By Chris Butler | Tennessee Watchdog
NASHVILLE — Fannie Mae and Freddie Mac have essentially paid back the $187 billion U.S. taxpayers loaned them after the economy tanked in 2008, but the feds are still seizing all of their profits.
The U.S. Treasury Department is doing this under something known as a “Third Amendment Sweep.”
But these profits, said Tim Pagliara, chairman and CEO of the Franklin-based CapWealth Advisors, belong in the private sector.
The government’s actions leave Fannie Mae’s and Freddie Mac’s shareholders with nothing.
FANNIE MAE: The feds are seizing private money from Fannie Mae and Freddie Mac.
“The government had a political agenda for whatever reason to shut them down and decided not to compensate the shareholders,” Pagliara told Tennessee Watchdog, adding Treasury officials are putting that money toward the federal deficit.
Regardless of how one feels about these two Government Sponsored Enterprises, especially after their role in the subprime mortgage crisis, there are more disturbing ramifications behind the Treasury’s actions.
“The Treasury has usurped the authority of the legislative branch because they have taken the position that they are going to shut down the GSEs,” Pagliara said. “They don’t have the authority to do that under the U.S. Constitution. Only Congress and the Senate can do that.”
So what do U.S. Treasury officials have to say in their defense?
A U.S. Treasury spokesman, who asked that Tennessee Watchdog not identify him, referred all questions to the U.S. Department of Justice.
U.S. Department of Justice spokeswoman Nicole Navas had nothing to say either.
“We decline to comment beyond what has been publicly filed due to the pending litigation,” Navas said in an emailed statement.
A variety of people, including former U.S. Solicitor General Ted Olsen, have filed a variety of lawsuits against the feds, although one federal judge threw out some of those lawsuits earlier this month.
If the U.S. government has the power to do this, could they do the same to General Motors or any of the banks that accepted bailout money? Worse yet, could the feds do the same to any publicly traded company and take anything that belongs to a private citizen?
Those were among the questions Treasury and Justice officials declined to answer Tuesday and Wednesday.
Because of this “Third Amendment Sweep” the feds will recover $51 billion more than they invested in Fannie and Freddie six years ago, according to Olsen.
“It’s a complete destruction of the investments of private shareholders,” Olsen wrote last year in the Wall Street Journal.
The feds put Fannie and Freddie in conservatorship in 2008, but Olsen argues their actions are the polar opposite of what conservatorship calls on the government to do — protect and manage the GSEs’ money.
Pagliara said he’s working with U.S. Rep. Marsha Blackburn, R-Brentwood, on legislation that would put Fannie and Freddie’s profits in escrow until the situation resolves itself.
A spokesman for Blackburn’s office didn’t immediately return a message seeking comment on the matter Tuesday or Wednesday.
Contact Christopher Butler at email@example.com
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