Exclusive: Obama Illegally Robbed Fannie, Freddie to Fund Obamacare
Obama diverted money from low-income housing to keep Obamacare alive
Jerome R. Corsi | Infowars.com - February 27, 2017
WASHINGTON, D.C. – Will this be the final nail in the coffin for the Affordable Care Act, commonly known as “Obamacare?”
Federal court litigation provides evidence the Obama administration illegally diverted taxpayer funds that had not been appropriated by Congress in an unconstitutional scheme to keep Obamacare from imploding.
In 2016, a U.S. District judge caught the Obama administration’s Health and Human Services Department acting unconstitutionally and therefore put an end to the illegal diversion of taxpayer funds, but the Obama administration didn’t stop there.
The Obama administration instead turned to the nation’s two government-sponsored mortgage giants – the Federal National Mortgage Association, commonly known as “Fannie Mae,” and the Federal Home Loan Mortgage Corporation, commonly known as “Freddie Mac” – to invent a new diversion of funds in a desperate attempt to keep Obamacare from collapsing.
A key date is May 12, 2016. That was the day when U.S. District Judge Rosemary Collyer, in the case U.S. House of Representatives v. Burwell, (130 F. Supp. 3d 53, U.S. District Court for the District of Columbia), ruled against Health and Human Services Secretary Sylvia Matthews Burwell.
Judge Collyer decided HHS Secretary Burwell had no constitutional authority to divert funds Congress appropriated to one section of the ACA to fund Obamacare subsidy payments to insurers under another section of the ACA, Section 1402 – the clause defining the insurer subsidies – when Congress specifically declined to appropriate any funds to Section 1402 for paying the insurance subsidy.
“Paying out Section 1402 reimbursements without an appropriation thus violates the Constitution,” Judge Collyer concluded. “Congress authorized reduced cost sharing but did not appropriate monies for it, in the Fiscal Year 2014 budget or since.”
“Congress is the only source for such an appropriation, and no public money can be spent without one.”
The U.S. District court in this ruling entered judgment in favor of the House of Representatives, barring HHS from using unappropriated money to pay insurers under Section 1402.
What was at issue in Section 1402 was the Obamacare provision that capped the amount of federal subsidies under Section 1402 that lower-income families could use to pay for insurance purchased on state insurance exchanges, particularly the difference between the capped maximum based on a person or family’s income in relation to the federal poverty level.
Congress had refused to pass an appropriation to fund Section 1402 – the section of the ACA that called for making the insurance subsidy payments.
In a report issued in March 2016, the Congressional Budget Office estimated the cost for providing Section 1402 subsidies over the next ten years (2016-2026) was estimated to be $130 billion.
Forbidden by Judge Collyer’s decision from diverting money Congress appropriated for other ACA provisions to pay Section 1402 subsidies, the Obama administration faced the prospect that the government could not pay subsidies to permit lower-income persons and families to buy the amount of health insurance Obamacare was written to provide them.
Either this, or insurers would be forced to charge middle and high income-persons and families such outrageous amounts for their insurance coverage (to subsidize the poor under ACA) that only the wealthiest could afford to buy health insurance.
In other words, Obamacare was dead in the water if the Obama administration could not find a way to circumvent the District Court’s decision U.S. House of Representatives v. Burwell to fund Section 1402 despite the fact Congress had refused to do so.
Determined to keep Obamacare alive, the Obama administration decided to find a way around Judge Collyer’s ruling.
The fix involved the Obama administration redefining the terms of the 2008 conservatorship agreements which advanced funds to Fannie Mae and Freddie Mac from a 10% dividend on moneys borrowed to the federal government’s confiscation of 100% of the future and imminent profits of these Government Sponsored Entities, or GSEs.
Miraculously, the Freddie and Fannie “pot of gold” turned out to be almost exactly the amount the Obama administration needed to meet the anticipated insurance company subsidies required to keep Section 1402 in business.
So, how did Fannie and Freddie get this pot of gold, given that only a few years earlier both GSEs were bankrupt?
In 2008, in the midst of the financial crisis caused in part by the collapse of the subprime mortgage market, the federal government decided to seize Fannie Mae and Freddie Mac, which at the time were two shareholder-owned companies.
In passing the Housing and Economic Recovery Act of 2008 (HERA), the U.S. Congress had fixed the regulatory issues at Fannie Mae and Freddie Mac, creating a mechanism for them to be placed into conservatorship at federal government’s discretion AND providing up to $187.5 billion in funds that could be advanced to the GSEs through a purchase of senior preferred stock paying a ten percent dividend.
In deciding to bail them out, the federal government took control of the two giant mortgage GSEs, with Fannie and Freddie effectively put into government “conservatorship.”
As part of the conservatorship, the federal government effectively acquired warrants, convertible at a nominal price, which allowed the federal government to acquire 79% of the GSE’s common stock.
This resulted in causing dilution in the percentage of Fannie and Freddie common stock ownership that was left in the hands of private and institutional investors.
Congress’ intent was that Fannie Mae and Freddie Mac would pay back the Treasury as the mortgage giants returned to profitability.
But after the Treasury was paid back, the terms of HERA anticipated Fannie Mae and Freddie Mac would pay appropriate dividends to stockholders, including the federal government, leaving enough funds within Freddie and Fannie to “conserve and preserve” the assets of the two GSEs, anticipating their eventual return to a “safe and solvent” operating condition.
In 2012, the Obama administration unilaterally decided to change the terms of HERA by sweeping all the profits of Fannie and Freddie into the Treasury’s general fund.
The Obama administration took this action, the so-called “Net Worth Sweep,” without any Congressional authority to do so.
The result was that the U.S. Treasury “found” a way to sweep 100% of Fannie and Freddie profits into the Treasury’s “general fund,” leaving the giant mortgage GSEs vulnerable to the need for another government bailout should another disruption occur in the nation’s economy.
Because of this decision, the Obama administration on its own authority simply decided to discontinue paying dividends to private and institutional owners of Fannie and Freddie common and preferred stock.
Congress, in passing HERA, never anticipated the Obama administration would take over Fannie and Freddie and strip the agencies of all profits – a move that left private and institutional shareholders in the cold.
Leading up to the decision to sweep Fannie and Freddie’s profits, the GSEs return to imminent profitability was known only by a few government officials and their consultants.
Their own internal forecasts, uncovered in unsealed court documents, showed that Fannie and Freddie’s profitability would soon dramatically outperform the amount of the allowable 10% dividend that the Treasury would receive under the existing Senior Preferred Stock Purchase Agreements.
MORE at link...............