New York Times and Ralph Nader criticize Obama for illegally seizing private property and violating disclosure laws
The New York Times and Ralph Nader have recently criticized President Obama for illegally seizing assets from shareholders of Fannie Mae and Freddie Mac, and for illegally avoiding disclosing this information to shareholders.
The fifth amendment requires that compensation be given for such seizures, but Obama did not do this.
Federal disclosure laws require that shareholders be informed of this information immediately, but Obama waited more than three years to tell them.
Neither of these actions by Obama surprises me one bit. These things are consistent with his many, many, many other illegal activities. He has no respect for the rule of law, the constitution, private property, or individual liberty.
The New York Times reports:
Would you buy stock in a company that barred you from sharing in its future earnings? Of course not. Participating in the upside is what stock ownership is all about.
And yet, as of December 2010, holders of Fannie Mae and Freddie Mac common stock were subject to such a restriction by the United States government. They didn’t know it at the time, though, because the policy was not disclosed.
This month, an internal United States Treasury memo that outlined this restriction came up at a forum in Washington.
The memo was addressed to Timothy F. Geithner, then the Treasury secretary, from Jeffrey A. Goldstein, then the under secretary for domestic finance. In discussing Fannie and Freddie, the beleaguered government-sponsored enterprises rescued by taxpayers in September 2008, the memo referred to “the administration’s commitment to ensure existing common equity holders will not have access to any positive earnings from the G.S.E.’s in the future.”
The memo, which was produced in a lawsuit filed by Fannie and Freddie shareholders, was dated Dec. 20, 2010. Securities laws require material information — that is, information that might affect an investor’s view of a company — to be disclosed. That the government would deny a company’s shareholders all its profits certainly seems material, but the existence of this policy cannot be found in the financial filings of Fannie Mae. Neither have the Treasury’s discussions about the future of the two finance giants mentioned the administration’s commitment to shut common stockholders out of future earnings.
Ralph Nader wrote:
“What legal authority does the Administration have, as this section of the memo intimates, to completely wipe out shareholders — even after taxpayers have been repaid (as is likely to happen soon)?”
“Contrary to this statement, neither the memo — nor Treasury’s actions by unilaterally amending the PSPAs — leaves one with the impression that this point in the memo is meant to highlight the importance of repaying the taxpayers. It seems to be setting a precedent for using and abusing the GSEs’ shareholders.”
“Taxpayers should recoup their investment in the GSEs; but the Administration does not have to wipe out shareholders in order for this to happen.”
“This need not be an issue of choosing taxpayers over shareholders. The federal government has similarly recouped taxpayer money used to bailout other corporations (A.I.G., Citigroup, etc.) involved in the financial collapse, but has allowed the shareholders of those companies to share in their recovery. The same should be the case with the GSEs.”