FannieGate: Obamacare Looting Scheme by diverting Fannie and Freddie Funds

Mnuchin Confirms the Controversy

On Fox News, Treasury Secretary Steve Mnuchin stated that President Obama engineered the Net Worth Sweep (NWS) in 2012 to divert funds from Fannie Mae and Freddie Mac to pay for Obamacare.

“It is true,” Mnuchin said when asked if Fannie and Freddie profits were used to fund ACA subsidies.

According to Mnuchin, the Obama administration kept taxpayers at risk while using GSE profits to fund low-income insurance subsidies critical to the Affordable Care Act (ACA).

What Is the Net Worth Sweep?

On August 17, 2012, the Treasury Department amended its Senior Preferred Stock Agreements with Fannie Mae and Freddie Mac:

• Private and institutional investors were deprived of dividends.

• Treasury confiscated billions in Fannie and Freddie earnings.

• The maneuver became known as the Net Worth Sweep (NWS).

This infusion of funds was essential to sustain the ACA because Congress had refused to appropriate taxpayer money for low-income insurance subsidies.

The Legal Problem: Section 1402 of the ACA

Section 1402 of the Affordable Care Act authorized subsidies to insurers for covering costs of low-income enrollees on state exchanges.

But here’s the issue:

• Congress never appropriated funds to pay for these subsidies.

• Without funding, Obamacare risked immediate collapse.

So, the administration redirected Fannie and Freddie profits instead.

The Court Challenge: U.S. House v. Burwell

On May 12, 2016, U.S. District Judge Rosemary Collyer ruled in U.S. House of Representatives v. Burwell:

• HHS Secretary Sylvia Burwell had no authority to divert funds to Section 1402 subsidies.

• Paying reimbursements without appropriation violated the Constitution.

• Congress explicitly authorized cost-sharing reductions but did not fund them.

The ruling struck at the core of how ACA subsidies were sustained.

Obama Administration’s Response

Rather than halt payments, the administration:

• Appealed the decision to the U.S. Circuit Court of Appeals.

• Continued subsidy payments during the appeal process.

This kept Obamacare afloat, but only on uncertain legal ground.

Implications for the Trump Administration

Mnuchin noted that if the Trump administration wanted to end Obamacare, all it needed to do was:

1. Drop the Circuit Court appeal.

2. Allow the District Court’s ruling to stand.

This would block further diversion of funds and trigger the implosion of Obamacare’s subsidy system.

Key Takeaways

• The Net Worth Sweep diverted billions from Fannie and Freddie starting in 2012.

• Section 1402 subsidies were never funded by Congress, raising constitutional issues.

• Courts ruled that paying without appropriation was illegal.

• The ACA survived largely through diverted funds and ongoing appeals.

⚖️ Disclaimer: This article is for informational purposes only. It summarizes public statements, fiscal policies, and court rulings regarding Fannie Mae, Freddie Mac, and the Affordable Care Act. It is not legal advice.

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Tags: ACA, Fannie MAe, fanniegate, Freddie Mac, obamacare, Steve Mnuchin
Posted in Corruption, evidence, Fabrication of documents |