Fannie & Freddie Tighten Lid on Political Spending

     (CN) – The Federal Housing Finance Agency does not have to turn over records of political contributions made by Fannie Mae and Freddie Mac before they went into conservatorship, the D.C. Circuit ruled.



     Judicial Watch filed a Freedom of Information Act requesting “any and all Freddie Mac … or Fannie Mae records concerning political campaign contributions” in 2009, about a year after both mortgage lenders were placed under the conservatorship of the agency at the peak of the financial crisis.
     But the agency refused, arguing that the records are exempt since neither Freddie Mac nor Freddie Mae are government agencies.
     Judicial Watch countered that the records of the two lenders became “agency records” under FOIA when the agency became their conservator.
     A Washington federal judge sided with the government, and the appellate court agreed Friday.
     Because no one at the agency had ever read the documents in question, they could not be defined as agency records, the eight-page opinion states
     “The public cannot learn anything about agency decision making from a document the agency neither created nor consulted, and requiring disclosure under these circumstances would do nothing to further FOIA’s purpose,” Judge Thomas Griffith wrote for a three-judge panel.
     Despite sympathizing with Judicial Watch’s interests, the judges said its request simply did not fit in with the intent of FOIA. “Although we appreciate Judicial Watch’s interest in how much money Fannie and Freddie gave to which politicians in the years leading up to our current financial crisis, satisfying curiosity about the internal decisions of private companies is not the aim of FOIA,” Griffiths wrote.
     Judicial Watch met some of the criteria since Freddie Mac and Fannie Mae relinquished control over their records when they accepted the conservatorship of the agency, giving the agency power to use and dispose of the records as it saw fit, the court found.
     But it could not prove, and did not even argue, that agency personnel read or relied upon the documents – a factor that Griffiths said was “fatal” to the petition.
     “Although there is no doubt that the FHFA could consult the requested records as it conducts its business, the problem for Judicial Watch is that no one from the FHFA has done so,” Griffiths wrote. “The Supreme Court held in Forsham v. Harris that documents an agency had the right to acquire would not become agency records subject to FOIA “unless and until the right is exercised.”
     “In deciding whether an agency controls a document its employees created, we have consistently found that ‘use is the decisive factor,'” he added, quoting the circuit’s own precedent in Consumer Federation of America v. USDA. “We think use is decisive here as well.”
     The panel also noted how the petition failed to allege that the agency integrated the documents into its filing system, confirming the point that “a document that could not reveal anything about agency decision making is not an ‘agency record.'”
     “It goes without saying that an agency cannot integrate into its record system a document created by a third party that none of its employees have read,” Griffiths wrote.
     Fannie Mae, formally known as the Federal National Mortgage Association, was created in 1938 as a government-sponsored private enterprise to expand the secondary mortgage market by purchasing mortgages insured by the Federal Housing Administration and securitizing them by issuing mortgage backed securities.
     The government created the Federal Home Loan Mortgage Corporation – aka Freddie Mac – in 1970 to compete with Fannie Mae, which until then had held a monopoly in the secondary mortgage market.
     The lenders were both publicly traded companies until June 16, 2010, when the Federal Housing Finance Agency delisted them after Fannie Mae’s stock traded at below $1 a share for more than 30 days.

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