The Treasury Department's looting of Fannie and Freddie has finally caught the attention of the New York Times.
In an article published on February 15, business reporter for the Times, Gretchen Morgenson details new revelations of the federal government's actions regarding the two mortgage GSEs. Citing an internal Treasury Department memo, dated December 20, 2010, addressed to Treasury Secretary Timothy Geithner from Undersecretary for Domestic Finance Jeffrey Goldstein, Morgenson details how the federal government failed to disclose its plan to bar private investors from participating in the companies' future earnings. Bear in mind that this took place at a time when the GSEs were under conservatorship by the federal government and shares were being traded in the public securities markets.
Is this the equivalent of securities fraud? Not necessarily . . . but perhaps the closest thing to it, according to Jillian Kay Melchior writing at National Review Online. Quoting securities lawyer James R. Cummins of Cummins & Brown in Cincinnati, Melchior writes, "It would be like an appropriation by the Soviet Union of private property . . . it happens all over the world, but it's not supposed to happen here in the U.S."
This story has been making the rounds with alternative media for more than a year. Now that the Times has taken notice, will more media outlets pay attention? More importantly, will politicians start to appreciate the nature of the government's treatment of investors in Fannie and Freddie? Let us know what you think.
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