CONFIRMED: TREASURY SAYS OBAMA STOLE FROM FANNIE & FREDDIE INVESTORS TO FUND OBAMACARE
CONFIRMED: TREASURY SAYS OBAMA STOLE FROM FANNIE & FREDDIE INVESTORS TO FUND OBAMACARE
republished below in full unedited for informational, educational, and research purposes:
WASHINGTON, D.C. – A careful analysis of the Treasury Department’s “Agency Financial Report for Fiscal Year 2013” provides evidence the Obama administration stole from Fannie and Freddie investors to fund Obamacare.
Guided
by a CPA, who worked for two years for a major U.S. accounting firm as
an outside auditor for Freddie Mac, Infowars.com has documented in the
Treasury Department’s 2013 financial reports how the Obama
administration diverted into Obamacare billions of dollars that Treasury
confiscated from Freddie and Fannie earnings.
On Aug. 17, 2012,
the Obama administration finalized the amendment of 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 analysis begins with a table entitled
“Summary Financial Information,” presented on page 26 of the Treasury
Department’s “Agency Financial Report for Fiscal Year 2013.”
Note
the line item “GSEs Non-Entity Costs (Revenue)” that records the flow
into Treasury of the funds confiscated by the Obama administration in
the NWS: recorded in 2012 as a cost to the treasury of $5.3 billion.
This
line item dramatically reverses in 2013 to reflect the NWS revenue
inflow from the two Government Sponsored Entities, GSEs, amounting in
2013 to $126 billion.
Treasury also revised their 2013 internal
estimate of GSE liabilities from a liability of $288.7 billion in 2012,
to a much-reduced liability of $9 billion in 2013 — a difference
explained entirely by the Net Worth Sweep.
The second paragraph of the “Financial Overview” below the chart leaves no doubt, reading as follows:
“Additionally,
the Department amended its Senior Preferred Stock Purchase Agreements
(SPSPAs) with Fannie Mae and Freddie Mac – two Government-Sponsored
Enterprises (GSEs) – in 2012, which changed, among other things, the
basis for determining quarterly dividends that are paid by the GSEs to
the U.S. government commencing with the quarter ending March 31, 2013.
As a result of the amended SPSPAs, coupled with the GSEs’ long-term
financial forecasts within a specific time horizon, the Department
reduced its contingent liability associated with the GSE program by $9.0
billion and $288.7 billion at the end of fiscal year 2013 and 2012,
respectively, via a reduction in expense.”
The $126.6 billion that
Treasury received from the Fannie and Freddie NWS is also noted in the
“Consolidated Statements of Net Cost for the Fiscal Years Ended Sept.
30, 2013 and 2012” that the report publishes on page 50.
The
explanation of the $126.6 billion in Treasury revenue received from the
GSEs is further elaborated in the following paragraph that appears on
page 29 of the report:
“GSE Non-Entity Revenue totaled
$126.6 billion for 2013 compared to net cost of $5.3 billion for 2012.
The revenue in 2013 was primarily driven by a $77.3 billion increase in
preferred stock dividends, coupled with a $30.9 billion valuation gain
on GSE investments in 2013 compared to a $42.3 billion loss in 2012.
These increases primarily stemmed from federal income tax benefits and
other improvements in the GSEs’ financial performance in 2013.”
On
page 94, the report provides a chart detailing that the $126.6 billion
in GSE revenue came from preferred stock dividends and from the market
fair value gain on the preferred stock Treasury held in Fannie and
Freddie, as seen here:
A
table presented on page 113, entitled “Transfers to the General Fund
and Other” makes clear Treasury transferred the NWS revenue from Fannie
and Freddie to the Treasury “General Fund,” where the revenue was
accounted as available for Treasury reallocation.
The
analysis of how the Treasury Department spent the NWS receipts
deposited into the General Fund derives from an analysis of the
month-by-month analysis of “Table 9: Summary of Receipts by Source, and
Outlays by Function of the U.S. Government,” found in the Monthly Treasury Statement of Receipts and Outlays of the U.S. Government.
With
the assistance of the accounting expert mentioned above, Infowars.com
constructed a spreadsheet to summarize findings from an analysis of the
Table 9 entries for calendar year 2013.
As
seen in the above excel spreadsheet, analysis of the line items in
Table 9 for the months of calendar year 2013 revealed that the amounts
Treasury received in GSE revenue corresponded to decreases in the
“Commerce and Housing” line item, and to increases in the line items
“Health” and “Medicare.”
This strongly suggests Treasury used the
“Commerce and Housing” line item to record receipts in GSE revenue that
were reallocated in subsequent months as debits out of “Commerce and
Housing” that corresponded to increases in “Health” and increases in
“Medicare.”
Note the first NWS payment was received by Treasury at the end of March 2013.
During
that month, the Treasury accounting debited “Commerce and Housing” by
$23.770 billion, establishing a pattern where the amounts credited to
“Health” and to “Medicare” increased for each of the next two months.
This pattern was repeated with the NWS of $65.2 billion received by
Treasury in June, the NWS of $14.6 billion in September, and the $39
billion in December.
With the exception of September, the amount
debited out of “Commerce” corresponded closely (but not exactly) with
the NWS received, and the amounts added to “Health” and “Medicare”
increased for the two months following Treasury’s receipt of NWS funds
from Fannie and Freddie.
The $133 billion in NWS Treasury receipts
for 2013 correspond interestingly to a comment made by Joshua Rosner,
managing director of the independent research firm Graham Fisher &
Co.
Rosner is a widely-recognized authority on Fannie Mae and
Freddie Mac, known for co-authoring with Pulitzer Prize-winning business
reporter Gretchen Morgenson the 2011 best-selling book entitled Reckless Endangerment: How Outsized Ambition, Greed and Corruption Led to Economic Armageddon – an analysis of Fannie Mae’s role in the sub-prime mortgage crisis that led to the economic crisis of 2008/2009.
“In
2013 alone, Treasury swept over $130 billion dollars in GSE profits in
the form of dividends via the Net Worth Sweep,” he wrote in a paper entitled “Former White House Officials Involved in GSE Scandal,” published May 23, 2016.
“To
highlight the scale of these dollars, these are the same amounts
recently at issue in a lawsuit over the cost of 10-years of ‘Obamacare’
reimbursements to insurers.”
That the Obama Treasury Department
was diverting funds to pay the Section 4012 insurance subsidies under
the Affordable Clear Act has been uncontested since May 12, 2016.
This
is the day when U.S. District Judge Rosemary Collyer ruled against
Health and Human Services Secretary Sylvia Matthews Burwell, in the case
U.S. House of Representatives v. Burwell, (130 F. Supp. 3d 53, U.S. District Court for the District of Columbia).
In
this case, 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.
The section of the ACA that HHS was desperate to fund was Section 1402 – the clause defining the insurer subsidies.
The problem was that Congress specifically declined to appropriate
any funds to Section 1402 to pay for the insurance subsidy the ACA
required for low-income individuals and families to afford the insurance
the ACA provided.
“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,
enjoining 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 low-income families would be required
to pay for insurance purchased on state insurance exchanges.
The law provided that federal insurance subsidies under Section 1402 would pay the difference between the capped maximum a low-income family was required to pay and the amount the insurance cost.
On
July 8, 2016, Thomas Miller, J.D., a resident fellow in health policy
studies at the American Enterprise Institute in Washington, submitted a statement before the House Subcommittee on Oversight and Investigations of the House Committee on Energy and Commerce.
In
this statement, Miller added support for the conclusion that the Obama
administration was desperate in its effort to identify funds that could
be diverted to keep Obama care from collapsing.
“For the last six
years, the Obama administration has been frustrated by its inability to
get Congress to support more funding for a number of its less-popular
objectives under the ACA,” Miller commented. “It keeps trying to stretch
appropriations law and administrative guidance to spend money without
necessary consent or authority.”
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 – the amount referenced by
Rosner in the quotation above.
Judge Collyer’s decision
specifically prohibited HHS to pay Section 1402 subsidies by diverting
money Congress had appropriated for other ACA provisions.
Given
this, the Obama administration faced the prospect the government could
not pay the insurance subsidies required for low-income persons and
families to buy insurance under Obamacare.
The only other
alternative was to force insurance companies to absorb as a loss the
amount the government had intended to pay as an insurance subsidy under
the ACA.
In other words, Obamacare risked bankrupting
participating insurance companies if the Obama administration could not
find a way to circumvent the District Court’s decision U.S. House of Representatives v. Burwell to find a way to fund Section 1402 despite the fact Congress had refused to do so.
In
July 2016, the Republican majority staff of the House Committee on
Energy and Commerce together with the Republican majority staff of the
House Committee on Ways and Means issued a “Joint Congressional Investigation into the Source of Funding for the ACA’s Cost Sharing Reduction Program.”
Page 10 of the joint committee’s final report noted the following:
“Between April 10, 2013 and July 11, 2013, in an unusual move, the
Administration informally withdrew its request for an annual
appropriation for the cost sharing reduction program by calling the
Senate Committee on Appropriations.”
The timing would suggest the
Obama administration realized in March 2013 the $130 billion the
Treasury expected to receive in 2013 as revenue from the Fannie and
Freddie NWS could be reallocated to pay for a decade the anticipated
shortfall in low-income insurance subsidies.
Having found this
solution may explain why the Obama administration stopped trying to
divert other funds Congress had appropriated to keep insurers solvent
under ACA requirements to subsidize health insurance for low-income
persons and families.