Federal Judge Margaret M. Sweeney has ruled that the U.S. government acted improperly when it failed to release over 12,000 documents specific documents to investors in Freddie Mac and Fannie Mae. These investors sued the government in 2013, following the seizure of profits from the two mortgage companies. Sweeney ordered the government to release the documents immediately.
Investors filed the lawsuit four years after the government took direct control of Freddie Mac and Fannie Mae, following the financial crisis that left the mortgage industry close to collapse. In 2012, however, the government began removing funds from the two enterprises. This money was placed in the general fund of the U.S. Treasury and occurred before Freddie Mac and Fannie Mae began making a profit. Since then, the U.S. Treasury has received $63.1 billion more from Freddie and Fannie than they took during their near-bankruptcy.
Investors say in the lawsuit that the government's seizure of all Freddie Mac and Fannie Mae's profits was theft of their private property. The documents withheld from the investors, include reports, memos, and emails, which government officials claimed included privileged information. After a private review, Sweeney ruled in an 80-page decision that the use of privilege was not justified in 52 of 56 documents she reviewed. Four others were protected under the presidential communications privilege, but Sweeney ruled that even those documents were necessary to the case and granted the investors access to all of these documents.