Court: U.S. Can Withhold Some Documents in GSE Lawsuit

The U.S. government won a small victory in appeals court on Monday following a ruling narrowing the range of documents they must turn over to investors currently suing them over its seizure of Fannie Mae and Freddie Mac.

The Federal Circuit Court of Appeals said four documents could be withheld from Fairholme Funds and other investors on the basis of presidential privilege, and four other documents were protected by privilege of the deliberative process.

Eight other disputed documents were declared not privileged by the court.

Fairholme is suing the government over its August 2012 decision to seize the profits of the two GSEs, which they called an unconstitutional taking of private property.

Judge Margaret Sweeney of the U.S. Court of Federal Claims previously ruled 58 documents sought by Fairholme Funds should be released. Following Monday’s ruling, 50 of those documents “merit no privileged treatment” and will still be made available.

Investors Unite, a coalition of private investors invested in the GSEs, issued a statement Monday praising the court’s decision to make most of the documents still available.

“The Appeals Court ruling stems from a writ of mandamus the government filed in October after Sweeney issued a sharp rebuke of the government's efforts to claim the documents sought were ‘privileged’ information,” Investors Unite said in their statement. “In this and other rulings, she has methodically chipped away at claims of executive privilege.

“Until the 50 documents cleared for review by Fairholme's attorneys are made public we can only speculate as to their exact content, but the fact that the Appeals Court stood with Sweeney on 86 percent of the documents is a positive sign for shareholders seeking justice,” they said. “We could learn more should Judge Sweeny request the government to revise its privilege claims.”

Investors Unite’s statement said despite the court’s decision to make 50 of the documents available, there remains 11,000 more yet to be released.

“The fine points of Constitutional law concerning executive privilege notwithstanding, the more straightforward question that must be asked repeatedly is this: Why would the government be trying so hard to keep so many documents so secret five years after the Sweep, especially if there were no national security matters at stake? Each procedural development moves us close to an answer on that.”