s exactly what’s happening.
The New York Times broke the story:
Since the government took over Fannie Mae and Freddie Mac, taxpayers have spent more than $160 million defending the mortgage finance companies and their former top executives in civil lawsuits accusing them of fraud. The cost was a closely guarded secret until last week, when the companies and their regulator produced an accounting at the request of Congress.
The bulk of those expenditures — $132 million — went to defend Fannie Mae and its officials in various securities suits and government investigations into accounting irregularities that occurred years before the subprime lending crisis erupted. The legal payments show no sign of abating.
One of the crooked executives specifically referenced by the Times is none other than Franklin Raines, Bill Clinton’s former budget director, who took a job as Chairman and Chief Executive Officer of Fannie Mae from 1999 to 2004. Raines allegedly cooked the books at Fannie, issued countless dubious mortgages, and then took a huge bonus before leaving the company. He is one of three executives who divvied up a tidy $24.2 million from the taxpayers to defend themselves in court.
Raines’ tenure at Fannie Mae was marked by massive corruption and mismanagement. And we’re supposed to bail him out, too? Once again the taxpayers are thrust into an Alice in Wonderland world where the government uses tax dollars to help politicians defend against government investigations.
Of course this corrupt deal-making was a “closely guarded secret!” Fannie, Freddie and their friends in government knew the public would never knowingly get behind a bailout that would benefit the executives who got us into this financial mess. (Most Americans oppose the bailouts on principle alone – never mind the flagrant corruption.)
Now do you see why Judicial Watch is fighting so hard to bring transparency to the bailout process in general, and to the Fannie and Freddie deal specifically? In fact, one of our key investigations focuses upon Fannie and Freddie’s political contributions. Let’s face it. You don’t broker a deal like this without greasing a few palms in Washington, DC. We want names and we want amounts.
But the Obama administration has made the shocking claim that these documents aren’t FOIA-able. In fact, Obama administration lawyers have argued that no Fannie or Freddie documents are subject to disclosure to the American people under law (the Freedom of Information Act). It makes one wonder what other bombshells are they hiding in their files? (We know, for instance, that President Obama himself was a top recipient of political contributions from these two agencies.)
Another of our lines of inquiry, pursued on behalf of former FDIC and Federal Reserve employee Vern McKinley, involves the decision to place Fannie and Freddie under conservatorship in the first place.
Ben S. Bernanke, Chairman of the Board of Governors of the Federal Reserve System, described “the catastrophe that would occur if we did not take these actions” in a meeting with the boards of Fannie Mae and Freddie Mac.
This catastrophic scenario has never been explained to the American people. But I doubt appropriate punishment for the executives who got us into this mess represents the type of “catastrophe” requiring our tax dollars.
Again, this recent news is all the more reason for transparency from the Obama administration. And so far we’ve received nothing but stonewalling from the Obama Federal Housing Finance Agency (FHFA), the government agency that now runs Fannie and Freddie. (Click here to read more about our historic open records lawsuit.)
When asked why on earth the FHFA agreed to continue paying the legal fees for Fannie and Freddie executives, Edward J. DeMarco, acting Director of the FHFA, simply said in a statement, “I have concluded that the advancement of such fees is in the best interest of the conservatorship.” He provided no further explanation.
As the Times points out, there is no end in sight for these taxpayer-funded legal payments. So the Obama administration wants more money from you but doesn’t want to answer any of your questions about how or why it is being spent. That’s why Judicial Watch continues to fight so hard in court to get to the truth behind these bailouts.