The U.S. government improperly withheld documents from investors who were suing the government over its decision in 2012 to seize all of the profits of Fannie Mae and Freddie Mac, the mortgage finance giants, a federal judge has ruled, the New York Times reported today. The judge, Margaret M. Sweeney of the Court of Federal Claims in Washington, also ordered the release of the documents, some of which appear to reach the highest levels of the Obama administration. Investors have contended that the government’s surprise decision to begin extracting all profits from the mortgage finance giants was an illegal taking of private property. The government initially argued that it acted to protect taxpayers from future losses because the companies were in a death spiral, but the decision to funnel the profits into the Treasury’s general fund came just before Fannie and Freddie returned to profitability. In September 2008, the government took over Fannie and Freddie, victims of the mortgage crisis. They have since recovered, and as of September had returned $63.1 billion more to the Treasury than they drew down during the crisis.
