Lower Court Ruling Allows Fed to Keep Bailout Documents Secret: "FOIA to become more of a withholding statute than a disclosure statute."
WASHINGTON, Nov. 3, 2011 /PRNewswire-USNewswire/ -- Judicial Watch, the public interest organization that investigates and prosecutes government corruption, announced today that it filed a petition on October 27, 2011, with the United States Supreme Court on behalf of former Federal Reserve employee Vern McKinley asking the High Court to review a lower court ruling validating the Federal Reserve's decision to withhold documents about its $29 billion bailout of Bear Stearns (Vern McKinley v. Board of Governors of the Federal Reserve System (No. 11-544)).
At issue in this Freedom of Information Act (FOIA) lawsuit is whether or not the federal government can withhold documents under the deliberative process privilege of FOIA Exemption 5 without demonstrating that the release of the documents would result in specific harm to government agency decision-making.
The United States District Court and the United States Court of Appeals previously ruled in favor of the Federal Reserve and dismissed Mr. McKinley's lawsuit. However, as Judicial Watch argued in its Supreme Court petition on behalf of Mr. McKinley, these rulings are a departure from Supreme Court precedent and FOIA law:
Despite the plain language of Exemption 5 and this Court's precedent, the D.C. Circuit has created a different, relaxed two-prong test that a government agency must satisfy to withhold material in the FOIA context…
…By removing the requirement that a government agency must make a specific showing of harm under the deliberative process privilege of Exemption 5, the D.C. Circuit has created a sweeping exemption, causing the FOIA to become more of a withholding statute than a disclosure statute. Petitioner therefore requests that this Court grant certiorari to affirm its reading of Exemption 5 to incorporate the common law deliberative process privilege and to dispose of the different, relaxed test created by the D.C. Circuit.
The Bear Stearns lawsuit, originally filed by Mr. McKinley in July 2009, seeks records related to the Board's unprecedented act to authorize the Federal Reserve Bank of New York (FRBNY) to provide "temporary emergency financing" to The Bear Stearns Companies, Inc., on March 14, 2008. Specifically, the Board authorized the FRBNY to extend a "nonrecourse loan" to JP Morgan, which in turn provided the financing to Bear Stearns.
Mr. McKinley specifically seeks "supporting memos and other information" that the Board used to justify its decision. In response to Mr. McKinley's request, the Board produced only 48 pages in their entirety and withheld 190 pages in their entirety or in part under Exemption 5.
"Never in American history has so much taxpayer money been spent with so little oversight or explanation. Mr. McKinley believes the American people deserve an explanation from the Federal Reserve about its secretive and massive bailouts – which are ongoing. But the Federal Reserve, and the Obama administration, are abusing the law and withholding documents without proper justification. We hope the Supreme Court overturns the erroneous lower court decision that, if left standing, could eviscerate the FOIA law and the public's right to know what its government is up to," stated Judicial Watch President Tom Fitton.
For further information, visit www.judicialwatch.org.
SOURCE Judicial Watch