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Judge rejected in its entirety the government's argument to hide Fannie & Freddie docs

foxnews.com | October 5, 2016

By John Yoo

As the Obama administration runs out the clock on its second term, it seeks to hide ever more of its policies from public scrutiny. One of the most extreme examples is the White House’s attempt to invoke presidential privilege, which is reserved for the most important national security, military, and diplomatic affairs, to conceal documents about housing. Yes, housing.

However, U.S. Court of Federal Claims Judge Margaret Sweeney, once again, has affirmed that our Constitution presumes people should have access to the information needed to secure justice and only in the most narrow circumstances can the government deny access to that information.

In an opinion made public this week, she rejected in its entirety the government’s argument for not allowing access by Fairholme Funds’ lawyers to nearly 60 documents relating to the Net Worth Sweep of Fannie Mae and Freddie Mac’s profits.

In the 80-page opinion, she took apart every claim of privilege the government asserts. With her decision, investors’ lawyers will have a chance to look at the emails, briefing documents, forecasts and other communication they believe go the heart of their claim that the Sweep was an unconstitutional taking of property. In addition, Judge Sweeney was so unconvinced of the need for secrecy that she also ordered the government to explain why it should not have to pay Fairholme’s legal fees incurred when filing this motion.

Litigation between shareholders in Fannie Mae and Freddie Mac and the U.S. government has called for the revelation of documents that the White House tried to keep secret under the doctrine of “executive privilege.” Fannie Mae and Freddie Mac are government-sponsored corporations that buy housing mortgages from banks, which effectively subsidizes the market for home purchases by making loans more secure. But when the housing market tanked during the 2008 financial crisis, both companies suffered financially and prompted a federal takeover of their operations.

Shareholders contend that the federal takeover, and the later diversion of profits from the companies to the federal treasury in 2012, carried out an unconstitutional taking of property.

The Obama administration has refused to make public communications – thousands of documents -- between the Treasury Department, Federal Housing Finance Agency, Fannie Mae and Freddie Mac, and the White House, on various forms of executive privilege. But Sweeney was clear in her April opinion when she said, “the court will not condone the misuse of a protective order as a shield to insulate public officials from criticism in the way they execute their public duties.”

In June, the Obama White House defied the judge’s order and refused to turn over four documents. In a June 10 declaration, Deputy White House Counsel Nicholas McQuaid claimed that executive privilege could conceal emails between Gene Sperling, who served as director of the President’s National Economic Council, his top aides, and the Treasury Department. McQuaid describes one document, for example, as “portions of an electronic mail conversation between James Parrott, a senior advisor to the National Economic Council, and Treasury staff discussing advice regarding White House housing policy reform.”

Sweeney makes clear that the White House’s claims abuse the president’s authority and prevent taxpayers from observing the workings of their government. There is no doubt, of course, that the president has a right to keep certain discussions within the White House confidential.

In the landmark Watergate tapes case, the Supreme Court acknowledged, “Without this privilege, the President will not enjoy the candor necessary to make the best decisions possible.” However, Nixon v. U.S. rejected the claim that presidential power could keep everything in the White House secret, certainly not communications between economic advisers and the Treasury Department.

As the Nixon Court recognized, a generalized right to confidentiality does not apply throughout the entire executive branch. Instead, the Justices found that the Constitution provided the president with the right to keep secret military or diplomatic communications because of his responsibilities as chief executive and commander-in-chief of the Armed Forces. Confidentiality covers the president’s discussions with “those who assist him.”

In Nixon, the Court also found that communications outside these areas would have to seek privilege based on “the President’s generalized interest in confidentiality.” But in such cases, the Court said the interest in confidentiality must be balanced against the competing need of other branches for disclosure of the information.

In the case of Nixon itself, the claim of confidentiality gave way before the right of criminal defendants to produce the information necessary for a fair criminal trial. The Bill of Rights, which required the production of relevant evidence to the defense, outweighed a diffuse claim of confidentiality.

Nixon shows in high relief the weaknesses of the Obama White House’s efforts to protect its Fannie Mae and Freddie Mac schemes.

The communications at stake here have absolutely nothing to do with weighty matters of national security and foreign policy and do not deserve the broadest protections for executive discussions. These discussions did not involve the president. Again, they were emails about housing policy between relatively unimportant White House aides and the Treasury Department. That the Obama administration would invoke such important constitutional powers in such a case shows how far it is willing to abuse the traditions and customs of the presidency to protect itself.

If the Obama administration were to prevail, then presumably every time the most minor employee of the White House became involved in an email communication – presto! executive privilege would apply.

Every employee in the executive branch, every agency, every government-owned corporation (including Amtrak and the Post Office), need only include some White House secretary on the cc: line of an email, and a constitutional cone of secrecy would descend to vest it with the same protected status as conversations between the president and the White House chief of staff.

This would create a level of secrecy that flies in the face of transparency in a democracy and has no basis in the constitutional text.

Ultimately, the Constitution requires that any claim of presidential confidentiality must give way before the Bill of Rights.

In Nixon itself, the Supreme Court found that the Fifth Amendment right to due process and the Sixth Amendment right to compulsory process (held by the Watergate burglars who were on trial and needed the tapes for their defense) outweighed any presidential claim to confidentiality.

In the case involving Fannie Mae and Freddie Mac, the plaintiffs are suing directly under the Fifth Amendment Takings Clause.

The federal courts have a specific constitutional duty to vindicate those rights, which should take precedence in any balancing test over the president’s generalized claim to confidentiality.

John Yoo is a law professor at the University of California at Berkeley and a visiting scholar at the American Enterprise Institute. He served in President George W. Bush's Justice Department.

 

 

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Nancy Duffy McCarron, CBN 164780
Attorney, Real Estate Broker, BBB Arbitrator, CA Notary Public
Certified Forensic Loan Auditor, Property Manager

 

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