Board of Governors of the Federal Reserve Summary Judgment Motion

8/14/2019 Board of Governors of the Federal Reserve Summary Judgment Motion

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UNITED STATES DISTRICT COURTFOR THE DISTRICT OF COLUMBIA

)VERN McKINLEY, ))

Plaintiff, ))

v. ) Case. No. 1:09-CV-1263)

FEDERAL DEPOSIT INSURANCE ) Judge Ellen S. Huvelle (ESH)CORPORATION, )

)and )

)BOARD OF GOVERNORS OF )THE FEDERAL RESERVE )SYSTEM, )

Defendants. ))

MOTION FOR SUMMARY JUDGMENT OF DEFENDANT BOARD OF

GOVERNORS OF THE FEDERAL RESERVE SYSTEM

Pursuant to Rule 56(b) of the Federal Rules of Civil Procedure, defendant Board

of Governors of the Federal Reserve System hereby moves for summary judgment. A

memorandum in support of this motion, three declarations (including attachments), and a

proposed order accompany this motion.

Case 1:09-cv-01263-ESH Document 27 Filed 02/01/10 Page 1 of 2


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UNITED STATES DISTRICT COURTFOR THE DISTRICT OF COLUMBIA

)VERN McKINLEY, ))

Plaintiff, ))

v. ) Case. No. 1:09-CV-1263)

FEDERAL DEPOSIT INSURANCE ) Judge Ellen S. Huvelle (ESH)CORPORATION, )

)and )

)BOARD OF GOVERNORS OF )THE FEDERAL RESERVE )SYSTEM, )

Defendants. ))

MEMORANDUM IN SUPPORT OF SUMMARY JUDGMENT MOTION OF

DEFENDANT BOARD OF GOVERNORS OF THE FEDERAL RESERVE

SYSTEM

KATHERINE H. WHEATLEY TONY WESTDC Bar No. 359037 Assistant Attorney GeneralAssociate General Counsel JOHN TYLER JOHN L. KURAY Assistant Branch Director, Federal ProgramsSenior Counsel BranchYVONNE F. MIZUSAWA C. LEE REEVESSenior Counsel Trial Attorney, Department of Justice, CivilBoard of Governors of the Federal Division, Federal Programs BranchReserve System 20 Massachusetts Avenue, N.W.20 th and C Streets, N.W. Washington, D.C. 20530Washington D.C. 20551 Tel: (202) 514-4805(202) 452-3789 Fax: (202) 616-8470

Fax (202) 736-5615 [email protected]

Attorneys for Defendant Board of Governors of the Federal Reserve System

Case 1:09-cv-01263-ESH Document 27-1 Filed 02/01/10 Page 1 of 33
mailto:[email protected]:[email protected]:[email protected]


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iii

EPA v. Mink ,

410 U.S. 73 (1973) ............................................................................................................ 13

Elec. Priv. Info. Ctr. v. DHS ,

No. 1:04cv1625 (D.D.C.) (Dec. 22, 2006)........................................................................ 17

FBI v. Abramson ,

456 U.S. 615 (1982) ........................................................................................................ 6, 7

FTC v. Grolier, Inc. ,

462 U.S. 19 (1983) ............................................................................................................ 19

Formaldehyde Inst. v. HHS ,

889 F.2d 1118 (D.C. Cir. 1989) ........................................................................................ 14

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

631 F.2d 896 (D.C. Cir. 1980) .............................................................................. 23, 25, 26

Ground Saucer Watch, Inc. v. CIA ,

692 F.2d 770 (D.C. Cir. 1981) ............................................................................................ 7

Hopkins v. U.S. Dep t of Housing and Urban Dev. ,

929 F.2d 81 (2d Cir. 1991)................................................................................................ 14

John Doe Agency v. John Doe Corp. ,

493 U.S. 146 (1989) ........................................................................................................ 6, 7

Judicial Watch v. Export-Import Bank ,

108 F. Supp. 2d 19 (D.D.C. 2000) .................................................................................... 14

Kintera, Inc. v. Convio, Inc. ,

219 F.R.D. 503 (S.D. Cal. 2003) ...................................................................................... 18

* Mead Data Cent., Inc. v. Dep t of the Air Force ,

575 F.2d 932 (D.C. Cir. 1978) .......................................................................................... 16



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iv

Meeropol v. Meese ,

790 F.2d 942 (D.C. Cir. 1986) ............................................................................................ 7

Mermelstein v. SEC ,

629 F. Supp. 672 (D.D.C. 1986) ....................................................................................... 25

Montrose Chemical Corp. of California v. Train ,

491 F.2d 63 (D.C. Cir. 1974) ............................................................................................ 15

NLRB v. Robbins Tire & Rubber Co. ,

437 U.S. 214 (1978) ............................................................................................................ 6

*NLRB v. Sears, Roebuck & Co. ,

421 U.S. 132 (1975) .................................................................................. 12, 13, 16, 17, 18

Nat l Communit y Reinvestment Coalition v. Nat l Credit Union Admin. ,

290 F. Supp. 2d 124 (D.D.C. 2003) .................................................................................. 23

* Nat'l Parks and Conservation Ass n v. Morton ,

498 F.2d 765 (D.C. Cir. 1974) .................................................................................... 20, 22

North Dartmouth Properties, Inc. v. HUD ,

984 F. Supp. 65 (D. Mass. 1997) ...................................................................................... 18

Oglesby v. U.S. Dep t of the Army ,

920 F.2d 57 (D.C. Cir. 1990) ........................................................................................ 7, 11

Pacific Fisheries, Inc. v. United States ,

539 F.3d 1143 (9th Cir. 2008) .......................................................................................... 18

Perry v. Block ,

684 F.2d 121 (D.C. Cir. 1982) ...................................................................................... 7, 11

Pub. Citizen Health Research Group v. FDA ,

704 F.2d 1280 (D.C. Cir. 1983) ........................................................................................ 19



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v

Quarles v. Department of Navy ,

893 F.2d 390 (D.C. Cir. 1990) .......................................................................................... 15

Renegotiation Bd. v. Grumman Aircraft Eng g Corp. ,

421 U.S. 168, 95 S. Ct. 1491 (1975) ................................................................................. 12

Rockwell Intern. Corp. v. DOJ ,

235 F.3d 598 (D.C. Cir. 2001) .......................................................................................... 13

SafeCard Servs., Inc. v. SEC ,

926 F.2d 1197 (D.C. Cir. 1991) .......................................................................................... 7

Schiller v. NLRB ,

964 F.2d 1205 (D.C. Cir. 1992) ........................................................................................ 19

In re Sealed Case ,

121 F.3d 729 (D.C. Cir. 1997) .......................................................................................... 13

In re Sealed Case ,

146 F.3d 881 (D.C. Cir. 1998) .......................................................................................... 18

Summers v. Dep t of Justice ,

140 F.3d 1077 (D.C. Cir. 1998) .......................................................................................... 8

U.S. ex rel. Bagley v. TRW, Inc. ,

212 F.R.D. 554 (C.D. Cal. 2003) ...................................................................................... 18

Vaughn v. Rosen ,

523 F.2d 1136 (D.C. Cir. 1975) ........................................................................................ 14

Washington Post Co. v. U.S. Dep t of Health & Human Servs. ,

690 F.2d 252 (D.C. Cir. 1982) .......................................................................................... 19

Weisberg v. U.S. Dep t of Justice ,

745 F.2d 1476 (D.C. Cir. 1984) .......................................................................................... 7



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vi

Wolf v. CIA ,

473 F.3d 370 (D.C. Cir. 2007) ............................................................................................ 8

STATUTES

5 U.S.C. 551(2) .......................................................................................................................... 20

5 U.S.C. 552(a)(4)(B) ................................................................................................................... 8

5 U.S.C. 552(b) ...................................................................................................................... 6, 11

5 U.S.C. 552(b)(4) ............................................................................................................. 5, 6, 19

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

5 U.S.C. 552(b)(6)5

5 U.S.C. 552(b)(8) ............................................................................................................ 5,23, 24

12 U.S.C. 324, 325 ................................................................................................................... 20

12 U.S.C. 1844(c) ...................................................................................................................... 20

Fed. R. Civ. P. 26(b)(3)................................................................................................................. 18



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PRELIMINARY STATEMENT

This action arises out of a Freedom of Information Act ( FOIA ) request that the

Plaintiff, Vern McKinley (McKinley or Plaintiff), submitted to Defendant Board of

Governors of the Federal Reserve System (Federal Reserve or Board), seeking

documents related to the Federal Reserves March 14, 2008 decision to extend a loan to

Bear Stearns & Co. (Bear Stearns) through JP Morgan Chase & Co. (JPMC). In

particular, Plaintiff sought further detail on information contained in the . . . minutes of

the Board of Governors of the Federal Reserve dated March 14, 2008 [including] any

supporting memos or other information that detail the expected contagion that wouldresult 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. See Pls. Compl. at 18 (Dkt.

#1). Defendant Board moves for summary judgment pursuant to Rule 56(b) of the

Federal Rules of Civil Procedure.

As outlined below and in the attached declaration of Alison M. Thro, Senior

Counsel in the Board s Legal Division, executed January 28, 2010 (Thro Decl.), the

Board conducted a thorough search for responsive documents. The Board has released

all responsive documents to the Plaintiff except for certain documents or portions of

documents that the Federal Reserve withheld based on statutory exemptions. As

explained in the Thro declaration and in the attached declarations of Coryann Stefansson,

Associate Director of the Board s Division of Banking Supervision and Regulation,

executed January 29, 2010 (Stefansson Decl. ) and Margaret Celia Winter, Freedom of

Information Act and Privacy Act Officer, U.S. Securities and Exchange Commission,



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executed January 21, 2010 (Winter Decl. ), the Boards application of these exemptions

was proper, and the Federal Reserve processed and released all reasonably segregable

information. Accordingly, this Court should grant summary judgment in favor of the

Federal Reserve.

BACKGROUND

The FOIA request in this case related to the basis of an emergency loan

authorized by the Federal Reserve Board in the midst of the financial crisis. The Boards

action took place against a backdrop of widespread uncertainty and turmoil in the U.S.

financial markets. Starting with the deterioration of U.S. housing markets in the latesummer of 2007, and accelerating throughout 2008, financial markets experienced a

sharp rise in uncertainty over the value of structured assets. Stefansson Decl., 6. As

these assets declined in value, financial institutions, some of which held large positions in

these assets, began to experience funding pressures. Id . As uncertainty grew over the

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

other even against good collateral, asset prices fell, and the availability of funding in

private credit markets declined significantly. Id . Financial institutions faced severe

liquidity pressures which accelerated rapidly between mid-January and mid-March 2008.

Id .

Around March 10, 2008, Board staff began to receive information and hear

rumors that Bear Stearns was experiencing severe liquidity pressures and might have to

declare bankruptcy in the near term. Thro Decl., 3; Stefansson Decl., 7. Rumors of

Bear Stearns possible bankruptcy filing unnerved trading partners and institutions

worldwide, and some pulled back from doing business with Bear Stearns. Stefansson



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Decl., 7. On Thursday, March 13, 2008, rumors of Bears Stearns failing financial

health caused its liquidity to decline sharply to levels that were not adequate to meet its

maturing obligations. Id. Later that evening, staff of the Securities and Exchange

Commission (SEC) notified Board and Federal Reserve Bank of New York

(FRBNY)staff that Bear Stearns would file for bankruptcy protection the following

morning. Id.

Bears Stearns impending bankruptcy , and the rapidity of events that preceded it,

presented the Board with difficult policy choices in an extraordinarily compressed time

period. Although Bear Stearns was a securities broker-dealer and holding company,Winter Decl., 10-11, and not a bank or bank holding company regulated by the Board,

a number of large, complex banking organizations (LCBOs)and smaller depository

institutions supervised by the Board, as well as other financial institutions, had exposure

to Bear Stearns and therefore could be severely impacted by a bankruptcy filing.

Stefansson Decl., 8. Moreover, the Board was concerned about the impact of a Bear

Stearns bankruptcy on the broader financial markets, which were in fragile condition and

could be subject to chaotic unwinding in the event of a bankruptcy. Id ., 8, 10.

Accordingly, on or around March 10, 2008, the Board, in conjunction with the

FRBNY to which the Board has delegated certain supervisory authority, rapidly began

collecting real-time data on the exposure of various financial institutions to Bear Stearns,

and other information, in an effort to assess the gravity of the situation and possible

Board responses. Much of this data was collected by Board and FRBNY bank

examination staffs from supervised financial institutions through the bank examination

process, which is considered by the Board and the regulated institutions to be sensitive



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and highly confidential. Stefansson Decl., 4, 13-15. Other confidential commercial

information was collected from market participants on a voluntary basis on the

understanding that the Board would maintain the data in strictest confidence. Thro Decl.,

20. The Board reached out to the SEC for additional data gathered through that

agencys voluntary Consolidated Supervised Entity (CSE) program to gauge its

response to the mounting crisis. Winter Decl., 10-11. All of this data, together with

additional information discussed below, informed the Boards ultimate decision on

March 14, 2008 to extend a short-term temporary loan to Bear Stearns through JPMC

(the Temporary Loan) .1

As detailed below and in the attached Thro Decl., in response to the P laintiffs

FOIA request, Board staff thoroughly searched a specially-created, comprehensive

repository of all documents related to the Bear Stearns loans, and conducted multiple

reviews of potentially responsive materials. As a result of that search, by letter dated

August 11, 2009, the Secretary of the Board released in full approximately 120 pages of

responsive, non-exempt information to the Plaintiff. Thro Decl., 9 and Exh. D.

By letter dated September 30, 2009, the Associate Secretary of the Board

informed the Plaintiff that the Board had completed its review and identified 238

additional responsive pages. Thro Decl., 10 and Exh. E. Of these 238 pages, 48 pages

were produced in full to the Plaintiff (with bates numbers ending in 00002-03, 06, 10, 14-

16, 18-19, 24-28, 36-37, 40, 42, 45-50 and 215-238)); 27 pages were provided with

redactions generally consisting of the identities of financial institutions and/or their

1 The Temporary Loan, authorized on March 14, 2008, was replaced two days later by aloan to facilitate JPMCs acquisition of Bear Stearns (the Acquisition Loan). ThroDecl., 3. The plaintiffs request seeks documents relating only to the Temporary Loan.

Id ., 6 and Exh. A.



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exposure to Bear Stearns; and 163 pages, consisting primarily of charts and/or supporting

data and legal memoranda, were withheld in full. Thro Decl., 15-16. Portions of 7 of

the redacted pages, and one of the full withheld pages, were referred to the SEC for a

FOIA determination. Thro Decl., 16; Winter Decl., 4.

With respect to the information withheld in full or in part, the September 30 letter

explained to Plaintiff that the Board had determined that those documents contained

exempt information pursuant to exemptions 4, 5, 6, and 8 of the Act, respectively 5

U.S.C. 552(b)(4), (b)(5), (b)(6), and (b)(8). The Board enclosed all reasonably

segregable nonexempt information and informed Plaintiff that potentially responsivedocuments containing information that originated with the SEC were being referred to the

SEC, along with a copy of his FOIA request, for final disposition.

By letter dated January 7, 2010, the SEC notified Plaintiff that it would withhold

in full the materials referred to it by the Board under FOIA exemptions 5 and 8, 5 U.S.C.

552(b)(5) and (b)(8), and provided a copy of its letter to the Board. See Thro Decl.,

11; Winter Decl., 5 and Attach. B.

In his lawsuit, filed July 8, 2009, Plaintiff challenges the validity of the Board s

decision to withhold documents in full or in part pursuant to 5 U.S.C. 552(b)(4),

(b)(5), and/or (b)(8).

ARGUMENT

I. STATUTORY BACKGROUND AND STANDARD OF REVIEW

The FOIA, 5 U.S.C. 552, generally mandates disclosure, upon request, of

government records held by an agency of the federal government except to the extent



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such records are protected from disclosure by any of nine exemptions. The fundamental

principle that animates FOIA is public access to Government documents. John Doe

Agency v. John Doe Corp. , 493 U.S. 146, 151 (1989). The basic purpose of FOIA is to

ensure an informed citizenry, vital to the functioning of a democratic society, needed to

check against corruption and to hold the governors accountable to the governed. NLRB

v. Robbins Tire & Rubber Co. , 437 U.S. 214, 242 (1978). At the same time, Congress

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); seealso 5 U.S.C. 552(b) (listing exemptions). While these exemptions are to be narrowly

construed, Abramson , 456 U.S. at 630, courts must not fail to give the exemptions

meaningful reach and application. John Doe Agency , 493 U.S. at 152. The FOIA thus

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).

Summary judgment is the procedure by which courts resolve nearly all FOIA

actions. In order to obtain summary judgment the agency must show that it made a

good faith effort to conduct a search for the requested records, using methods which can

be reasonably expected to produce the information requested. Oglesby v. U.S. Dept of

the Army , 920 F.2d 57, 68 (D.C. Cir. 1990). There is no requirement that an agency

search every record system. Id. [T]he issue to be resolved is not whether th ere might

exist any other documents possibly responsive to the request, but rather whether the

search for those documents was adequate. Weisberg v. U.S. De p t of Justice , 745 F.2d



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1476, 1485 (D.C. Cir. 1984); see also Meeropol v. Meese , 790 F.2d 942, 952- 53 (D.C.

Cir. 1986) (A search is not unreasonable simply because it fails to produce all relevant

material.); Perry v. Block , 684 F.2d 121, 128 (D.C. Cir. 1982).

In evaluating the adequacy of a search, courts accord agency affidavits a

presumption of good faith, which cannot be rebutted by purely speculative claims about

the existence and discoverability of other documents. SafeCard Servs., Inc. v. SEC , 926

F.2d 1197, 1200 (D.C. Cir. 1991); see also Ground Saucer Watch, Inc. v. CIA , 692 F.2d

770, 771 (D.C. Cir. 1981). The statute does not require meticulous documentation [of]

the details of an epic search. Perry , 684 F.2d at 127. [A]ffidavits that explain inreasonable detail the scope and method of the search conducted by the agency will suffice

to demonstrate compliance with the obligations imposed by the FOIA. Id.

To sustain its burden of justifying nondisclosure of information, see 5 U.S.C.

552(a)(4)(B), the agency must provide declarations that identify the information at issue

and the bases for the exemptions claimed. See Summers v. Dep t of Justice , 140 F.3d

1077, 1080 (D.C. Cir. 1998). Courts review de novo the agency s use of a FOIA

exemption to withhold documents. Wolf v. CIA , 473 F.3d 370, 374 (D.C. Cir. 2007).

II. THE BOARD CONDUCTED AN ADEQUATE SEARCH FOR RESPONSIVE DOCUMENTS

A. The Bear Stearns Document Repository

In response to public interest in the Board s transactions involving Bear Stearns,

the Board created a document repository to facilitate prompt and thorough responses to

FOIA and other requests for information regarding Bear Stearns. Thro Decl., 3. This



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repository was searched to gather the documents responsive to the FOIA request. Id.,

12.

In creating the repository, members of the Board s Legal Division contacted

approximately 80 Board staff members in seven divisions (Monetary Affairs, Reserve

Bank Operations and Payment Systems, Office of Board Members, Office of the

Secretary, Legal, International Finance, and Bank Supervision and Regulation) who were

involved in any aspect of JPMCs acquisition of Bear Stearns and the Boards

authorization of the Temporary Loan or the Acquisition Loan. Id ., 4. Board Legal

Division staff identified these Board staff members by starting with a core group of persons who had been involved in these matters and asking them, and subsequent

interviewees, to identify any other Board staff who might have responsive documents.

Using this procedure, the Board indentified all individuals likely to have relevant

documents. All of these staff members were then asked to forward any documents

relating to the Bear Stearns transactions to the Legal Division for inclusion in the

repository. Board members were also contacted and requested to provide responsive

documents for inclusion in the repository, and Legal Division staff worked with the

various Board members to ensure that all relevant material was provided. Id ., 5.

In response to its contacts with the 80 Board and Board staff members, the Legal

Division received over 28,000 pages of information. The bulk of documents related to

the JPMC/Bear Stearns matter were generated and placed into the document repository

by the end of June 2008. The Board considered its search to be broad enough to capture

all Board documents potentially responsive to any FOIA or other request for information



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relating to the Temporary Loan or the Acquisition Loan, including the request to the

Board at issue in this case. Id ., 4-5.

B. Processing of the FOIA Request

Upon receipt of the FOIA request, Board personnel began the process of

identifying potentially responsive documents within the document repository. Thro

Decl., 12. The repository contained all documents reasonably likely to be responsive to

the FOIA request. Id ., 5. The Boards m ost senior attorney responsible for processing

FOIA requests, Alison Thro, personally searched the repository for responsive

documents. Id ., 1, 12. Ms. Thro reviewed the documents of approximately 31 Boardmembers and staff whom she believed, based on her experience processing prior, similar

FOIA requests, were most likely to have responsive documents. Id ., 12. After

conducting multiple reviews of the repository, she identified a large number of

documents potentially responsive to the FOIA request. She then reviewed those

documents, narrowing the focus to materials responsive to plaintiffs request for

evidentiary support for the Boards March 14, 2008 decision to authorize the Temporary

Loan. Id ., 13. In general, responsive documents included: (a) e-mails (some with

attachments) among Board and FRBNY staff and officials, and between Board and SEC

staff, conveying the latest market developments along with views and analyses; (b)

memoranda (with supporting materials) prepared by Board and FRBNY staff

documenting arguments made prior to and in support of the Board s March 14, 2008

decision to extend the Temporary Loan; and (c) market information obtained from non-

supervised entities by the FRBNY on a voluntary and strictly confidential basis. Thro

Decl., 13. All of this information was provided to Board or Reserve Bank staff who



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considered the issues related to Bear Stearns liquidity crisis and the Boards potential

response to it. Id ., 17, 19, 22; see also Stefansson Decl., 11, 14.

Working with at least two other attorneys in the Board s Legal Division, Ms. Thro

reviewed each page carefully for exempt information. Id ., 14. Redactions were not

made in a wholesale manner, but on some pages consisted of only a few words or

phrases, and full pages were withheld only when they contained no reasonably segregable

non-exempt information. Id.

Certain documents responsive to the FOIA request contained information

provided to the Board by the SEC. Thro Decl., 10, 16. In keeping with the Boardsnormal process in FOIA cases, Board staff forwarded these documents to the SEC along

with a copy of Plaintiffs FOIA request for a FOIA determination. Id .; Winter Decl., 4.

It is plain from the Thro declaration that the Board conducted an adequate search for

responsive documents and is entitled to summary judgment on the issue. The search was

reasonably calculated to yield all documents responsive to the FOIA request, Oglesby ,

supra , 920 F.2d at 68, as the Board conducted not one, but multiple layers of review. The

declarations explain in sufficient detail why the scope and method of the search were

sufficient to comply with its obligations under FOIA. Perry , supra , 684 F.2d at 127.

Accordingly, the Board s efforts c onstituted an adequate search in satisfaction of the

Boards obligation under FOIA.



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III. THE BOARD PROPERLY WITHHELD RECORDS UNDER APPLICABLE FOIA EXEMPTIONS

The Board processed the responsive records in accordance with FOIA and

withheld certain information pursuant to FOIA exemptions 4, 5, 6,2

and 8, as explained in

detail below and in the attached Declarations. The Board properly invoked these

exemptions, and processed and released all reasonably segregable information from the

responsive records. Accordingly, the Board is entitled to summary judgment.

A. The Board Processed And Released All Reasonably SegregableInformation From The Responsive, Non-Exempt Records

As required by FOIA, the Board has provided all reasonably segregable responsive information that is not exempt from disclosure. 5 U.S.C. 552(b). The Board

provided the Plaintiff with all material in the public domain and with all reasonably

segregable portions of releasable material. Thro Decl., 9, 10, 12-13. No reasonably

segregable, nonexempt portions were withheld. Id. ; Winter Decl., 12. As shown on the

accompanying Vaughn index, the Board has indicated where any material was withheld

in the documents it released to Plaintiff as well as an explanation of the nature of any

information withheld. Thro Decl. 15 and Exh. F. All the material the Board withheld is

exempt from disclosure pursuant to FOIA exemptions or is so intertwined with protected

material that segregation is not possible without revealing the underlying protected

material. See Thro Decl., 14; Winter Decl., 12.

2 Plaintiff has elected not to challenged the Federal Reserves withholdings made pursuant to Exemption 6. Email of Paul J. Orfanedes to Lee Reeves, December 1, 2009(Plaintiff has elected not to challenge the Federal Reserves redactions under Exemption6 . . . .) (attached). Accordingly, the Federal Reserve does not address exemption 6 inthis brief.



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As explained more fully below and in the attached declarations, the Board

properly withheld information that fell within the ambit of one or more FOIA

exemptions.

B. The Federal Reserve Properly Withheld Pre-Decisional, DeliberativeDocuments Related To Its Decision To Authorize The Temporary Loan, AsWell As Attorney Work Product, Pursuant To Exemption 5

Exemption 5 of FOIA protects inter -agency or intra-agency memorandums or

letters which would not be available by law to a party . . . in litigation with the agency.

5 U.S.C. 552(b)(5). By this language, Congress intended to incorporate into the FOIA

all the normal civil discovery privileges. The Supreme Court has construed this languageto exempt those documents . . . normally privileged in the civil discovery context.

NLRB v. Sears, Roebuck & Co. , 421 U.S. 132, 149 (1975); see also Renegotiation Bd. v.

Gru mman Aircraft Eng g Corp ., 421 U.S. 168, 184, 95 S. Ct. 1491, 1500 (1975)

(Exemption 5 incorporates the privilege s which the Government enjoys under the

relevant statutory and case law in the pretrial discovery context.). It therefore covers

the attorney-client privilege, the attorney work-product privilege, or the executive

deliberative process privilege, Rockwell Intern. Corp. v. DOJ , 235 F.3d 598, 601 (D.C.

Cir. 2001), the latter two of which apply here.

1. Deliberative Process Privilege

All of the documents withheld in this case are protected by the deliberative

process privilege and were properly withheld under exemption 5. 3 Documents covered

by the deliberative process privilege and therefore exempt from release include those

reflecting advisory opinions, recommendations and deliberations comprising part of a

3 Thro Decl., 17, 19, 22; Steffanson Decl., 12 (detailing documents withheld under exemption 5 on deliberative process privilege grounds).



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process by which governmental decisions and policies are formulated. NLRB. v. Sears,

Roebuck & Co. , 421 U.S. 132, 150 (1975) (quoting Carl Zeiss Stiftung v. V.E.B. Carl

Zeiss, Jena, 40 F.R.D. 318, 324 (D.D.C. 1966) ); In re Sealed Case , 121 F.3d 729, 737

(D.C. Cir. 1997) (same). As the Supreme Court has explained:

The deliberative process privilege rests on the obvious realization thatofficials will not communicate candidly among themselves if each remark is a potential item of discovery and front page news, and its object is toenhance the quality of agency decisions by protecting open and frank discussion among those who make them within the Government.

Department of the Interior v. Klamath Water Users Protective Assn , 532 U.S. 1, 8-9

(2001) (internal quotation marks and citations omitted). [E]fficiency of Governmentwould be greatly hampered if, with respect to legal and policy matters, all Government

agencies were prematurely forced to operate in a fishbowl. EPA v. Mink , 410 U.S. 73,

87 (1973).

In deciding whether a document should be pr otected by the privilege [courts]

look to whether the document is predecisional [ ] whether it was generated before the

adoption of an agency policy [ ] and whether the document is deliberative [ ] whether

it reflects the give-and-take of the consultat ive process. Coastal States Gas Corp. v.

Dept of Energy , 617 F.2d 854, 866 (D.C. Cir. 1980). To establish that a document is

predecisional, the agency need not point to an agency final decision, but merely establish

what deliberative process is involved, and the role the documents at issue played in that

process. Judicial Watch v. Export-Import Bank , 108 F. Supp. 2d 19, 35 (D.D.C. 2000)

(citing Formaldehyde Inst. v. HHS , 889 F.2d 1118, 1223 (D.C. Cir. 1989)). Documents

prepared by agency officials wh o themselves lack any authority to take final agency



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action . . . are necessarily predecisional. Hopkins v. U.S. Dept of Housing and Urban

Dev. , 929 F.2d 81, 85 (2d Cir. 1991).

There should be considerable deference to the [agencys] judgment as to wh at

constitutes . . . part of the agency give -and-take of the deliberative process by

which the decision itself is made. Chem. Mfrs. Assn v. Consumer Prod. Safety

Commn , 600 F. Supp. 114, 118 (D.D.C. 1984) (quoting Vaughn v. Rosen , 523 F.2d

1136, 1144 (D.C. Cir. 1975)). The agency is best situated to know what confidentiality

is needed to prevent injury to the quality of agency decisions . . . . Chem. Mfrs. , 600 F.

Supp. at 118 (quoting NLRB, 421 U.S. at 151).In this case, the vast majority of documents withheld pursuant to exemption 5

were e-mails and documents exchanged in the period of time immediately preceding the

Boards March 14, 2008 decision to authorize a loan to Bear Stearns. More precisely, the

Board withheld documents discussing data gathered by Board and FRBNY examiners

concerning financial institutions the Board was supervising at that time and these

institutions exposure to Bear Stearns. Thro Decl. , 17; Steffanson Decl., 11-14. As

explained more fully in the Thro declaration and the attached index, this information was

gathered for, communicated to, and discussed by Board members and Board and FRBNY

staff in the days leading up to the Boards decision to authorize the Temporary Loan

because it bore on the significant issue of the potential consequences of a Bear Stearns

bankruptcy on individual financial institutions and firms and then-fragile financial

markets. Thro Decl., 17. As described by Ms. Stefansson, a participant in the March

14, 2008 Board meeting and discussions that preceded it, Stefansson Decl., 11, Board

members and staff considered this information in making the decision to authorize the



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Temporary Loan because they believed that a sudden, disorderly failure of Bear Stearns

would have had unpredictable, but severe, consequences on the functioning of financial

markets. Id ., 10. Accordingly, the withheld material is quintessentially pre-decisional

and deliberative and protected under exemption 5. Coastal States , supra , 617 F.2d at

866.

This includes certain factual material that itself is deliberative. See, e.g. , Thro

Decl., Exh. F, Item 8. As the D.C. Circuit has recognized, exemption 5 was intended to

protect not simply deliberative material , but also the deliberative process of agencie s.

Montrose Chem. Corp. of California v. Train , 491 F.2d 63, 71 (D.C. Cir. 1974)(emphasis added). The D.C. Circuit has therefore held that even when requested material

is found to be factual, such material is exempt under Exemption 5 if disclosure wou ld

expose an agency s decisionmaking process in such a way as to discourage candid

discussion within the agency and thereby un dermine the agency s ability to perform its

functions. Quarles v. Dep t of Navy , 893 F.2d 390, 392 (D.C. Cir. 1990) (citing

Dudman Comm. Corp. v. Dep't of the Air Force , 815 F.2d 1565, 1569 (D.C. Cir. 1987)).

For example, the Board withheld in Document 8 the identities of financial institutions

about which the Board was concerned in light of Bear Stearns deteriorating financial

condition. Thro Decl., Exh. F, Item 8. These are precisely the sort of facts that serve

primarily to reveal the evaluative process by which different members of the

decisionmaking chain arrive at their conclusions and what those predecisional



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conclusions are, Mead Data Cent., Inc. v. Dep't of the Air Force , 575 F.2d 932, 935

(D.C. Cir. 1978), and are thus exempt from disclosure under Exemption 5. 4

The Board also withheld under exemption 5 various e-mails and their

attachments exchanged among Board and Reserve Bank staff and officials that related

to: (i) market developments and analyses related to a potential bankruptcy by Bear

Stearns; (ii) methods of obtaining information regarding financial institutions

exposure to Bear Stearns; (iii) proposed regulatory responses to the situation; and (iv)

arguments and considerations regarding the need for the Temporary Loan. Thro Decl.,

19; see also Stefansson Decl., 13. Because this information and these analyseswere considered by the Board, and by Board and FRBNY 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, Stefansson Decl., 11, these materials were

properly withheld under exemption 5 and the deliberative process privilege. NLRB,

supra , 421 U.S. at 150 (exemption 5 protects documents comprising part of a process

by which governmental decisions and policies are formulated ) (internal quotation

omitted).

As explained more fully in the Winter declaration, the Board also withheld on the

SECs behalf responsive documents on deliberative process privilege grounds. These

documents contain information and communications shared on an inter-agency basis

between the staffs of the SEC and the Board and FRBNY regarding the financial

condition of Bear Stearns prior to the Board s authorization of the Temporary Loan.

Winter Decl., 6. These documents addressed issues that arose concerning the financial

4 The factual portions of other documents, to the degree they can be separated from thedeliberative material, were withheld pursuant to exemptions 4, 8, or both, as discussed



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health and condition of Bear Stearns at the time, and informed the deliberations leading

up to the Board s decision to authorize a loan to JPMC through the discount window, and

are properly withheld under exemption 5 and the deliberative process privilege. See

Winter Decl., 6-8.

Last, the Board properly withheld two documents (items 35 and 36 on the Vaughn

index) under the deliberative process privilege that recount factual considerations and

legal analyses presented orally to the Board before its March 14, 2008 decision to

authorize the Temporary Loan, that were reduced to writing, and dated, after the decision.

Given the extraordinary time pressures in the days preceding the Boards March 14decision, the information and analyses contained in these documents was presented orally

to the Board for its c onsideration in advance of the Boards March 14 decision regarding

Bear Stearns, and was not put into documentary form until later. See Stefansson Decl.,

12 (documents only created later due to exigencies of time); Thro Decl., 22 (these

documents reflect pre- decisional, deliberative considerations) . Because these

documents unequivocally reflect prior communications and the ingredients of the

decisionmaking , NLRB, supra, 421 U.S. at 151, they were properly withheld as

predecisional, deliberative materials. See also Elec. Priv. Info. Ctr. v. DHS , No.

1:04cv1625 (D.D.C.) (Dec. 22, 2006) (Dkt. # 21) (e-mail generated after agency decision

that recounted deliberations preceding decision deemed pre-decisional and protected by

exemption 5); North Dartmouth Properties, Inc. v. HUD, 984 F. Supp. 65, 68 (D. Mass.

1997) (protecting under exemption 5 document generated after the agencys decision

was made, but which nonetheless reiterated the agencys pre -decisional deliberations) .

infra.



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Accordingly, this Court should sustain the Board s deliberative process privilege claims

pursuant to exemption 5.

2. Attorney Work Product

The attorney work product doctrine protects materials prepared by an attorney or

others in anticipation of litigation, including the materials of government attorneys

generated in litigation and prelitigation counseling. See Fed. R. Civ. P. 26(b)(3); NLRB,

supra , 421 U.S. at 154. Both fact work product and opinion work product are

protected. Pacific Fisheries, Inc. v. United States , 539 F.3d 1143, 1148 (9th Cir. 2008)

(citing Fed. R. Civ. P. 26(b)(3)).5

Fact work product consists of factual material that is prepared in anticipation of litigation or trial. Kintera, Inc. v. Convio, Inc. , 219 F.R.D.

503, 507 (S.D. Cal. 2003). Opinion work includes the selection, organization, and

characterization of facts that reveals the theories, opinions, or mental impressions of a

party or the party s representative. See id. ; U.S. ex rel. Bagley v. TRW, Inc. , 212 F.R.D.

554, 563 (C.D. Cal. 2003). Without a strong work -product privilege, lawyers would

keep their thoughts to themselves, avoid communicating with other lawyers, and hesitate

to take notes. In re Sealed Case , 146 F.3d 881, 884 (D.C. Cir. 1998). The protection of

the work product doctrine continues beyond the termination of the particular situation for

which the materials were created. FTC v. Grolier, Inc. , 462 U.S. 19, 28 (1983).

The phrase in anticipation of litigation extends beyond an attorneys preparation

for a case in existing litigation, including as well protection for materials prepared in

anticipation of foreseeable litigation, even if no specific claim is contemplated. See

5 Importantly, if a document is covered by the attorney work -product privilege, thegovernment need not segregate and disclose its factual contents. Pacific Fisheries , 539F.3d at 1148.



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Schiller v. NLRB , 964 F.2d 1205, 1208 (D.C. Cir. 1992); Delaney, Migdail & Young v.

Internal Revenue Serv. , 826 F.2d 124, 127 (D.C. Cir. 1987).

In this case, the Board withheld a draft affidavit (item 38 of the Vaughn index)

prepared by FRBNY attorneys and conveyed to Board attorneys in anticipation of

possible litigation by Bear Stearns shareholders stemming from the Boards authorization

of the Temporary Loan. Thro Decl., 22 and Exh. F. Accordingly, the Board properly

declined to produce this material as attorney work product.

C. The Board Properly Withheld The Identities Of Firms With Exposure ToBear Stearns, As Well As Data Regarding The Magnitude Of Such Exposure,

Pursuant To Exemption 4While all of the material withheld by the Board is protected by exemption 5,

much of the factual material contained in the documents is also protected by exemption 4.

Exemption 4 applies if a tripartite test is satisfied: Records must contain information that

is (1) commercial or financial in character, (2) obtained from a person, and (3) privileged

or confidential. 5 U.S.C. 552(b)(4).

Courts have recogni zed that the terms commercial and financial should be

given their ordinary meanings and merely require that the submitter has a commercial

interest in the records. See Pub. Citizen Health Research Group v. FDA , 704 F.2d 1280,

1290 (D.C. Cir. 1983) (citing Washington Post Co. v. U.S. De pt of Health & Human

Servs. , 690 F.2d 252, 266 (D.C. Cir. 1982) and Bd. of Trade v. Commodity Futures

Trading Comm n, 627 F.2d 392, 403 (D.C. Cir. 1980)).

Private commercial information that has been submitted to the government under

compulsion is confidential for purposes of e xemption 4 if disclosure is likely either

(1) to impair the Government s ability to obtain necessary information in the future; or



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(2) to cause substantial harm to the competitive position of the person from whom the

information was obtained. Na t l Parks and Conse rvation Ass n v. Morton , 498 F.2d

765, 770 (D.C. Cir. 1974)(footnote omitted). When private commercial information is

provided to the government voluntarily, it is protected under e xemption 4 if it is of a

kind that would customarily not be released to the public by the person from whom it was

obtained. Critical Mass Energy Pro ject v. Nuclear Regulatory Comm n, 975 F.2d 871,

879 (D.C. Cir. 1992). These two tests recognize that exemption 4 is designed to protect

the governments interest in the availability and reliability of commercial and financial

information obtained from third parties as well as the interests of persons who providesuch information to the government. See id. at 877-79.

In this case, the Board withheld under exemption 4 the identities of financial

institutions and/or their exposure to Bear Stearns, as well as bid/ask spreads in select repo

markets. See Thro Decl., 17, 20, 21and Exh. F (items withheld under exemption 4);

Stefansson Decl., 13. There can be no question that that the institutions that provided

this information have a commercial interest in information regarding the degree of

their exposure to Bear Stearns, or that the firms qualify as persons under FOIAs broad

definition. See 5 U.S.C. 551(2) (defining person to include, inter alia, partnerships

and corporations). Thus, the dispositive issue for exemption 4 purposes is whether the

withheld information is privileged or confidential.

With respect to information obtained from regulated financial institutions as part

of the supervisory process, the Board is authorized by law to obtain such information.

See, e.g., 12 U.S.C. 324, 325 (state member banks); 12 U.S.C. 1844(c) (bank

holding companies). In connection with its consideration of the Bear Stearns issue, the



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Board compelled financial entities it regulated to produce data regarding their financial

exposure to Bear Stearns. See Thro Decl., 17 (describing exemption 4 information

Board gathered on a compulsory basis); Stefansson Decl., 13-15. This information is

exempt under the competitive injury test of National Parks .

As explained in the Stefansson declaration, disclosure of this information would

likely cau se substantial competitive harm to LCBOs because an LCBOs competitors

could use the data to assess sensitive trading relationships and credit relationships [and

thus potentially] harm the firms on -going businesses activities. Stefansson Decl., 15.

The declaration explains that [i]n an extreme case, a competitor could exploit theinformation regarding exposures to weaken a specific entity and cause weaknesses in its

liquidity position, could pull or accelerate funding facilities the competitor had

outstanding to the LCBO, or could use the data to underbid the LCBO in the private

funding markets. Id. A competitor also could inform the LCBOs customers and

market analysts that the LCBO faced a funding shortage, which likely would cause some

retail and commercial customers to move their business to other banks and may cause

analysts to downgrade the LCBOs stock. Id .

Alternatively, to the degree the information obtained from supervised institutions

could be said to be provided voluntarily, it is protected under exemption 4 for two

reasons. First, the information is not customarily disclosed to the public, Stefansson

Decl. 15, so it is protected by exemption 4 under Critical Mass, supra , 975 F.2d at 879 .

Second, disclosure would impair the Board s ability to obtain this type of information in

the future. As Ms. Stefansson attested, if the Board were to disclose this highly

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share such information with bank supervisors, including the Board, in the future.

Stefansson Decl., 15; accord Thro Decl., 17. As explained in Ms. Stefanssons

declaration, [s]upervised institutions rely on bank supervisors to protect the

confidentiality of information obtained through the supervisory process . Stefansson

Decl., 15. Because disclosure would impair the Governments ability to obtain

necessary information in the future, it is exempt under the first prong test of National

Parks , supra , 498 F.2d at 770.

Other firms not supervised by the Board voluntarily produced to the Board

information regarding their financial exposure to Bear Stearns, Thro Decl., 20, and twoinstitutions voluntarily provided proprietary information regarding bid/ask spreads in

select repo markets. Id ., 21. This subset of information withheld under exemption 4

was furnished voluntarily on a strictly confidential basis, id ., 20, because the Board

gave assurances of confidentiality to the provider firms, either contractually or otherwise.

Id ., 20-21 (describing exemption 4 information Board gathered on a voluntary basis);

Stefansson Decl., 15. These market participants do not customarily disclose this type

of information to the public. Thro Decl., 20 ; accord Stefansson Decl., 15. Indeed,

such assurances of confidentiality would be unnecessary if the information were

customarily released to the public. Critical Mass , supra, 975 F.2d at 874. Accordingly,

this information is exempt under the test enunciated in Critical Mass , supra , and the

Board is entitled to summary judgment.

D. The Board Properly Withheld Information Pursuant To Exemption 8

Certain material withheld from disclosure, in addition to being exempt under

exemption 5 (and, in some cases, exemption 4), was also protected under FOIA



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withheld SEC materials relate to examination, operating, or condition reports, prepared

by, on behalf of, or for the use of the [SEC], id ., 12, and were properly withheld under

exemption 8. See Mermelstein v. SEC, 629 F. Supp. 672, 674 (D.D.C. 1986) (Congress

has since given sufficient indication that it expects securities exchanges to be numbered

among [financial institutions] for purposes of FOIA exemption 8).

Within these documents, the Board withheld under exemption 8 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. See Thro

Decl., 17; Steffanson Decl., 15. Because the withheld information is both containedin and related to . . . examination, operating or conditio n reports namely, the very

reports and analyses the Board used to determine how it would respond to the Bear

Stearns crisis the Board properly withheld such information pursuant to Exemption 8.

See Gregory , supra , 631 F.2d at 899 (Financial examinat ion into all loans and banking

relationships takes place as the agency searches for the causes of the [ ] banks distress

and negotiates to protect the interests of depositors and borrowers.) ; Bloomberg, L.P. v.

United States Securities & Exchange Comm. , 357 F.Supp.2d 156, 169-170 (D.D.C. 2004)

(upholding agency withholding of SEC staff notes and memoranda pursuant to exemption

8).

As noted previously, the ability of the Board to monitor and react to the Bear

Stearns crisis depended in substantial part on information furnished by financial

institutions those entities regulated information that was provided based on strict

assurances of confidentiality. See Thro Decl., 17; Stefansson Decl., 14-15. The

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INDEX OF WITHHELD MATERIAL

Vern McKinley FOIA Request No. 2009-164, dated Dec. 17, 2008

Responsive Documents : Information forming the basis for the Federal Reserve Boards decision of March 14, 2008, to authorize under section 13(3) of the Federal Reserve Act (12 U.S.C. 343) theFederal Reserve Bank of New York to extend credit to JPMorgan Chase Bank, N.A. (JPMC) inconnection with its acquisition of The Bear Stearns Companies, Inc. (BS).

Emails reflecting the collection of responsive documents by Board attorneys were redacted as non-responsive. Duplicate emails were redacted. Some emails and other responsive material were providedby another Federal agency; those were referred to the other agency for review and are not reflected onthis index.

References herein relate to the Board of Governors of the Federal Reserve System (Board); theFederal Reserve System (FRS); the Federal Reserve Bank of Boston (FRB-Boston); the Federal

Reserve Bank of New York (FRBNY); the Federal Reserve Bank of Richmond (FRB-Richmond); theFederal Reserve Bank of San Francisco (FRB-San Francisco); the Securities and Exchange Commission(SEC); and Large Financial Institutions (LFIs).



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Document Number: 1

Bates Range: 000001

Date: 3/10/08

Document Type: Email

From/To: FRBNY staff to FRBNY, Board, FRB-Boston, FRB-Richmond, FRB-San Franciscostaff

Subject: Priority: Bear Stearns

Exemption(s): 5

Description of withheld material: Two sentences of this email describing the method by which FRSexaminers are to obtain information from supervised institutions regarding the institutions exposure to

BS are redacted.

Basis for withholding: The withheld information is pre-decisional deliberative material that reveals theFederal Reserve staffs focus of concern as news spread of BSs weakening financial condition, whichplayed a part in the Boards deliberative process regarding how to respond to the rapidly deterioratingfinancial situation at BS.



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Document Number: 2

Bates Range: 000004

Date: 3/10/08


From/To: Board staff to Board Chairman

Subject: Bear Stearns Priority Request

Exemption(s): 6

Description of withheld material: Chairman Bernankes personal email address is redacted.

Basis for withholding: The Chairman has a unique email address, which is kept confidential in order tosafeguard his privacy. This reflects the Boards procedure to protect the Chairmans privacy interests.



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Document Number: 4

Bates Range: 000007

Date: 3/10/08


From/To: FRBNY staff to FRBNY, FRB-Boston, Board, FRB-Richmond, FRB-San Franciscostaff

Subject: Priority: Bear Stearns

Exemption(s): 4, 5, 8

Description of withheld material: Information identifying a regulated financial institution and providingdetails of its exposure to BS is redacted (portions of one paragraph and individual words in a subsequent

paragraph).

Basis for withholding: The information is confidential business information obtained from an FRS-regulated financial institution by FRS examiners in the course of the supervisory process. Disclosure of information such as this would likely cause substantial competitive harm to the submitter, impair thegovernments ability to obtain necessary information in the future and could chill the free flow of information between a regulated financial institution and its supervisor. In addition, the informationwas disseminated among Federal Reserve System staff as part of the Boards pre-decisional, deliberativeprocess regarding how to respond to the rapidly deteriorating financial situation at BS.



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Document Number: 5

Bates Range: 000008 (Middle)

Date: 3/11/08



Subject: Priority: Bear Stearns March 11 update


Description of withheld material: Identities of LFIs reporting their actions with respect to BS areredacted.

Basis for withholding: The information is confidential business information obtained from FRS-regulatedfinancial institutions by FRS examiners in the course of the supervisory process. Disclosure of theidentities of these institutions would likely cause substantial competitive harm to the submitters, impairthe governments ability to obtain necessary information in the future and could chill the free flow of information between regulated financial institutions and their supervisor. In addition, the informationreveals FRS staffs focus of concern as news spread of BSs weakening financial condition. Theinformation was disseminated among FRS staff as part of the Boards pre-decisional, deliberativeprocess regarding how to respond to the rapidly deteriorating financial situation at BS.



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Document Number: 6

Bates Range: 000008-09

Date: 3/10/08



Subject: Priority: Bear Stearns March 10 update


Description of withheld material: Portions of one paragraph of text are redacted in reports fromidentified supervised financial institutions regarding their activities in attempting to limit exposure to BS.

Two additional paragraphs containing supervisory information unrelated to BS were redacted.

Basis for withholding: The information concerning BS is confidential business information obtained fromFRS-regulated financial institutions by FRS examiners in the course of the supervisory process.Disclosure of the identities of these institutions and of the types of actions they take in suchcircumstances would likely cause substantial competitive harm to the submitters, impair thegovernments ability to obtain necessary information in the future and could chill the free flow of information between regulated financial institutions and their supervisor. In addition, the informationreveals FRS staffs focus of concern as news of BSs weakening liquidity. The information wasdisseminated among staff at the Board as part of the Boards pre-decisional, deliberative processregarding how to respond to the rapidly deteriorating financial situation at BS. The information notconcerning BS was withheld as not responsive to plaintiffs FOIA request.



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Document Number: 7

Bates Range: 000011-12

Date: Undated (attachment to email dated 3/13/08, Bates 000010)

Document Type: Note

From/To: N/A

Subject: BS&Rs information on Bear Stearns current liquidity issues as of March 13,2008

Exemption(s): 4, 5

Description of withheld material: The identities and amount of exposure of several large mutual fundswith exposure to BS are redacted from page 000011 (3 partial lines of text).

Basis for withholding: Release of this confidential business information voluntarily obtained from aperson would likely cause substantial competitive harm to the subject companies, impair thegovernments ability to obtain necessary information in the future, or would not customarily bedisclosed to the public by the submitter. In addition, the information reveals FRS staffs focus of concernas news spread of BSs weakening financial condition. The information was disseminated among staff atthe Board as part of the Boards pre-decisional, deliberative process regarding how to respond to thedeteriorating financial situation at BS.



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Document Number: 8

Bates Range: 000013

Date: 3/13/08


From/To: Board staff to Board staff

Subject: Bear Stearns

Exemption(s): 5

Description of withheld material: The identities of two financial firms and one regulated financialinstitution are redacted.

Basis for withholding: The withheld information is pre-decisional deliberative material that reveals theidentities of institutions that FRS staff considered to be systemically important or whose failure couldhave systemic consequences to the financial system as news spread of BSs weakening financialcondition, which played a part in the Boards deliberative process regarding how to respond to therapidly deteriorating financial situation at BS.



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Document Number: 9

Bates Range: 000017

Date: 3/13/08


From/To: Board staff to Board staff

Subject: Banks Exposure to Bear Stearns


Description of withheld material: Identities of major banks with exposure to BS and, in one case,amount of exposure, are redacted.

Basis for withholding: This information was obtained from FRS-regulated financial institutions by FRSexaminers as part of the supervisory process. This type of confidential commercial information, if revealed, would likely cause substantial competitive harm to the submitter and could chill the free flowof information between regulated financial institutions and their supervisor and impair thegovernments ability to obtain necessary information in the future. In addition, the information wasdisseminated among staff at the Board as part of the Boards pre-decisional, deliberative processregarding how to respond to the rapidly deteriorating financial situation at BS.



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Document Number: 10

Bates Range: 000020 and 000051 (duplicate)

Date: Undated (attached to email dated 3/13/08, Bates 000018-19)

Document Type: Table

From/To: N/A

Subject: Bear Stearns Exposure Information for LFIs


Description of withheld material: The 1-page table, which is withheld in full, identifies FRS-supervisedLFIs with exposure to BS, the amount and relative size of the each institutions exposure, and the sourceof the information.

Basis for withholding: Most of the exposure data was obtained by FRS examiners directly fromregulated financial institutions as part of the supervisory process. This type of confidential commercialinformation, if revealed, would likely cause substantial competitive harm to the submitter, impair thegovernments ability to obtain necessary information in the future and could chill the free flow of information between regulated financial institutions and their supervisor. The table was disseminatedamong staff at the Board as part of the Boards pre-decisional, deliberative process regarding how torespond to the deteriorating financial situation at BS.



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Document Number: 11

Bates Range: 000004, 21, 22, 23, 30, 31, 38 and 39

Date: 3/13/08

Document Type: Emails and attachment

From/To: Among SEC staff, FRBNY staff and Board staff

Subject: Bear Stearns Information

Exemption(s): 5, 8

Description of withheld material: Details on BSs repo exposure to counterparties obtained on aconfidential inter-agency basis by FRS staff from SEC staff are redacted.

Basis for withholding: The withheld confidential financial information was obtained by SEC staff from BSand communicated by SEC staff to FRS staff on a confidential inter-agency basis. The confidentialcommercial information subsequently was communicated on an intra-agency basis among FRS staff aspart of the pre-decisional, deliberative process regarding how the Board would respond to the rapidlydeteriorating financial situation at BS. In addition, the SEC obtained the withheld information from BSpursuant to its Consolidated Supervised Entity (CSE) program which is designed to monitor forfinancial weakness in CSE holding companies. The withheld records relate to examination, operating orcondition reports prepared by, on behalf of or for the use of the SEC in connection with its supervisionand regulation of BS.



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Document Number: 12

Bates Range: 000022 (Bottom)

Date: 3/13/08


From/To: FRBNY staff to SEC staff; FRBNY staff to Board staff; Board staff to Board staff

Subject: Bear Stearns maturity schedule

Exemption(s): 5, 8

Description of withheld material: This email seeks clarification regarding the nature and scope of BSsrepo exposure to counterparties. One sentence revealing confidential financial information on BSobtained on a confidential inter-agency basis by FRS staff from SEC staff is redacted.

Basis for withholding: The withheld information was communicated by SEC staff to FRS staff on aconfidential inter-agency basis and subsequently was communicated on an intra-agency basis amongFRS staff as part of the pre-decisional, deliberative process regarding how the Board would respond tothe rapidly deteriorating financial situation at BS. In addition, the SEC obtained the withheldinformation from BS pursuant to its Consolidated Supervised Entity (CSE) program which is designedto monitor for financial weakness in CSE holding companies. The withheld records relate toexamination, operating or condition reports prepared by, on behalf of or for the use of the SEC inconnection with its supervision and regulation of BS.



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Document Number: 13

Bates Range: 00029

Date: 3/13/08


From/To: Board staff to Board Staff

Subject: Bear Stearns exposures


Description of withheld material: Identification of LFIs and the nature and scope of their exposure to BSare redacted.

Basis for withholding: This confidential business information was obtained by FRS examiners from FRS-regulated financial institutions as part of the supervisory process. Disclosure of this information wouldlikely cause substantial competitive harm to the submitters of the information and could chill the freeflow of information between regulated financial institutions and their supervisor. In addition, theinformation was disseminated on an intra-agency basis among FRS staff as part of the pre-decisional,deliberative process regarding how to respond to the rapidly deteriorating financial situation at BS.



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Document Number: 14

Bates Range: 000032

Date: 3/13/08


From/To: Board staff to Board staff, including the Boards General Counsel

Subject: Bear Stearns update

Exemption(s): 4, 5

Description of withheld material: Two sentences detailing BSs liquidity position and Board staffsplanned action in response are redacted.

Basis for withholding: This confidential commercial information was obtained by SEC staff from BS andcommunicated on an inter-agency basis to FRS staff. The information was disseminated on an intra-agency basis among FRS staff, including the Boards General Counsel, as part of the pre-decisional,deliberative process regarding how to respond to the rapidly deteriorating financial situation at BS. Inaddition, release of this confidential business information obtained by SEC staff from BS would likelycause substantial competitive harm and impair the governments ability to obtain necessary informationin the future, and this information was not customarily released to the public by the submitter .



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Document Number: 16

Bates Range: 000034 (Top)

Date: 3/13/08


From/To: Board staff to Board members and Board staff, including the Boards GeneralCounsel


Exemption(s): 5

Description of withheld material: The redacted five sentences of this email describes a conversationbetween Scott Alvarez, General Counsel to the Board, and a member of Board staff, regarding the

projected regulatory response to BSs funding position, and a Board staff members subsequent contactwith another federal agency concerning the situation at BS.

Basis for withholding: The information consists of an intra-agency communication disseminated on anintra-agency basis among FRS staff, including Board members and the Boards General Counsel, as partof the pre-decisional, deliberative process regarding how to respond to the rapidly deterioratingfinancial situation at BS. A portion of the information recounts inter-agency consultations regarding thesituation at BS.



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Document Number: 17

Bates Range: 000034 (Bottom)

Date: 3/13/08


From/To: Board member to Board members and staff, including the Boards GeneralCounsel



Description of withheld material: The name of a regulated LFI with exposure to BS is redacted.

Basis for withholding: The information is confidential business information obtained from an FRS-regulated financial institution by FRS examiners in the course of the supervisory process. Disclosure of information such as this would likely cause substantial competitive harm to the submitter, impair thegovernments ability to obtain necessary information in the future and could chill the free flow of information between a regulated financial institution and its supervisor. In addition, the informationwas disseminated among Federal Reserve System staff as part of the Boards pre-decisional, deliberativeprocess regarding how to respond to the rapidly deteriorating financial situation at BS.



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19

Document Number: 18

Bates Range: 000035

Date: 3/13/08


From/To: Board member to Board member and Board staff, including the Boards GeneralCounsel


Description of withheld material: The name of a regulated LFI with exposure to BS is redacted.

Basis for withholding: The information is confidential business information obtained from an FRS-regulated financial institution by FRS examiners in the course of the supervisory process. Disclosure of

information such as this would likely cause substantial competitive harm to the submitter, impair thegovernments ability to obtain necessary information in the future and could chill the free flow of information between a regulated financial institution and its supervisor. In addition, the informationwas disseminated among Federal Reserve System staff as part of the Boards pre-decisional, deliberativeprocess regarding how to respond to the rapidly deteriorating financial situation at BS.



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Document Number: 19

Bates Range: 000040 (Middle)

Date: 3/14/08


From/To: Board staff to Board members and staff

Subject: Bear Stearns cash flow

Exemption(s): 6

Description of withheld material: A Board staff members cellular telephone number is redacted.

Basis for withholding: This number is kept confidential in order to protect the staff members privacyinterest.



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21

Document Number: 20

Bates Range: 000041

Date: Undated (attached to email dated 3/14/08, Bates 000040)


From/To: N/A

Subject: Bear Stearns projected cash flow

Exemption(s): 4, 5

Description of withheld material: This table, which is withheld in full, identifies BSs projected cashflows, as well as FRS-supervised LFIs with exposure to BS and the relative size of the exposure to theinstitution in question.

Basis for withholding: The withheld confidential financial information was obtained by SEC staff from BSand communicated by SEC staff to FRS staff on a confidential inter-agency basis. The confidentialcommercial information subsequently was communicated on an intra-agency basis among FRS staff aspart of the pre-decisional, deliberative process regarding how to respond to the rapidly deterioratingfinancial situation at BS. In addition, release of this confidential business information obtained by SECstaff from BS would likely cause substantial competitive harm to BSs counterparties and impair thegovernments ability to obtain necessary information in the future, and is not customarily released tothe public by the submitter.



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Document Number: 21

Bates Range: 000043

Date: Undated (attached to email dated 3/14/08, Bates 000042)


From/To: N/A

Subject: Bear Stearns counterparty credit exposures


Description of withheld material: The table, which is withheld in full, identifies FRS-supervised LFIs andother non-supervised, private companies with exposure to BS and the size of the exposure for eachinstitution in question.

Basis for withholding: A portion of the information in this table is confidential business informationobtained from FRS-regulated financial institutions by FRS examiners in the course of the super

Board of Governors of the Federal Reserve Summary Judgment Motion

Documents

Transcript of Board of Governors of the Federal Reserve Summary Judgment Motion