FannieGate: Obamacare Looting Scheme by diverting Fannie and Freddie Funds

Steve Mnuchin stated Monday on Fox News that President Obama engineered the “Net Worth Sweep” (NWS) in August 2012 to divert funds from the two Government Sponsored Entities (GSEs) to pay for Obamacare, after Congress refused to fund the low-income insurance subsidies critical to keep afloat the Affordable Care Act (ACA).

“There is a Twitter conversation going on, and it has been going on for some time, about how President Obama needed money for Obamacare and he took from Fannie and Freddie. Is that true?” Bartiromo asked Mnuchin.

“It is true,” Mnuchin replied.

“They [the Obama administration] used the profits of Fannie and Freddie to pay for other parts of the government while they kept taxpayers at risk,” Mnuchin answered.

An examination of the Treasury Department’s balance sheet for Fiscal Year 2013 documented how the Obama administration diverted billions of dollars into Obamacare that Treasury confiscated from Freddie and Fannie earnings.

On Aug. 17, 2012, the Obama administration amendment the Treasury Department’s Senior Preferred Stock Agreements with Fannie and Freddie that deprived private and institutional investors of their legally due dividend payments.

This enabled the Obama Treasury Department to confiscate billions of dollars in Fannie and Freddie earnings, in what is known as the “Net Worth Sweep,” or NWS.

The point is Congress never funded any taxpayer funds to pay the low-income insurance subsidies that are at the core of making the ACA work.

Section 1402 of the ACA – is written to provide federal subsidies to insurance companies for insurance purchased on state insurance exchanges to cover the difference between the capped maximum a low-income purchaser could be expected to pay and the amount the insurance cost.

Without funds provided by Congress to pay the low-income insurance subsidies under 1402, Obamacare would have collapsed immediately.

On May 12, 2016, U.S. District Judge Rosemary Collyer, in the case U.S. House of Representatives v. Burwell, 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,” she stressed.

The Obama administration appealed the District Court decision in U.S. House of Representatives v. Burwell to the U.S. Circuit Court of Appeals, deciding on its own authority that federal funds could continue to be diverted from other budgetary purposes to continue paying the insurance subsidies as long as the case was under appeal.

If the Trump administration wants to end Obamacare, all that is necessary is to drop the Circuit Court appeal in Burwell, and the result the District Court decision would become established law.

By dropping the appeal, the Trump administration would rule out any further diversion of federal funds to pay the ACA insurance subsidies, and Obama care would implode.

9 Responses

  1. I think we need to have more than Mr. Mnuchin’s word that anything is true.

  2. Stop diverting the funds, and pay back the 300 billion the former GSE’s received from taxpayer dollars. If Fannie and Freddie are partially privatized, the offering should first wipe the preferred shareholders with a senior offering held by the government / the taxpayer.

  3. I’ll bet 1000 shares of FF that Mnuchin and Trump will join in on rape of mom/pop investors.

  4. What I understand is the investors ie hedge funds who picked up Fannie & Freddie stock REAL cheap want to cash in for their big windfall….I’m not sure diverting funds to Obamcare was the right thing to do….but I’m also not sure that making hedge funds rich off the hardships that homeowners suffered is right either….this is one very big mess….and #mnuchin does not have the right motivations to come to a just and fair solution.

  5. Hmm, the point here seems to be missed by some of the other commentators?!?

    What I got from the article (and this Obama revelation) is that Mr. Obama somehow “amended” agreements, without consent from the other parties to those agreements … “amended contracts” in which investors (real Americans, like my Mom & Dad) risked their money, for what (those investors) believed was worth the risk for the bargain they struck, betting on both “Freddie” and “Fannie” to prosper by helping the American public … somehow, deserve less than the bargain they struck, or, to happily allow Obama to take “their” money for himself?!?

    To me, the point here is clear:

    What the Obama administration did while holding, and protecting, the two orphaned children called “Freddie” and “Fannie,” is similar to what happens to too many “Foster Kids” which are also in a “conservatorship” for their own good, only to realize soon thereafter that the ones assigned to protect those in conservatorship … are the ones perpetrating the abuse and rape behind closed doors.

    Very little difference to the raping of the investors by their conservator named; “The Obama Administration.” There is no greater-good-scenario here, being served by these crimes. That’s ridiculous..

    The point being … the “investors” and the “American People” are the victims here, and, not Obama or Obamacare!!

  6. Says he who threw out seniors in a blizzard. Making poor investors the victim, where was their due diligence abd bring up fraud against us? It will be Black Rock and billionaire investors that will make out like bandits again! Speaks with forked tongue.

  7. The fictitious and ILLEGAL foreclosures have been Obamas ATM funding obamacare. Obamacare is not about healthcare, it has always been about laundering the stolen homes…

  8. Read this article i wrote and connect the county recorders into the Ponzi Scheme as well. READ PLEASE

  9. Let me see if I understand the options here…obamacare was in part funded by Fannie and Freddie….profits used to help the American people ….Now Mnuchin and his buddies want to stop this so the investors can reap millions in profits for themselves….not the American people.

    who do these crooks like Mnuchn work for? their own pockets or the American people.

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