Investors Unite Launches, Unveils Paper on Government Secrecy

A popular government, without popular information, or the means of acquiring it, is but a prologue to a farce or a tragedy; or, perhaps both.

– James Madison, 1832

The Father of the Constitution wrote this toward the end of his long life. Madison was not only a cutting-edge political philosopher but also a shrewd political operative and judge of character.  He knew that those entrusted with power would be susceptible to mischief and misdeeds. The governing system he shepherded into existence was designed to minimize that risk and make sure the governed were responsible for the Republic’s success.

In that spirit, Investors Unite launched a website that shines a light on the government’s effort to block access to what policymakers had in mind when they concocted the Net Worth Sweep of all of Fannie Mae and Freddie Mac’s earnings starting in 2012. is a clearinghouse of information on this issue. It features a two-minute video that provides an overview of the issue, several court documents and news stories as well as a recently released white paper, “The Government’s Seizure of Private Property Behind a Veil of Secrecy,” by University of Virginia Law Professor Saikrishna Prakash.

Investors have vigorously contested the legality of the Net Worth Sweep for over two years. This has prompted debate not only about the policy change but also broader questions regarding housing finance policy. More and more, however, the zeal with which the government has misused “executive privilege” and claims of “protected information” to impede the legal challenges merits special attention.  This website, which will continue to be updated, consolidates a trove of useful information as the legal struggle inches toward its eventual resolution.

This spring a federal judge signaled her belief that the government’s justification for keeping thousands of documents sealed was getting thinner every day. When U.S. Court of Federal Claims Judge Margaret Sweeney decided to unseal seven of those documents, she made it a point to provide her rationale, thus throwing down the gauntlet on the government’s persistent obfuscation. She took particular aim at the idea that discussions from four years ago or more could harm the economy today. She wrote:

While the court recognizes that protection of the Nation’s financial markets and fledgling financial institutions were legitimate goals when the court first entered its order, with the passage of time, the potential for harm to the Nation’s markets and then-fledgling financial institutions no longer exists. Instead of harm to the Nation resulting from disclosure, the only “harm” presented is the potential for criticism of an agency, institution, and the decision-makers of those entities. 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 essence, she recognizes that current and former public officials might squirm in the sunlight but the public’s right to know must prevail.

Judge Sweeney’s April 11 order is on the website.  So are logs of documents (emails, press clippings and other pieces of information) the government has asserted is “privileged” and therefore off limits to the public.  Note that these lengthy documents are just lists of items the government wants to keep secret. The actual documents add up to 120,000 pages or more. Also included are court filings from plaintiffs explaining why they should have access to the information.

In addition, over the last year the government’s stonewalling has drawn scrutiny from journalists, members of Congress and legal experts. The site provides links to articles in the New York Times, commentaries and analyses by distinguished thinkers such as John Yoo and the white paper by Prof. Saikrishna Prakash, which was the subject of an Investors Unite teleconference last week.

The paper explores the government’s pursuit of “partial secrecy” by attempting to limit review of some documents to only plaintiff’s lawyers as well as “total secrecy” with a very broad assertion of executive privilege over thousands of documents – essentially declaring them off limits even to plaintiffs’ attorneys. The Fifth Amendment of the U.S. Constitution empowers citizens to seek redress from a “taking” by the government. Prakash concludes that the government continues to fall short in justifying its attempt to curtail that right. He noted during today’s call that Judge Sweeney has signaled that protective order over so many documents is no longer necessary, “if it ever was necessary.”

The government’s sidestepping of the law is troubling. Its attempt to cover up its actions makes it even worse. The more the public knows about this farce, the clearer the imperative to remain vigilant to undo the harm to shareholders and help avoid tragedies of government misdeeds in the future.

Finally, we know our active membership and attentive followers will let us know if there is more to include on the website. We have tried to make it especially easy with our “Have a Tip?” button.  Simply click to submit suggested additions for the website.