On December 23, the United States District Court for the District of Columbia denied a motion by the Federal Deposit Insurance Company (FDIC) to dismiss a Judicial Watch FOIA lawsuit filed on behalf of our client, former FDIC employee Vern McKinley.
Actually, U.S. District Court Judge Emmett G. Sullivan did more than deny the motion to dismiss. He also granted, in part, Judicial Watch’s motion for summary judgment and criticized the FDIC by saying the agency “has not fulfilled its obligations under FOIA.” Now the FDIC must conduct a new search for responsive records and demonstrate that the records have been provided or properly withheld under FOIA law.
This lawsuit, filed on March 15, 2010, is one of several we’ve filed on behalf of Mr. McKinley. (You can find them all here.) And all of these lawsuits have a similar purpose: to determine under what legal authorities and lawful rationales the federal government initiated these massive financial bailouts.
In this case we’re seeking records related to the FDIC’s decision to guarantee $306 billion of loans and securities held by Citigroup, Inc., and $118 billion held by Bank of America. The lawsuit also seeks information about the Temporary Liquidity Guarantee Program (TLGP), the FDIC program that now guarantees $394 billion in bank deposits and debt.
On April 15, 2010, after JW filed its lawsuit, the FDIC did provide 101 pages of documents – but they were heavily (and improperly) redacted and no adequate justification was provided for withholding the information.
According to Judge Sullivan’s December 23 ruling:
The FDIC argues that the [McKinley] claim is moot because the agency complied with its obligations under the FOIA by producing the requested documents. [McKinley] responds that his claim is not moot because the documents produced are heavily redacted, and the FDIC has not met its statutory burden to “justify its claims of exemption, demonstrate that all non-exempt information has been segregated and disclosed, or prove that its searches for responsive information were reasonably calculated to uncover all responsive materials.” The Court agrees with [McKinley] that his claim is not moot.
Although the agency has released portions of certain agency documents, these additional issues remain in dispute, and the Court has jurisdiction to hear these claims.
The agency has not provided a sufficient declaration from which the Court can conclude it conducted an adequate search for all records within its possession and control.
The Court further concludes that, based on the current record, the [FDIC] has not fulfilled its obligations under FOIA or the Sunshine Act to justify withholding of documents or parts of documents pursuant to the Act’s exemptions.
Judge Sullivan also expressed skepticism about the legal basis of the FDIC’s heavy redactions. The court stated that it “is particularly troubled by” some of the FDIC’s assertions. The court has, therefore, initially rejected the FDIC’s redactions and demanded further justification for the withholding of information from the public. To top it off, Judge Sullivan ruled that FDIC’s argument to dismiss Judicial Watch’s lawsuit was “baseless.”
How did this simple FOIA request end up in court?
Mr. McKinley filed his FOIA requests regarding the Citigroup and Bank of America bailouts on December 4, 2009, and December 20, 2009, respectively. In addition, McKinley filed a third FOIA request on December 20, 2009, regarding the FDIC’s Temporary Liquidity Guarantee Program, which, according to the FDIC, was established to “strengthen confidence and encourage liquidity in the banking system” by guaranteeing unsecured debt and by “providing full coverage of non-interest bearing deposit transaction amounts regardless of dollar amounts.” Mr. McKinley seeks access to “minutes and supporting memos” from the FDIC Board of Directors meetings that preceded all three.
After granting itself 10-day extensions to process McKinley’s FOIA requests, the FDIC failed to respond within the statutory allotted time frame. Following Judicial Watch’s lawsuit filed on March 15, 2010, the FDIC provided a small number of heavily redacted documents and then, in a highly unusual move, filed its motion to dismiss the lawsuit claiming the matter was resolved. The agency has provided no additional documents and has not provided a sufficient explanation for the redacted material. And so we decided to pursue the matter further.
There is no way for the FDIC to spin Judge Sullivan’s ruling in their favor. It represents a clear-cut repudiation of the agency’s arrogant disregard for open records laws. Taxpayers should be pleased the court is holding the Obama administration to account for its stonewalling and lawless secrecy regarding the bailouts.
The federal government’s response to the financial crisis was radical and unprecedented and the American people want the full truth about how and why these decisions were made.
In a Judicial Watch’s Election Day poll a total of 68% of actual voters surveyed said corruption played a major role in the financial crisis, with 47% saying corruption played a “very major role.” And 67% of actual voters said they believe the records regarding how the Treasury Department has spent bailout funds should “definitely be made available” to the public, while only 13% of voters said the records should “definitely be kept secret” — a ratio of 5:1.
We all must be assured that the government exercised proper authority under the law in executing these financial bailouts, which are (and this bears repeating) ongoing.
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