The federal judge overseeing the Fairholme Funds case ruled
last week that the U.S. Treasury must release all documents it has concerning
the conservatorship of Fannie Mae and Freddie Mac.
The ruling from Judge Margaret Sweeney, according to ValueWalk, grants a motion filed by Fairholme’s attorneys
to force the government to stop withholding documents it claims are protected
under privilege or because the contents could impact the markets. Fairholme’s
attorneys have argued that the government deliberately is stonewalling, making
it more difficult to get a true understanding of the events and decisions
leading up to decision to take Fannie and Freddie into conservatorship.
Rafferty Capital Markets analyst Richard Bove sees this as a
“win” for Fairholme with respect to clients.
“It has always been my belief that this mediation will
result in a settlement giving shareholders their ownership rights back,” Bove was
quoted as saying. “The case is now alive again in three courts where any one of
those three could find in Fairholme’s favor. The next step is for one of these
three courts to unseal the documents so that the public can see what has
happened in the historical discussions between the White House, the Treasury
Department, and the Federal Housing Finance Agency concerning Fannie Mae’s
status.”
The ruling means Fairholme’s attorneys can bring all of the
protected information currently under seal – more than 10,000 pages worth of
depositions, documents and other items that fall under the discovery terms –
into the D.C. Circuit without having to keep going back to the judge for
decisions on individual components. The “protected information” removed from
depositions include those from Edward DeMarco, head of the Federal Housing
Finance Agency when the conservatorship move took effect, and Mario Ugoletti, a
Treasury official who oversaw the agency’s policy toward the GSEs at the time
of the conservatorship and who moved over to FHFA as a special advisor to
DeMarco.
Ugoletti has said that he played a key role in creating the
Preferred Stock Purchase Agreements, which were later amended. Ugoletti’s moves
and statements, Fairholme’s attorneys have said, raise questions as to whether
he was acting independently at FHFA, as required of a conservator, or serving
as an unofficial agent on behalf of the Treasury.