Case Detail
| Case Title | BALL v. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| District | District of Columbia | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| City | Washington, DC | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Case Number | 1:2013cv00603 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Date Filed | 2013-04-30 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Date Closed | 2015-03-31 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Judge | Judge Tanya S. Chutkan | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Plaintiff | LAURENCE M. BALL | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Defendant | BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Documents | Docket Complaint Complaint attachment 1 Complaint attachment 2 Complaint attachment 3 Complaint attachment 4 Opinion/Order [23] FOIA Project Annotation: Judge Tanya Chutkan has ruled that several memos prepared by the Federal Reserve Board during its consideration of steps it could take to lessen the effects of several high-profile 2008 bankruptcies are protected by Exemption 5 (privileges). Chutkan also ruled that records of the Federal Reserve Bank of New York, which made the loans, are not agency records of the Federal Reserve Board, and that, further, the Federal Reserve Banks qualified as financial institutions for purposes of Exemption 8 (bank examination records). Laurence Ball, an economics professor at Johns Hopkins, requested two memorandums analyzing the Federal Reserve's legal justification for extending loans to Bear Stearns/JPMorgan and AIG and two spreadsheets listing the collateral securing those loans. The agency withheld all four documents. Ball challenged the agency's search only in respect to the collateral spreadsheet for the AIG loan. He argued the Federal Reserve was required to search the records of the Federal Reserve Bank of New York as well. Acknowledging that her interpretation of what constituted records of the Board differed somewhat from the Second Circuit's interpretation, Chutkan indicated that Board records included those records created by the Board or created by a Federal Reserve Bank working for or on behalf of the Board and records housed by the Board or any Federal Reserve Bank for administrative reasons as long as those records were created while working for or on behalf of the Board in connection with official business. She observed that "crucial to the inquiry here, for a FRB record to be a Board record, the FRB must have been working for or on behalf of the Board." Ball argued that the Board authorized the FRBNY loan and, thus, it was made "on behalf" of the Board. But Chutkan explained that "an analysis of the phrase 'on behalf of' reveals that it contemplates something more like delegation than authorization." She added that "action 'on behalf of' requires more than authorization; it requires a principal to delegate power to the representative to act on their behalf. Authorization is merely the act of giving permission or formally approving. Even if one is authorized to act, this does not mean they are acting on behalf of another." She pointed out that the "the Board [had the statutory] power to authorize the FRBs to extend loans. [The statute] did not give the Board the power to extend a loan, therefore the Board could not delegate that authority to the FRBNY. FRBs could choose not to extend a loan, even after the Board authorized it." Ball argued the legal memos were no longer privileged because the agency had adopted them as its working law or had adopted them by public reference. Chutkan found the memos were focused on the specific situation and were not intended to establish working law more broadly. As to public adoption, she found Ball's reference to statements made by Board General Counsel Scott Alvarez to the Financial Crisis Inquiry Commission came closest to publicly adopting the memos, but she noted that "it is not clear whether Alvarez had the authority to adopt Board policy in the first place. Even more damaging to Ball's argument, however, was Chutkan's finding that the D.C. Circuit had found nearly identical memos were protected in McKinley v. Board of Governors of the Federal Reserve System647 F.3d 331 (D.C. Cir. 2011). Ball argued that FRBs did not qualify as financial institutions for purposes of Exemption 8 because they "engage in other activities that are not the domain of traditional financial institutions." Chutkan disagreed, pointing out that "the FRBs are hybrid entities, with some public and some private functions, but at least some of their functions are those of a financial institution. They manage 'money, credit, or capital,' and therefore under a plain meaning interpretation they qualify as financial institutions."
Issues: Agency Record, Exemption 5 - Privileges - Waiver of privilege, Exemption 8 - Financial institution | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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