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Thursday, May 23, 2024 | Back issues
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JPMorgan, AIG Bailout Records Remain Secret

(CN) - Federal Reserve memos and spreadsheets regarding bailout loans are not subject to release under the Freedom of Information Act, a federal judge ruled.

The Federal Reserve made two emergency loans to Bear Stearns and JPMorgan Chase & Co. amidst the housing crisis of 2008, according to the ruling. It also lent insurer AIG $85 billion around the same.

Laurence Ball, an economics professor at Johns Hoskins University, filed a FOIA request with the Federal Reserve in 2012 seeking two memos and two spreadsheets regarding the loans. The memos analyzed the board's authority to make the loans while the spreadsheets listed collateral for the loans, the ruling states.

Ball's request was denied based on FOIA exemptions and he sued the Board of Governors of the Federal Reserve System in 2013.

U.S. District Judge Tanya Chutkan ruled in favor of the Federal Reserve on Tuesday, finding that the memos and spreadsheets are protected by two FOIA exemptions.

FOIA Exemption 5 applies to inter-agency and intra-agency records protected by legal privileges, while Exemption 8 shields financial institution records from release.

The judge found that Exemption 5's deliberative process privilege protects the memos from being released under FOIA, pointing to similar cases.

"Working law" documents pertaining to adopted policy are not protected from disclosure and Ball argued that the memos became the board's working law but Chutkan disagreed.

"The board could choose to use or ignore the [legal] advice in Documents 1 and 2, and there is no indication as to how Documents 1 and 2 influenced the board's decision, if at all. Ball has not provided sufficient evidence that Documents 1 and 2 were adopted as the board's working law, and 'it is [the plaintiff's] and not the board's burden to establish that predecisional records have been adopted as policy,'" the judge wrote, citing the 2012 D.C. district court decision McKinley v. Board of Governors of the Federal Reserve System.

Chutkan ruled that Exemption 8 applies to the requested spreadsheets because Federal Reserve Banks are financial institutions. Even if they were not financial institutions, the spreadsheets in question would still likely be protected because of who the money was loaned to, the judge ruled.

"The parties did not address whether Bear Stearns and AIG themselves are financial institutions, but it is reasonably likely that they are, meaning the board could likely have withheld the documents under Exemption 8 even if the [Federal Reserve Bank of New York] was not a financial institution," Chutkan wrote.

The Federal Reserve Act of 1913 created the Federal Reserve System, made up of the board and 12 regional Federal Reserve Banks. The board consists of seven members appointed by the President and confirmed by the Senate.

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