Board of Governors Appellee Brief 4 March 2011 US Ct Appeals DC Appellant McKinley (Lawsuit #1)

8/7/2019 Board of Governors Appellee Brief 4 March 2011 US Ct Appeals DC Appellant McKinley (Lawsuit #1)

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ORAL ARGUMENT SCHEDULED FOR APRIL 21, 2011

No. 10-5353

IN THE UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

VERN MCKINLEY,

Plaintiff-Appellant,

v.

BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM,

Defendant-Appellee.

On Appeal from the United States District Court

For the District of Columbia, Case No. 09-1263

BRIEF FOR APPELLEE

TONY WEST

Of counsel: Assistant Attorney General

KATHERINE H. WHEATLEY BETH S. BRINKMANN

Associate General Counsel Deputy Assistant Attorney General

YVONNE F. MIZUSAWA MARK B. STERN

Senior Counsel SAMANTHA L. CHAIFETZ

(202) 514-4821

Board of Governors of the Attorneys, Appellate Staff

Federal Reserve System Civil Division, Dept. of Justice

20th and C Streets, N.W. 950 Pennsylvania Avenue, N.W.

Washington, D.C. 20551 Room 7248

Washington, D.C. 20530

Case: 10-5353 Document: 1296585 Filed: 03/04/2011 Page: 1


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TABLE OF CONTENTS

Page

JURISDICTIONAL STATEMENT. ........................................................................ 1

STATEMENT OF THE ISSUES. ............................................................................ 2

STATUTES. ............................................................................................................. 2

STATEMENT OF THE CASE................................................................................. 2

STATEMENT OF THE FACTS. ............................................................................. 5

I. Background. ......................................................................................... 5

II. Statutory Framework . ........................................................................ 12

III. Plaintiffs FOIA Request and the Present Litigation.......................... 15

SUMMARY OF ARGUMENT. ............................................................................. 17

STANDARD OF REVIEW. ................................................................................... 20

ARGUMENT. ......................................................................................................... 21

I. THE BOARD PROPERLY WITHHELD THE RECORDS

AT ISSUE PURSUANT TO FOIA EXEMPTION 5. ....................... 21

A. The district court properly recognized that

communications between the Board and the FRBNY

should be deemed intra-agency communications

within the meaning of Exemption 5......................................... 21

B. The district court properly concluded that, because

the materials withheld were both predecisional

and deliberative, they were within the scope of

FOIA Exemption 5................................................................... 28



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II. THE BOARD ALSO PROPERLY WITHHELD CERTAIN

MATERIALS PURSUANT TO FOIA EXEMPTION 8................... 32

CONCLUSION. ...................................................................................................... 36

ii



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TABLE OF AUTHORITIES

Cases: Page

Comm. for Monetary Reform v. Bd. of Governors of Federal Reserve System,

766 F.2d 538 (D.C. Cir. 1985). ............................................................................ 5

* Consumers Union of U.S., Inc. v. Heimann,

589 F.2d 531 (D.C. Cir. 1978)............................................................... 13, 32, 35

Ctr. for Natl Sec. Studies v. U.S. Dept of Justice,

331 F.3d 918 (D.C. Cir. 2003)........................................................................... 12

* Dept of the Interior v. Klamath Water Users Protective Assn,

532 U.S. 1 (2001)....................................................................... 13, 22, 24, 25, 28

Dudman Communications Corp. v. Dept of Air Force,

815 F.2d 1565 (D.C. Cir. 1987)................................................................... 30, 31

EPA v. Mink,

410 U.S. 73 (1973). ............................................................................................ 31

FBI v. Abramson,

456 U.S. 615 (1982)........................................................................................... 12

Fasano v. Fed. Reserve Bank of New York,

457 F.3d 274 (3d Cir. 2006). ............................................................................... 6

Fed. Open Markets Comm. v. Merrill,

443 U.S. 340 (1979)............................................................................................. 5

First Agric. Natl Bank v. States Tax Commn,

392 U.S. 339 (1968)............................................................................................. 6

* Gregory v. Fed. Deposit Ins. Corp.,

631 F.2d 896 (D.C. Cir. 1980)......................................................... 13, 33, 34, 35

* Authorities upon which Appellee chiefly relies are market with astericks.

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Horwitz v. Peace Corps,

428 F.3d 271 (D.C. Cir. 2005)........................................................................... 30

Judicial Watch, Inc. v. Dept of Justice,

365 F.3d 1108 (D.C. Cir. 2004)......................................................................... 21

Mead Data Central, Inc. v. U.S. Dept of the Air Force,

566 F.2d 242 (D.C. Cir. 1977)..................................................................... 29, 30

Mead Data Central, Inc. v. U.S. Dept of the Air Force,

575 F.2d 932 (D.C. Cir. 1978)........................................................................... 30

Montrose Chemical Corp. v. Train,

491 F.2d 63 (D.C. Cir. 1974)............................................................................. 21

Morley v. C.I.A.,

508 F.3d 1108 (D.C. Cir. 2007)......................................................................... 20

NLRB v. Sears, Roebuck & Co.,

421 U.S. 132 (1975)........................................................................................... 21

* Natl Inst. of Military Justice v. Dept of Defense,

512 F.3d 677 (D.C. Cir. 2008)................................................... 13, 18, 22, 23, 27

Quarles v. Dept of Navy,

893 F.2d 390 (D.C. Cir. 1990)........................................................................... 31

Reuss v. Balles,

584 F.2d 461 (D.C. Cir. 1978). ............................................................................ 6

Russell v. Dept of the Air Force,

682 F.2d 1045 (D.C. Cir.1982).......................................................................... 21

Ryan v. Dept of Justice,617 F.2d 781 (D.C. Cir. 1980)..................................................................... 21, 22

Wolfe v. Dept of Health and Human Services,

839 F.2d 768 (D.C. Cir. 1988) .......................................................................... 30

iv



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Statutes:

5 U.S.C. 552. ........................................................................................................ 12

5 U.S.C. 552(a)(4)(B). ........................................................................................... 1

5 U.S.C. 552(b). ............................................................................................... 4, 12

*5 U.S.C. 552(b)(5). ...................................................................................... 13, 21

*5 U.S.C. 552(b)(8). .......................................................................... 13, 20, 32, 33

12 U.S.C. 222 note. ................................................................................................ 8

12 U.S.C. 241. ........................................................................................................ 6

12 U.S.C. 248(a). ............................................................................................. 8, 34

12 U.S.C. 248(a)(1)................................................................................................ 8

12 U.S.C. 248(f). .................................................................................................... 7

12 U.S.C. 248(j). .................................................................................................... 7

*12 U.S.C. 248(r)(2). ................................................................................. 7, 11, 26

12 U.S.C. 302. .................................................................................................. 7, 27

12 U.S.C. 307. ........................................................................................................ 7

12 U.S.C. 321....................................................................................................... 27

12 U.S.C. 325. ........................................................................................................ 8

12 U.S.C. 338. ........................................................................................................ 8

12 U.S.C. 341. ........................................................................................................ 6

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12 U.S.C. 341(5). ................................................................................................... 7

*12 U.S.C. 343..................................................................................................... 11

*12 U.S.C. 343(a). ............................................................................... 7, 26, 27, 28

12 U.S.C. 483. ........................................................................................................ 8

12 U.S.C. 485. ........................................................................................................ 7

12 U.S.C. 1844(c)(2).............................................................................................. 8

12 U.S.C. 3105(c). ................................................................................................. 8

28 U.S.C. 1291. ...................................................................................................... 1

28 U.S.C. 1331. ...................................................................................................... 1

Regulations:

12 C.F.R. 201.1. ............................................................................................... 5, 27

Rules:

Fed. R. App. P. 4(a)(1).............................................................................................. 1

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Legislative Materials:

H.R. Rep. No. 1497, 89th Cong., 2nd Sess. (1966). ............................................... 34

S. Rep. No. 813, 89th Cong., 1st Sess. (1965).................................................. 31, 34

Statement by Timothy F. Geithner, President and Chief Executive Officer

of Federal Reserve Bank of New York, Before the U.S. Senate

Committee on Banking, Housing, and Urban Affairs (Apr. 3, 2008),

available at http://banking.senate.gov/public/_files/

OpgStmtGeithner4308Testimony.pdf.................................................................. 9

Other Authorities:

Board of Governors of the Federal Reserve System, The Federal ReserveSystem Purposesand Functions (9th ed. June 2005), available at

http://www.federalreserve.gov/pf/pdf/pf_complete.pdf . ...................... 5, 6, 7, 27

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No. 10-5353

IN THE UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

VERN MCKINLEY,

Plaintiff-Appellant,

v.

BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM,

Defendant-Appellee.

On Appeal from the United States District Court

For the District of Columbia, Case No. 09-1263

BRIEF FOR APPELLEE

JURISDICTIONAL STATEMENT

Plaintiff asserted claims under the Freedom of Information Act, 5 U.S.C.

552(a)(4)(B), and invoked the jurisdiction of the district court under 28 U.S.C.

1331. Joint Appendix (JA) 9. The district court entered a judgment in favor of

the defendant on September 29, 2010. JA 146. Plaintiff noticed this appeal on

October 19, 2010, within the period specified by Fed. R. App. P. 4(a)(1). JA 147.

This court has jurisdiction under 28 U.S.C. 1291.



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STATEMENT OF THE ISSUES

1. Whether the district court correctly concluded that communications between

the Federal Reserve Board and the Federal Reserve Bank of New York were properly

withheld under Exemption 5 of the Freedom of Information Act.

2. Whether the district court correctly concluded that certain information

supplied by financial institutions regulated by the Federal Reserve Board was

properly withheld under Exemption 8 of the Freedom of Information Act.

STATUTES

The pertinent statutory provisions are reproduced in the addendum to this brief.

STATEMENT OF THE CASE

Around March 10, 2008in the midst of the recent crisis in the U.S. financial

marketsthe Board of Governors of the Federal Reserve System (Federal Reserve

Board or Board) learned that The Bear Stearns Companies Inc. (Bear Stearns)

was experiencing severe liquidity pressures. Three days later, on March 13, the

Board learned that Bear Stearns was about to file for bankruptcy protection. See

District Court Memorandum Opinion of Sept. 29, 2010 (Op.) 3 (JA 122).

In response to this rapidly evolving crisis, the Board quickly gathered

information and recommendations from various sources, including the Securities and

Exchange Commission and the Federal Reserve Bank of New York, one of the twelve

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regional banks in the Federal Reserve System. Ibid. On March 14, 2008, the Board

determined that the sudden disorderly failure of Bear Stearns threatened significant

harm to the nations economy and financial stability. Id. at 4 (JA 123). The Board

therefore authorized the Federal Reserve Bank of New York to make a short-term

emergency loan to Bear Stearns through JP Morgan Chase & Company. Ibid. The

minutes of the Boards March 14 meeting explained that this temporary emergency

financing was the best available alternative given the fragile condition of the

financial markets at the time, the prominent position of Bear Stearns in those markets,

and the expected contagion that would result from the immediate failure of Bear

Stearns. Board Minutes of March 14, 2008 (Minutes) 2 (JA 46).

In December 2008, plaintiff-appellant Vern McKinley submitted a Freedom of

Information Act (FOIA) request to the Federal Reserve Board seeking documents

related to its March 14, 2008 loan authorization decision. In particular, plaintiff

sought any supporting memos or other information that detail the expected

contagion that would result from the immediate failure of Bear Stearns and the

related conclusion that this action was necessary to prevent, correct, or mitigate

serious harm to the economy or financial stability as described in the meeting

minutes. JA 44. Further, plaintiff filed suit to compel the Board to make the

requested information immediately available. Compl. 11 (JA 17).

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Between August and September 2009, after compiling and reviewing

documents, the Board produced 195 pages of responsive materials 167 full pages

and 28 partially redacted pages and withheld 163 pages. Thro Decl. 9-10 (JA

33). The Board explained that the items withheld, in full or in part, were subject to

one or more statutory exemptions under FOIA, 5 U.S.C. 552(b) specifically,

Exemptions 4, 5, 6, or 8. Ibid.

In February 2010, the Board moved for summary judgment on the ground that

plaintiff had been given all responsive materials not subject to FOIA exemptions. In

support of its motion, the Board supplied declarations from senior personnel of the

Federal Reserve Board and Securities and Exchange Commission (SEC). Plaintiff

filed a cross-motion for summary judgment, urging that Exemptions 4, 5, and 8 were

improperly claimed.1

In September 2010, the district court granted the Boards motion and denied

plaintiffs cross-motion. The court held that the disputed materials were inter-

agency or intra-agency communications protected by either deliberative process

privilege or, in the case of one item, attorney work product privilege, and therefore

subject to FOIA Exemption 5. Op. 9-21 (JA 128-40). The court further held that the

Plaintiff did not pursue a challenge to the Boards Exemption 6 withholdings.1

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Board properly invoked FOIA Exemption 8 with regard to certain information

obtained from regulated financial institutions. Id. at 21-26 (JA 140-45).2

Plaintiff timely appealed. JA 147.

STATEMENT OF THE FACTS

I. Background

A. The Federal Reserve System was established in 1913 as the nations

central bank. Comm. for Monetary Reform v. Bd. of Governors of Federal Reserve

System, 766 F.2d 538, 539 (D.C. Cir. 1985). Its principal functions include

supervising and regulating banking institutions to ensure the safety and soundness

of the nations banking and financial system, and maintaining the stability of the

financial system and containing systemic risk that may arise in financial markets.

Board of Governors of the Federal Reserve System, The Federal Reserve System

Purposes and Functions 1 (9th ed. June 2005) (Purposes and Functions); see, e.g.,3

12 C.F.R. 201.1 (The Federal Reserve System extends credit with due regard to the

Having found that all of the materials at issue were properly withheld, the2

court did not address the Boards assertion that some materials were also subject to

FOIA Exemption 4. Op. 26 (JA 145).

The Boards Purposes and Functions publication, available at3

http://www.federalreserve.gov/pf/pdf/pf_complete.pdf, has been relied upon by courts

to explain the Federal Reserve Systems operations. See, e.g., Fed. Open Markets

Comm. v. Merrill, 443 U.S. 340, 342 n.2 (1979).

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basic objectives of monetary policy and the maintenance of a sound and orderly

financial system.).

The Federal Reserve Systems central body is the Federal Reserve Board a

government agency composed of seven members appointed by the president and

confirmed by the Senate. 12 U.S.C. 241; see Reuss v. Balles, 584 F.2d 461, 462

(D.C. Cir. 1978). Twelve regional Federal Reserve Banks and their branches serve

as the Systems operating arms,carr[ying] out a variety of System functions

subject to the supervisory authority of the Board. Purposes and Functions 10, 6; see

Op. 2 (JA 121).

Chartered by Congress, the Reserve Banks were established to be the

monetary and fiscal agents of the United States. First Agric. Natl Bank v. States

Tax Commn, 392 U.S. 339, 356 (1968) (Marshall, J., dissenting). To aid in

achieving Congresss goal of insulating them from political pressure, the Federal

Reserve Banks are formed as corporations, Fasano v. Fed. Reserve Bank of New

York, 457 F.3d 274, 277 (3d Cir. 2006), and operate under various grants of

independent authority, such as the power to sue and be sued in their own names, to

make contracts, and to hire and fire at-will employees. 12 U.S.C. 341.

At the same time, as the Reserve Banks are intimate parts of the Governments

fiscal structure, Fasano, 457 F.3d at 278, their operations and activities are

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supervised by the Federal Reserve Board. E.g., 12 U.S.C. 248(j), 485. The

Boards oversight responsibilities include, for example, appointing three of the nine

members of each Banks board of directors, id. 302; approving the selections of

Bank presidents, id. 341(5); suspending or removing Reserve Bank officers or

director, id. 248(f); and reviewing and approving the salaries paid to Reserve Bank

employees, id. 307.

The Reserve Banks are authorized to extend various types of credit to

depository institutions and have established several programs to lend to these

institutions on an ongoing basis. See Purposes and Functions 46-49. In unusual and

exigent circumstances, the Federal Reserve Board may in accordance with section

13(3) of the Federal Reserve Act authorize a Federal Reserve Bank to extend credit

to a non-depository institution. 12 U.S.C. 343(A); see id. 248(r)(2). Before4

extending the credit, the Reserve Bank must obtain evidence that the institution is

unable to secure adequate credit accommodations from other banking institutions.

12 U.S.C. 343(A).5

Section 343(A) describes the conditions in which the Board, by the4

affirmative vote of at least five members, may authorize such lending. Section248(r)(2) describes additional criteria that must be satisfied for the Board to act with

fewer than five members available.

In 2010, section 13(3) was substantially amended by section 1101 of the5

Dodd-Frank Wall Street Reform and Consumer Protection Act. These amendments

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The Board and the Reserve Banks, through examiners the Board selects or

approves, are authorized to examine certain types of banking organizations. See 12

U.S.C. 248(a), 325, 338, 1844(c)(2), 3105. For the most part, this authority is

6

carried out by examiners at the Federal Reserve Banks under the coordination and

oversight of the Board. See 12 U.S.C. 222 note (providing in the Rules of

Organization that the Board's Director of Banking Supervision and Regulation

coordinates the bank supervisory functions of the System and evaluates the

examination procedures of the Reserve Banks). In addition, the Reserve Banks must

at all times furnish to the Board of Governors of the Federal Reserve System such

information as may be demanded concerning the condition of any member bank

within the district of the said Federal reserve bank. 12 U.S.C. 483.

B. This case concerns a FOIA request for supporting memos or other

information detailing the basis for the Federal Reserve Boards decision on March

14, 2008, pursuant to section 13(3) of the Federal Reserve Act, to authorize the

to section 13(3) are not relevant to the issues in this case.

For example, 12 U.S.C. 248(a)(1) authorizes the Board [t]o examine at its6

discretion the accounts, books, and affairs of each Federal reserve bank and of each

member bank and to require such statements and reports as it may deem necessary,

and 325 provides that certain commercial banks belonging to the Federal Reserve

System, known as member banks, are subject to examination by Federal Reserve

examiners selected or approved by the Board.

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Federal Reserve Bank of New York (FRBNY) to make an emergency loan to avoid

the immediate failure of Bear Stearns. JA 44.

The Boards deliberations took place amid significant turmoil in the U.S.

financial markets. Beginning in the summer of 2007, the U.S. financial markets saw

demand for structured or securitized assets decline dramatically. As the value

of these assets dropped, various financial institutions some of which held large

positions in these assets experienced funding pressures. As uncertainty grew over

the magnitude of losses, financial institutions became increasingly unwilling to lend

to each other, even against high-quality collateral. As a result, the liquidity pressures

on financial institutions intensified, escalating rapidly between mid-January and mid-

March 2008. See Stefansson Decl. 6 (JA 100).7

Around March 10, 2008, the Federal Reserve Board began to receive

information that Bear Stearns was experiencing severe liquidity pressures and might

be forced to declare bankruptcy in the near term. Op. 3 (JA 122); see Thro Decl. 3

(JA 30). As a broker-dealer holding company, Bear Stearns was regulated by the

SEC, not by the Federal Reserve Board; and because Bear Stearns was not a

For a more detailed discussion of the dynamics of the financial crisis, see the7

Statement by Timothy F. Geithner, President and Chief Executive Officer of Federal

Reserve Bank of New York, before the U.S. Senate Committee on Banking, Housing,

and Urban Affairs (Apr. 3, 2008), available at

http://banking.senate.gov/public/_files/OpgStmtGeithner4308Testimony.pdf.

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depository institution, it was ineligible to obtain financing from a Federal Reserve

Banks regular lending program. Op. 4 (JA 123): see Winter Decl. 10 (JA 110)

(describing the make-up of Bear Stearns); 12 U.S.C. 347b(a), 461(b)(7).

Nonetheless, the threat of its collapse was of significant concern to the Board, given

the firms prominent position in various financial markets and the vulnerability of

those markets in March 2008. Stefansson Decl. 8, 10 (JA 101-02).

In weighing the Federal Reserve Systems potential responses to Bear Stearns

difficulties, the Board quickly sought to assess the gravity of the situation and the

consequences Bear Stearns bankruptcy would hold for the U.S. financial markets.

Op. 3 (JA 122). To do so, the Board and Board staff (particularly those in the

Division of Banking Supervision and Regulation) worked to understand the latest

market developments and the exposure of certain key financial institutions to Bear

Stearns. Stefansson Decl. 8-9 (JA 101-02). Consistent with the Federal Reserve

Systems structure and well-established supervisory processes, id. 9 (JA 102), the

Board relied heavily on Federal Reserve Bank staff and examiners to identify, in

real-time, information relevant to the deliberations and to make recommendations.

Op. 3 (JA 122); see Stefansson Decl. 13-14 (JA 103-104); Thro Decl. 17, 19-21

(JA 37-41). The SEC also provided input on a confidential inter-agency basis based

on its supervisory relationship (through the SEC voluntary Consolidated Supervised

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Entity program) with Bear Stearns. Danis Decl. 3-4 (JA 118); Winter Decl. 6-7,

10-12 (JA 109-10).

On March 13, Bears Stearns liquidity declined to levels that were insufficient

to meet its maturing obligations, and staff of the SEC notified the Board and the

FRBNY that Bear Stearns would have to file for bankruptcy protection the next day.

Op. 3 (JA 122).

Based on the targeted collection of information acquired by the Board with the

help of the FRBNY and the SEC, the Board concluded that the immediate failure of

Bear Stearns would have severe implications for the functioning of the financial

markets, particularly given the vulnerable state of the markets. Op. 4 (JA 123).

In addition to these unusual and exigent circumstances, required to authorize a loan

to a non-depository institution under 12 U.S.C. 343, the Board found that the other

factors that must exist to authorize such a loan on the vote of fewer than five Board

members, id. 248(r)(2), were also present. Minutes 2-3 (JA 46-47). The Board8

found that adequate credit accommodations could not be secured from other sources,

and that the Boards action was necessary to prevent, correct, or mitigate serious harm

to the economy or financial stability. Id. at 3 (JA 47).

This was necessary because one member of the Board of Governors was8

unavailable to participate in the Boards emergency meeting on March 14. Minutes

3 (JA 47).

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In light of its analysis, the Board authorized the FRBNY to extend credit to

JP Morgan Chase to provide a temporary loan to Bear Stearns to enable it to meet its

financial obligations and to avoid filing for bankruptcy. Op. 4 (JA 123). In turn, the

FRBNY approved the loan, and the transaction was completed. Ibid. Bear Stearns

did not file for bankruptcy, and, on March 16, a second loan was authorized to

facilitate JP Morgan Chases acquisition of Bear Stearns. Ibid.

II. Statutory Framework

The Freedom of Information Act, 5 U.S.C. 552, codifies a general policy of

disclosure, upon request, of records held by federal agencies, except to the extent

such records are protected by statutory exemptions. In enacting the FOIA, Congress

sought to ensure an informed citizenry but recognized that legitimate

governmental and private interests could be harmed by release of certain types of

information and provided nine specific exemptions under which disclosure could be

refused. FBI v. Abramson, 456 U.S. 615, 621 (1982) (internal quotations marks and

citation omitted); see also 5 U.S.C. 552(b) (listing exemptions). Thus, the FOIA,

with its exemptions, represents a balance struck by Congress between the publics

right to know and the governments legitimate interest in keeping certain information

confidential. Ctr. for Natl Sec. Studies v. U.S. Dept of Justice, 331 F.3d 918, 925

(D.C. Cir. 2003).

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III. Plaintiffs FOIA Request and the Present Litigation

A. In December 2008, plaintiff submitted a FOIA request for further detail on

information contained in the [March 14, 2008] minutes of the Board of Governors of

the Federal Reserve. JA 44. He asked, [i]n particular, for any supporting memos

or other information that detail the expected contagion that would result from the

immediate failure of Bear Stearns and the related conclusion that this action was

necessary to prevent, correct, or mitigate serious harm to the economy or financial

stability as described in the meeting minutes. Ibid. Plaintiff subsequently brought

this suit to compel the Board to make the requested information immediately

available. Compl. 11 (JA 17).

After searching its comprehensive repository of materials related to the March

2008 Bear Stearns loans, see Thro Decl. 3-5 (JA 30-32), the Board produced 195

pages of responsive materials (167 full pages and 28 partially redacted pages) and

withheld 163 pages, id. 9-10 (JA 33-34). Plaintiff was informed that the withheld

and redacted materials comprising 38 items in the Vaughn index were protected

from release by one or more statutory exemptions under the FOIA. Op. 5 (JA 124);

see also Thro Decl. 10 (JA 33-34); Winter Decl. 5 (JA 108).

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B. On cross-motions for summary judgment, the district court ruled in favor9

of the Board. Op. 26 (JA 145).

1. The Board maintained that all of the materials sought by the plaintiff were

subject to Exemption 5, and the court agreed holding that they were inter-agency

or intra-agency communications protected by either deliberative process privilege

or, in the case of one item, attorney work product privilege. Op. 9-21 (JA 128-40).

The court rejected plaintiffs contention that communications involving

employees of the FRBNY were outside the scope of Exemption 5. The court

acknowledged that the FRBNY is not a federal agency, but held that it was covered

in this case by the consultant corollary. See id. at 12 (JA 131). The court found

that the Board had shown, through declarations and documents, that the FRBNYs

input was solicited for the purpose of aiding the Boards deliberative process, id. at

10 (JA 129), and that the FRBNY was not representing an interest of its own when

it advised the Board, but rather it was simply assisting the Boards evaluation of the

The Boards motion was accompanied by four declarations: one from the9

Boards Senior Counsel, Thro Decl. (JA 28); one from the Associate Director of the

Boards Division of Banking Supervision and Regulation, Stefansson Decl. (JA 98);

one from the U.S. Securities and Exchange Commissions FOIA and Privacy Act

Officer, Winter Decl. (JA 107); and one from a senior financial economist in the

Broker-Dealer Risk Office of the Division of Trading and Markets at the Securities

and Exchange Commission, Danis Decl. (JA 117). The Vaughn index, describing

each of the withheld items and the basis for the withholding, was included as Exhibit

F to the Thro Declaration (JA 58).

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Bear Stearns situation, id. at 12 (JA 131).

Likewise, the court rejected plaintiffs claim that factual information had been

wrongly withheld under Exemption 5, id. at 15-17 (JA 134-36), as the court was

convinced that disclosure of the requested [information] ... would expose the

Boards decisionmaking process, id. at 17 (JA 136) (internal quotations marks

omitted). The court concluded, for example, that revealing the specific institutions

the staff of the Board and the FRBNY had reached out to and focused their attention

on, as well as the particular financial statistics that were requested and culled from

the mass of data available for the Boards consideration, would reveal the agencys

deliberations. Id. at 15-17 (JA 134-36).

The court also addressed plaintiffs suggestion that the Board had failed to

proffer evidence that each of the withheld items would, if released, cause harm to the

agencys decisionmaking process. Id. at 17-18 (JA 136-37). The court observed that

the well-established test under Exemption 5 is whether an item is predecisional and

deliberative, and that no additional demonstration of harm is required as a matter of

law. Id. at 18 (JA 137).

2. The court additionally held that FOIA Exemption 8 provided an alternate

basis for declining to release certain information gathered from financial institutions

regulated by the Federal Reserve Board (or, in the case of information gathered from

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Bear Stearns, regulated by the SEC). Id. at 21 (JA 140). The court observed that the

information at issue concerning various institutions exposure to Bear Stearns was

obtained as part of [the Boards and the SECs] continuous supervision of

institutions pursuant to the agencies undisputed regulatory responsibilities. Id.

at 23-24 (JA 142-43). Further, the court acknowledged that the information was

compiled under circumstances that demanded fast moving, real-time reporting. Id.

at 23 (JA 142). The court concluded, accordingly, that these records were properly

characterized as related to examination, operating, or condition reports, and thus

within the broad scope of Exemption 8. Id. at 24 (JA 143).10

SUMMARY OF ARGUMENT

Plaintiff seeks records pertaining to the Federal Reserve Boards decision in

March 2008 to authorize the Federal Reserve Bank of New York to make a short-

term emergency loan to Bear Stearns through JP Morgan Chase. Plaintiff seeks,

[i]n particular, any supporting memos or other information that detail the

expected contagion that would result from the immediate failure of Bear Stearns

and the related conclusion that this action was necessary to prevent, correct, or

mitigate serious harm to the economy or financial stability as described in the

As noted supra, the court did not address the applicability of Exemption 4 to10

some of the materials. Op. 26 (JA 145).

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[Federal Reserve Boards] meeting minutes. JA 44.

I. The Federal Reserve Board properly withheld all the records at issue on

this appeal under FOIA Exemption 5.

a. Plaintiff errs in asserting that the communications between the Board and

the Federal Reserve Bank of New York should not be treated as inter-agency or

intra-agency communications within the meaning of Exemption 5. The Reserve

Banks are not government agencies. They are, however, critical components of

the Federal Reserve System, and the Board relies on input from the regional

Reserve Banks in exercising its regulatory authority, including input from the

Reserve Bank examiners who carry out the field examinations and inspections of

entities regulated by the Board. In responding to the Bear Stearns crisis, the Board

thus turned to the FRBNY for assistance in the Boards consideration of potential

responses to Bear Stearns funding difficulties. Op. 10 (JA 128) (quoting

Stefansson Decl. 8). The material prepared for the Board by the FRBNY

played essentially the same part in an agencys process of deliberation as

documents prepared by agency personnel might have done, and it is common

sense that such records be treated as intra-agency communications. Natl Inst. of

Military Justice v. Dept of Defense, 512 F.3d 677, 682, 685 (D.C. Cir. 2008)

(internal quotation marks and citations omitted).

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b. After reviewing the agencys declarations and the Vaughn index, the

district court concluded that the records were pre-decisional and deliberative.

Plaintiff does not challenge that conclusion, but argues, that the district court

should have required additional detailed proof that disclosure would result in

specific harm to the agencys deliberative process. This Court has never

suggested that a standardless inquiry of this kind is necessary or appropriate.

Exemption 5 reflects a congressional determination that agencies should not be

required to disclose records that are predecisional and deliberative, as such

disclosure would chill frank discussion of policies and issues. Agencies need not,

on a case-by-case basis, proffer evidence that this congressional judgment was

correct.

In any event, the agencys declarations made quite clear that compelling

disclosure of the requested records would have the inhibiting impact to which

Exemption 5 is addressed. The district court correctly recognized that requiring

disclosure would expose [the Boards] decisionmaking process in such a way as

to discourage candid discussion within the agency and thereby undermine the

agencys ability to perform its functions. Op. 17 (JA 136) (internal quotations

marks and citation omitted).

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II. The district court correctly concluded that some of the requested records

were also protected by FOIA Exemption 8, which authorizes an agency to

withhold information that is contained in or related to the examination, operating

or condition reports prepared by, or on behalf of, or for the use of an agency

responsible for the regulation or supervision of financial institutions. 5 U.S.C.

552(b)(8). Exemption 8 plainly protects from disclosure the e-mails or tables (or

portions thereof) that contained information obtained by the Board from financial

institutions subject to its regulation. The district court rightly concluded that the

Boards ability to gather such information in furtherance of its mission to regulate

our nations banking system wouldinarguably be compromised if such

information were now released, an outcome [that] is precisely what Exemption 8

is designed to avoid[.]Op. 25 (JA 144) (internal quotation marks omitted).

STANDARD OF REVIEW

This Court reviews de novo a district courts grant of summary judgment in

a FOIA case. See Morley v. C.I.A., 508 F.3d 1108, 1114 (D.C. Cir. 2007).

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ARGUMENT

I. THE BOARD PROPERLY WITHHELD THE RECORDS AT

ISSUE PURSUANT TO FOIA EXEMPTION 5.

A. The district court properly recognized that communications

between the Board and the FRBNY should be deemed

intra-agency communications within the meaning of

Exemption 5.

1. Exemption 5 permits an agency to withhold from the public

inter-agency or intra-agency memorandums or letters which would not be

available by law to a party other than an agency in litigation with the agency. 5

U.S.C. 552(b)(5). This exemption shields documents of the type that would be

privileged in the civil discovery context, including materials protected by the

attorney-work product privilege and the executive deliberative process privilege.

NLRB v. Sears, Roebuck & Co., 421 U.S. 132, 149 (1975); see Judicial Watch,

Inc. v. Dept of Justice, 365 F.3d 1108, 1113 (D.C. Cir. 2004).

This Court has emphasized that Exemption 5 protects not only

communications which are themselves deliberative in nature, but all

communications which, if revealed, would expose to public view the deliberative

process of an agency. Russell v. Dept of the Air Force, 682 F.2d 1045, 1048

(D.C. Cir.1982) (citing Montrose Chemical Corp. v. Train, 491 F.2d 63, 71 (D.C.

Cir. 1974); see Ryan v. Dept of Justice, 617 F.2d 781, 790 (D.C. Cir. 1980)

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(explaining that factual segments are protected by Exemption 5 if the manner

of selecting or presenting those facts would reveal the deliberate process, or if the

facts are inextricably intertwined with the policy-making process) (citations

omitted).

This Court has also repeatedly recognized that Exemption 5 protects

material prepared for an agency by a non-governmental entity if that material

played essentially the same part in an agencys process of deliberation as

documents prepared by agency personnel might have done[.] Natl Inst. of

Military Justice, 512 F.3d at 682 (quoting Dept of the Interior v. Klamath Water

Users Protective Assn, 532 U.S. 1, 10 (2001)); see id. at 680-81, 684 (discussing

Circuit precedent).

2. On appeal, plaintiff renews his contention that communication[s]

between the Board and FRBNY cannot be considered inter-agency or intra-

agency exchanges within the meaning of Exemption 5. Pl. Br. 8.

It is undisputed that Federal Reserve Banks, such as the FRBNY, are not

government agencies (or components thereof) for purposes of the FOIA. Ibid. As

the district court explained, however, the records at issue play[ed] essentially the

same part in an agencys process of deliberation as documents prepared by agency

personnel might have done[.] Op. 11 (JA 130) (quoting Natl Inst. of Military

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Justice v. Dept of Defense, 512 F.3d at 682 (quoting Klamath, 532 U.S. at 10)).

In such cases it is common sense that the records be deemed intra-agency

communications. Natl Inst. of Military Justice,512 F.3d at 685 (quoting Ryan,

617 F.2d at 790).

As the district court explained, that is precisely the role of the records

provided by the FRBNY to the Board at issue in this case. Upon learning of Bear

Stearns severe funding difficulties on or around March 10, 2008, the Federal

Reserve Board was faced with the pressing question of what steps, if any, to take

in response. It was critical to the Boards decisionmaking to assess the effects that

a bankruptcy filing by Bear Stearns would have on the financial markets generally

and on certain institutions specifically. Op. 10, 17 (JA 129, 136). To that end, the

Board looked to the FRBNY to provide critical data points and recommendations.

Ibid.

Many of the banking organizations likely to be adversely affected if Bear

Stearns defaulted were subject to the examination authority of the Board, which

exercises this authority through Reserve Bank examiners who conduct the field

examinations and inspections of these organizations. See, e.g., Stefansson Decl.

4 (JA 99) (explaining that large complex banking organizations are subject to

continuous on-site supervision by Reserve Bank examiners).

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It was in accordance with [these] well-established supervisory processes

that the FRBNY surveyed financial institutions for purposes of assessing [their]

real-time exposure to Bear Stearns and conveyed its findings to the Board to

assist in the Boards consideration of potential responses to Bear Stearns funding

difficulties. Op. 10 (JA 129) (quoting Stefansson Decl. 8). As described

supra, the relevant events unfolded quickly between March 10 and March 14,

2008. In response to news of Bear Stearns rapidly deteriorating financial

condition, the Board sought to understand the gravity of the situation and the

impact Bear Stearns failure would have. Op. 3 (JA 122). The FRBNY provided

the Board with data and analyses, which were considered by the Board and staff

advising the Board as part of the ongoing process of deliberation leading up to the

decision to authorize the Temporary Loan. Thro Decl. 19 (JA 39).

3. Plaintiffs argument is premised on a mistaken analogy to Department of

the Interior v. Klamath Water Users Protective Assn, 532 U.S. 1 (2001), in which

the Supreme Court held that communications between Indian Tribes and the

Bureau of Indian Affairs regarding water rights fell outside the scope of

Exemption 5. The Court held that, in communicating their views to the Bureau of

Indian Affairs, the tribes not only had their own, albeit entirely legitimate,

interests in mind, but more specifically were seeking a Government benefit [ i.e.,

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water rights] at the expense of other applicants. Id. at 12 & n. 4. The Court

declined to extend Exemption 5 protection to documents submitted by the Indian

tribes because the [t]ribes [we]re self-advocates at the expense of others seeking

benefits inadequate to satisfy everyone. Id. at 12. The Court concluded that the

intra-agency condition excludes, at the least, communications to or from an

interested party seeking a Government benefit at the expense of other applicants,

Id. at 12 n.4. As the Court also explained, however, there is no requirement that a

consultant be devoid of a definite point of view, id. at 10, as long as the

consultant does not represent an interest of its own, or the interest of any other

client, id. at 11. Indeed, without resolving the question, the Court acknowledged

that consultants may be enough like the agencys own personnel to justify calling

their communications intra-agency. Id. at 12.

That description certainly applies here. Equally clearly, the FRBNY was

notan interested party seeking a Government benefit at the expense of other

applicants. Id. at 12 n.4. Nevertheless, in an effort to identify a divergence of

interests between the Board and FRBNY, plaintiff asserts that FRBNY had its

own interests when it communicated with the Board because Section 13(3) [of the

Federal Reserve Act] gave FRBNY, not the Board, final decision making

authority. Pl. Br. 10. By this plaintiff apparently means that the Boards March

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14, 2008 decision authorizedFRBNY to extend a temporary loan to benefit Bear

Stearns, but did not legally compelthe bank to do so. Ibid.; see 12 U.S.C.

343(A). Plaintiffs logic is unclear. That the FRBNY retained discretion as to

whether to extend a loan, even if authorized to do so, only diminishes any

potential concern that the Board might require it to extend one contrary to its own

judgment.

Similarly, plaintiff points out that before extending the loan, FRBNY was

statutorily required to make its own finding that Bear Stearns could not secure

adequate credit accommodations from other banking institutions. Pl. Br. 10

(quoting 12 U.S.C. 343(A)). Plaintiff does not explain why this would suggest

that FRBNY acted in furtherance of its own interests so as to preclude

participation in the Boards decisionmaking process. Id. at 14. Indeed, in the Bear

Stearns situation, the Board was required to, and did, make the very same

determination. See Minutes 3 (JA 47); see 12 U.S.C. 248(r)(2). .

More fundamentally, plaintiffs suggestion that the FRBNY is a private

bank, Pl. Br. 3, engaged in the business of banking, id. at 11, that makes

decisions about extending credit based on what is best for FRBNY, ibid., fails to

appreciate the FRBNYs role as part of the Federal Reserve System. As discussed

supra, Congress chartered the Federal Reserve Banks for a public purpose. ...

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[A]nd they combine both public and private elements in their makeup and

organization. Purposes and Functions 10. Like the Board, the Reserve Banks11

are key components of the Federal Reserve System, and that System extends

credit with due regard to the basic objectives of monetary policy and the

maintenance of a sound and orderly financial system. 12 C.F.R. 201.1.

Indeed, nowhere is coordination between the Federal Reserve Board and the

Reserve Banks more central and more apparent than in the extension of credit in

unusual and exigent circumstances pursuant to Section 13(3) of the Federal

Reserve Act. The statute requires the Board and Federal Reserve Bank to act

together in order to make a loan. 12 U.S.C. 343. And, indeed, as the plaintiff

notes, prior to issuing a loan authorized under Section 13(3), the Reserve Bank

must find that the borrower is unable to secure adequate credit accommodations

While Reserve Banks are corporations, their stock is available only to11

member banks, who are required by law to subscribe to it. 12 U.S.C. 321. And

holding of this stock ... does not carry with it the control and financial interest

conveyed to holders of common stock in for-profit organizations. Purposes and

Functions 12 (explaining that Reserve Bank stock, which cannot be sold or pledged

as collateral, is merely a legal obligation of Federal Reserve membership); see, e.g.,

12 U.S.C. 302 (providing that the Federal Reserve Board appoints three members

of each Banks board of directors). In any event, even if the FRBNY were a typical

private corporation, it could still come within the consultant corollary of the

deliberative process exemption. Natl Inst. of Military Justice, 512 F.3d at 681

(Exemption 5 extends to documents received from private, nongovernmental

parties.)

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from other banking institutions, 12 U.S.C. 343 effectively confirming that no

private bank would make such a loan.

In sum, there is no basis on which to conclude that the FRBNY was

advocating for any interest that differed from the interests of the Federal Reserve

Board. Even more clearly than advice provided by an outside expert or a

contractor hired by an agency, the materials contributed by the FRBNY staff

play[ed] essentially the same part in an agencys process of deliberation as

documents prepared by agency personnel might have done. Klamath, 532 U.S. at

10.

B. The district court properly concluded that, because

the materials withheld were both predecisional and

deliberative, they were within the scope of FOIA

Exemption 5.

Plaintiff does not challenge the district courts conclusion that the materials

withheld would if disclosed expose the process by which the Board formulated

its final decision. Op. 17 (JA 136). Rather, he argues that the court also should12

After reviewing the Boards declarations and the Vaughn index, the district12

court concluded that the Board had established that the disclosures plaintiff sought

would expose the agencys judgment calls and decisionmaking process. Op. 15-17

(JA 134-36). The court noted, for example, the Boards testimony that revealing the

identities of financial institutions discussed in certain communications would reveal

which institutions the Federal Reserve System staff considered to be systemically

important, id. at 15-16 (JA 134-35) (quoting Thro Decl., Ex. F, Item 8), and which

thus played an important part in the Boards deliberations. Id. at 16 (JA 135). (...

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have required additional evidence that the disclosure of the withheld material

would harm [the Boards] decision making process. Pl. Br. 15. As the district

court explained, however, once it has been shown that a document is both

predecisional and deliberative, no such showing is legally required. Op. 18 (JA

137).

Plaintiff nevertheless maintains that the Board must show by specific and

detailed proof that disclosure would defeat, rather than further, the purposes of the

FOIA. Pl. Br. 17 (quoting Mead Data Central, Inc. v. U.S. Dept of the Air

Force, 566 F.2d 242, 258 (D.C. Cir. 1977)). As the district court explained,

plaintiffs reliance on Mead Data is misplaced. The statement plaintiff quotes was

made by the Court in considering whether Exemption 5 could ever apply to an

agencys negotiation proceedings with an outside party - i.e., to material that was

indisputably not part of the agencys internal deliberative process. Op. 18 (JA

137) (citing Mead Data, 566 F.2d at 257-58). In that circumstance, the Court held

that Exemption 5 would be inapplicable unless the agency could show that the

threat of disclosure of negotiation proceedings would so inhibit private parties

from dealing with the Government that agencies must be permitted to withhold

contd ...) Plaintiff has waived any challenge to that holding by failing to raise it in

his opening brief.

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such information in order to preserve their ability to effectively arrange for

contractual agreements. Mead Data, 566 F.2d at 257-58. In contrast, the

district court observed, elsewhere in Mead Data, the Court upheld the

applicability of Exemption 5 to other documents [that were part of the agencys

internal processes] where the record established that those documents were both

predecisional and part of the deliberative process. Op. 18 (JA 137); see Mead,

566 F.2d at 257.13

In a second decision involving the same parties, the Court held that the13

material withheld in this case mainly cost comparisons, feasibility opinions, and the

data relevant to how the personnel involved arrived at those comparisons were

protected because they would reveal the process by which different members of the

decisionmaking chain arrived at their conclusions and what those predecisional

conclusions are. SeeMead Data Central, Inc. v. U.S. Dept of the Air Force , 575F.2d 932, 934 (D.C. Cir. 1978). The Court required no additional showing that

disclosure would jeopardize candor.

The same is true of cases cited by the plaintiff. See, e.g., Horwitz v. Peace

Corps, 428 F.3d 271, 277 (D.C. Cir. 2005) (holding that a remarkably candid

document was predecisional and deliberative and therefore exempt from disclosure,

without requiring the government to provide evidence of harm) (cited in Pl. Br. 15-

16); Dudman Communications Corp. v. Dept of Air Force, 815 F.2d 1565, 1569

(D.C. Cir. 1987) (Court observed that making a draft document public would provide

some insight into the Air Forces internal editing process, but did not deem proof of

harm to the deliberative process necessary). Cf. Wolfe v. Dept of Health and Human

Services, 839 F.2d 768, 773 (D.C. Cir. 1988) (declining to become enmeshed in a

continual process of estimating or, more accurately, guessing about the adverse

effects on the decisional process of a great variety of combinations of pieces of

information) (cited in Pl. Br. 16).

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Exemption 5 reflects Congresss recognition that exposing agencies

predecisional, deliberative processes would lead them to eschew frank discussion

of legal or policy matters in writing, that efficiency of Government would be

greatly hampered, and that the quality of the agency decisions would suffer as a

result. S. Rep. No. 813, 89th Cong., 1st Sess., 9 (1965); see, e.g., EPA v. Mink,

410 U.S. 73, 87 (1973) (explaining that the importance of this underlying policy

was echoed again and again during legislative analysis and discussions of

Exemption 5). Accordingly, having demonstrated that a record is pre-decisional

and deliberative, an agency need not make additional specific showings regarding

the impact of disclosure on its decisionmaking process.

In any event, after reviewing the declarations and the Vaughn index, the

district court correctly recognized that disclosure would expose [the Board's]

decisionmaking process in such a way as to discourage candid discussion within

the agency and thereby undermine the agencys ability to perform its functions.

Op. 17 (JA 136) (quoting Quarles v. Dept of Navy, 893 F.2d 390, 392 (D.C. Cir.

1990) (quoting Dudman, 815 F.2d at 1568)). No additional proof is necessary to

underscore the correctness of that conclusion.

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II. THE BOARD ALSO PROPERLY WITHHELD CERTAIN

MATERIALS PURSUANT TO FOIA EXEMPTION 8.

The district court concluded, in the alternative, that the Board properly

invoked FOIA Exemption 8 with regard to e-mails or tables (or portions thereof)

that contained information obtained pursuant to the Boards supervisory authority,

from financial institutions subject to its regulation. Op. 21-25 (JA 140-44); see

Thro Decl. 17-18 (JA 37-39). The information withheld consists of the14

following: the identity of institutions with exposure to Bear Stearns, the amount of

such exposure, and/or the activities these institutions had taken to limit their

exposure to Bear Stearns.

FOIA Exemption 8 provides that an agency may withhold information that

is contained in or related to examination, operating or condition reports prepared

by, or on behalf of, or for the use of an agency responsible for the regulation or

supervision of financial institutions. 5 U.S.C. 552(b)(8). As the district court

noted, it is well-established that Exemption 8s scope is particularly broad. Op.

22 (JA 141) (quoting Consumers Union of U.S., Inc. v. Heimann, 589 F.2d 531,

Exemption 8 was invoked with regard to thirteen items. For two of those14

items, the SEC, rather than the Board, was the regulatory body collecting the

information. Both items were records obtained in connection with the SECs

supervision and regulation of Bear Stearns. See Thro Decl., Ex. F (Items 11 and 12)

(JA 70-71); Danis Decl. 4-5 (JA 118). Plaintiffs brief does not discuss the SEC,

but the arguments here apply with equal force to the SECs two items.

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534 (D.C. Cir. 1978) (If the Congress has intentionally and unambiguously

crafted a particularly broad, all-inclusive definition, it is not our function, even in

the FOIA context, to subvert that effort.)). See Gregory v. Fed. Deposit Ins.

Corp., 631 F.2d 896, 898 (D.C. Cir. 1980).

Plaintiff does not dispute that the records at issue were prepared by, on

behalf of, or for the use of the Board, an agency responsible for the regulation or

supervision of financial institutions. 5 U.S.C. 552(b)(8). Plaintiff also does not

dispute that the information was properly obtained pursuant to the Boards

supervisory authority. Finally, plaintiff does not dispute the exigent circumstances

under which this information was gathered and reported.

Plaintiff nevertheless renews his contention that the Board failed to provide

a sufficient explanation for the applicability of this exemption. As the district

court explained, the Boards declarations establish that it obtained the documents

at issue as part of its continuous supervision of institutions it supervised, in the

hectic days and hours during which the Board and its staff strove to assess the

impact of a possible disorderly failure of Bear Stearns. Op. 23 (JA 142); see

Stefansson Decl. 4, 14-15 (JA 99-100, 104-05) (explaining that the bank

supervisory process is one of continual interaction and information-sharing by

regulation entities with their bank supervisors); Thro Decl. 17 (JA 37). These

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materials constituted part of a fast-moving, real-time effort by the Board to

monitor the possible impact of a Bear Stearns bankruptcy. Op. 23 (JA 142). The

materials at issue contain precisely the type of sensitive details collected by

Government agencies which regulate these institutions that Congress recognized

could, if indiscriminately disclosed, cause great harm. H.R. Rep. No. 1497, 89th

Cong., 2nd Sess. 11 (1966); see also S. Rep. No. 813, 89th Cong., 1st Sess. 10

(1965).

Plaintiff suggests that the emails and charts at issue cannot constitute or

relate to reports for purposes of Exemption 8, Pl. Br. 21, a proposition without

basis in the statutory text, this Courts precedent, or common sense. The Boards

broad authority includes the power to require such statements and reports as it

may deem necessary.12 U.S.C. 248(a). The Boards receipt of real-time

reports from supervised financial institutions reflected in the withheld emails

and attachments and obtained by Federal Reserve examiners as part of a well-

established supervisory process falls well within the broad protections afforded

by Exemption 8. Gregory, 631 F.2d at 898 (Congress looked to the nature and

source of the material and determined to provide absolute protection regardless of

the circumstances underlying the regulatory agencys receipt or preparation of

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examination, operating or condition reports).15

The district court explained that plaintiffs position would undermine the

frank cooperation between bank officials and regulated entities that Exemption

8 seeks to protect. Op. 25 (JA 144) (quoting Gregory, 631 F.2d at 899); see also

Heimann, 589 F.2d at 534 (If details of the bank examinations were made freely

available to the public and to banking competitors, ... banks would cooperate less

than fully with federal authorities.). The district court correctly concluded that

the Boards ability to gather information in furtherance of its mission to regulate

our nation's banking system would inarguably be compromised if such information

were now released. Op. 25 (JA144) .

Plaintiff cites no authority that supports his suggestion that the reports15

covered by Exemption 8 must adhere to a particular standardized format. More

generally, plaintiff addresses no case law pertaining to Exemption 8.

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CONCLUSION

For the foregoing reasons, the district courts ruling should be affirmed.

Respectfully submitted,

TONY WEST

Of counsel: Assistant Attorney General

KATHERINE H. WHEATLEY BETH S. BRINKMANN

Associate General Counsel Deputy Assistant Attorney General

YVONNE F. MIZUSAWA MARK B. STERN

Senior Counsel SAMANTHA L. CHAIFETZ(202) 514-4821

Board of Governors of the Attorneys, Appellate Staff

Federal Reserve System Civil Division, Dept. of Justice

20th and C Streets, N.W. 950 Pennsylvania Avenue, N.W.

Washington, D.C. 20551 Room 7248


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CERTIFICATE OF COMPLIANCE

I certify that this brief complies with the type-volume limitation of Fed. R.

App. P. 32(a)(7)(B). It has been prepared in Times New Roman, 14-point font.

The Corel WordPerfect 12 word count is 7808, excluding the parts of the brief

exempted by Fed. R. App. P. 32(a)(7)(B)(iii).

/s/ Samantha L. Chaifetz

Samantha L. ChaifetzAttorney for Appellee

Date: March 4, 2011



46/48

CERTIFICATE OF SERVICE

I hereby certify that on March 4, 2011 the foregoing brief was filed via the

CM/ECF system with the Court and served via the CM/ECF system to the

following counsel of record:

Paul J. Orfanedes

Michael Bekesha

Judicial Watch, Inc.

425 Third Street, S.W., Suite 800


/s/ Samantha L. Chaifetz

Samantha L. Chaifetz

Attorney for Appellee

Date: March 4, 2011



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ADDENDUM

FOIA, 5 U.S.C. 552

(b) This section does not apply to matters that are--

...

(5) inter-agency or intra-agency memorandums or letters which would

not be available by law to a party other than an agency in litigation

with the agency;

...

(8) contained in or related to examination, operating, or condition

reports prepared by, on behalf of, or for the use of an agency

responsible for the regulation or supervision of financial institutions

Federal Reserve Act 13(3), 12 U.S.C. 343

(A) In unusual and exigent circumstances, the Board of Governors of the

Federal Reserve System, by the affirmative vote of not less than five

members, may authorize any Federal reserve bank, during such periods as

the said board may determine, at rates established in accordance with the

provisions of section 357 of this title, to discount for any participant in any

program or facility with broad-based eligibility, notes, drafts, and bills of

exchange when such notes, drafts, and bills of exchange are indorsed orotherwise secured to the satisfaction of the Federal reserve bank: Provided,

That before discounting any such note, draft, or bill of exchange, the

Federal reserve bank shall obtain evidence that such participant in any

program or facility with broad-based eligibility is unable to secure adequate

credit accommodations from other banking institutions. All such discounts

for any participant in any program or facility with broad-based eligibility

shall be subject to such limitations, restrictions, and regulations as the

Board of Governors of the Federal Reserve System may prescribe.



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Federal Reserve Act 11, 12 U.S.C. 248

The Board of Governors of the Federal Reserve System shall be authorized and

empowered:

...

(r)(1) Any action that this chapter provides may be taken only upon the

affirmative vote of 5 members of the Board may be taken upon the

unanimous vote of all members then in office if there are fewer than 5

members in office at the time of the action.

(2)(A) Any action that the Board is otherwise authorized to take under the

second paragraph of section 343 of this title may be taken upon theunanimous vote of all available members then in office, if--

(I) at least 2 members are available and all available members

participate in the action;

(ii) the available members unanimously determine that--

(I) unusual and exigent circumstances exist and the borrower is

unable to secure adequate credit accommodations from other

sources;

(II) action on the matter is necessary to prevent, correct, or

mitigate serious harm to the economy or the stability of thefinancial system of the United States;

(III) despite the use of all means available (including all

available telephonic, telegraphic, and other electronic means),

the other members of the Board have not been able to be

contacted on the matter; and

(IV) action on the matter is required before the number of

Board members otherwise required to vote on the matter can be

contacted through any available means (including all available

telephonic, telegraphic, and other electronic means); and

(iii) any credit extended by a Federal reserve bank pursuant to such

action is payable upon demand of the Board.

(B) The available members of the Board shall document in writing the

determinations required by subparagraph (A)(ii), and such written findings


Documents

Board of Governors Appellee Brief 4 March 2011 US Ct Appeals DC Appellant McKinley (Lawsuit #1)