Treasury Thumbs Nose at Bloomberg FOIA Request on Citi Guarantees

In Rudy Giuliani’s second term as mayor, the famed backer of law n’ order had a great fondness for taking it into his own hands. Groups that wanted to assemble on the steps of City Hall were required to file a notice or petition of some sort. A peculiar ritual would then ensue. The mayor’s office would deny the request, the group in question would seek a court order to allow their little protest to go ahead, and without fail, permission would be granted.

It was a form of petty harassment, an abuse of official power and a waste of everyone’s, particularly the court’s, time.

The Obama Administration and the Fed are engaging in precisely the same tactics to deny access to what ought to be public property, in this case, information about how taxpayer funds were utilized during the crisis. And that means not just the TARP, but the many other handouts to banks, including guarantees, regulatory forbearance, the operation of various rescue facilities and programs (arguably, the slightly over $1 trillion in MBS purchases was aimed at banks, not borrowers), and other hidden subsidies.

Predictably, the Obama administration promised transparency and instead delivered foot dragging and obfuscation. Bloomberg provides an unpleasant but nevertheless illuminating account of how a request by its reporter Mark PIttman for information regarding the November 2009 bailout of Citigroup was treated with what amounts to contempt. I say “what amounts to” because the Treasury did bother complying with the form of the FOIA inquiry.

Note that past efforts by the officialdom to withhold information on actions during the financial crisis haven’t fared too well. Pittman also submitted a FOIA asking the Fed to divulge the names of banks that took emergency loans. The Fed refused, and Bloomberg won in district court and on appeal. The Fed has until October 26 to decide whether to appeal to the Supreme Court. Similarly, the Fed refused to disclose the holdings of Maiden Lane III, one of its two AIG rescue vehicles, arguing disclosure of the information would impair its ability to realize maximum value for the public (the argument was that by divulging its transactions, it would give traders and advantage). Tom Adams prepared an analysis that we published on Naked Capitalism that showed that over 80% of the Maiden Lane III transactions were already public, and one could put together considerable detail about each deal, again strictly from public sources (see here, here and here). Representative Darrel Issa later released all the transaction level detail .

There is simply no excuse for withholding the information at issue. These are matters that happened two years ago; they can have no commercial impact upon Citigroup. It’s clear who this secrecy is designed to protect, and that’s them officialdom.

Nevertheless, the Treasury cites an incredibly litany of “trade secrets, personnel rules and practices, memos subject to attorney-client privilege and violations of personal privacy.” This list was used to justify gutting 560 pages of e-mails between the Treasury and the Fed, redacting to uselessness another 104 pages of schedules, and withholding another 886 pages of documents. I’ve had financial firm clients who’ve won cases based on violation of trade secrets. It’s an incredibly tough standard to meet. I guarantee in general that Citi does not take the steps necessary for mere securities ownership to qualify as a trade secret, nor does positions held into nearly two years ago qualify on a practical basis.

Here are some more examples of the contempt with which the Administration treats the public. From Bloomberg:

The late Bloomberg News reporter Mark Pittman asked the U.S. Treasury in January 2009 to identify $301 billion of securities owned by Citigroup Inc. that the government had agreed to guarantee. He made the request on the grounds that taxpayers ought to know how their money was being used.

More than 20 months later, after saying at least five times that a response was imminent, Treasury officials responded with 560 pages of printed-out e-mails — none of which Pittman requested. They were so heavily redacted that most of what’s left are everyday messages such as “Did you just try to call me?” and “Monday will be a busy day!”

None of the documents answers Pittman’s request for “records sufficient to show the names of the relevant securities” or the dates and terms of the guarantees. Even so, the U.S. government considers the collection of e-mails a partial response to an official request under the federal Freedom of Information Act, or FOIA. The Justice Department in July cited an increase in such responses as evidence that “more information is being released” under the law….

And get a load of the runaround:

Pittman’s request for the Treasury Department records spent months in limbo, according to discussions with the agency’s employees. He had waited about 10 months for a response when he died on Nov. 25, 2009. Shortly afterward, Michael Galleher, an attorney working on contract for the Treasury Department, called Bloomberg News, asking where he could send the responsive documents. Attempts to return Galleher’s call failed; he couldn’t be found at the agency.

A December call to Gilmore, the FOIA liaison, was returned by Daneisha White, a FOIA officer, who suggested calling Michael C. Bell, the FOIA manager in the Office of Financial Stability. Bell referred questions back to Gilmore.

Meanwhile, that month, Citigroup repaid $20 billion of its bailout money and terminated the asset guarantees.

Gilmore called back in January, saying Galleher had left the agency at the end of 2009. He and his colleagues would search for Pittman’s FOIA documents, he said, because they weren’t sure where they were.

In April came a call from Galleher. He said that he had returned to work at Treasury’s FOIA office, that he had the relevant documents for Pittman’s request and that he would send them that week…

In May, Galleher reported that he would have something to send soon. He said the same thing in June, and then in July. Part of the holdup was caused by the governmentwide practice of giving private companies a chance to object to the disclosure of requested documents, he said. Doing so ensures that companies continue to cooperate with the executive branch by providing records without fear they’ll be made public without review, said Pustay of the Justice Department.

And notice we have no explanation of the delay from July to the end of October, an additional three months.

The Obama Administration is clearly taking its playbook straight from the Ministry of Truth.

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  1. attempter

    As the public are the owners of Citi and all the other zombie banks, all their information is our property. They must affirmatively publicize all information. That’s a minimum consequence of the Bailout.

    By definition all government information is our property and must be publicized unless there’s some actual existential threat to us. No such threat exists on earth today. So it follows that government has zero right to any secrets whatsoever.

    So information regarding the interaction of government and bailed-out banks (a redundant compound noun,really; these banks could not and do not exist except as parasites on the government, i.e. on the people) is doubly public property.

    The government’s stonewalling on transparency is a primary case study in two things:

    1. Proof that the government consciously sees itself as the servant of Wall Street, and the people as the enemy.

    2. The government’s general hatred for democracy and elitist contempt for the people.

  2. Paul Repstock

    You’re correct Attempter. All these messes refuse to go away, people refuse to be quiet about them. So in their arrogance, our governments and the financial insitutions which support them, simply choose to ignore us. The game is rigged and the only way we can avoid getting slaughtered is by refusing to participate. How I wish we had a Mahatma Ghandi to lead us.

    Face it. We are not governed by elected officials. We are governed by a beuracracy, directed by politicians (somewhat), who are in turn given their orders from those people who really have the power.

    I nearly fell of my chair when I read Mervyn King’s statement. That the Banks should be broken up because they cannot be trusted with our deposits and other funds. This man must be terribly angry, and terribly naive. Perhaps he just has a death wish. Standard Oil will be the only corporate breakup ever to occur. There is simply not the poer or the will to do that again. And look how successful that turned out…:( Not!

    1. Paul Repstock

      Perhaps the recent 2 cent increase in the value of the Pound is the Bank’s reply to Mr. King, or perhaps he talks out of both sides of his face?? I nolonger believe anything people tell me..Sad isn’t it. The only reason anyone talks now is to misslead.

      1. chris trakas

        I believe it was Chomsky who opined that, most likely, language developed as a result of man’s need to prevaricate.

  3. Hubert

    Mark Pittman, if I remember correctly, is dead by now. Does anybody know anything of his health before ? No conspiracy implied, just a question…..

  4. Hubert

    Okay, I read to the bottom. Mark Pittman is definitely dead.
    In the last 3 years things happened which I would have considered impossible back then. Now I think anything is possible with Wall Street & Washington.
    So, has anybody any idea about Mark Pittman´s health before November 2009 ?

  5. nowhereman

    And then the government, on election day, says; “Trust us, we have your best interests at heart.”

    Over and over and over and over and over and over ……….

  6. Psychoanalystus

    What a bunch of gangsters. Criminals acting with impunity. Thank you, Mr. Obama — I am looking forward to voting for the Tea Party next week.


    1. catlady

      Don’t do that. The Tea Party is funded by the oligarchs who created and profit from this mess. Vote GREEN!!!!

  7. frances snoot

    Doesn’t Michael Bloomberg have some controlling interest in Bloomberg? Or is he just the linebacker for Blackrock?

  8. Doug Terpstra

    From Yves’ interview of Maria Bartiromo linked yesterday:

    Maria: “I remember when I was talking with Hank Paulson … during the commercial break he said to me, ‘Maria, in six months you will understand why we did what we did.’ … I wrote about how the government was not being transparent with people. We didn’t know who was getting the money, and that was by design.”

    Yves: “That was actually one of the most astonishing things in your book … the government secrecy [about TARP] finally became clear: it was hiding Citigroup’s insolvency … they needed to spread the [trillion dollars] out to effectively cover that it was Citi that they were most concerned about, to avoid there being a run on Citi.”

    Maria: “Yeah.”


    Yves: “… do you think, with the benefit of hindsight … it would have been better to actually resolve some of the firms that were instead bailed out?”

    Maria: “Well, you know, It’s very easy two years later to look back and judge, and I don’t want to do that because I do believe that the leadership at the wheel at this moment in time was the right leadership, and I think they did a great job, actually … the leadership in charge that weekend was the leadership that I trust.”

    Deflection; look forward not backward. I mean, really, why study history? So Paulson’s six month mystery drags on to two years and they still won’t come clean—because they can’t. Can you smell fear?

    1. psychohistorian

      I think that the uber rich fascist world complex is vastly more dangerous than the military industrial complex war machine that works for it.

      You won’t be seeing any wikileaks about ongoing uber rich societal control plans in our current world.

  9. CingRed

    Thanks Yves for another fine confirmation that we are truly a banana republic. Most people just don’t realize that yet and most probably never will.

    1. skippy

      How could they…born and raised to consume, honor the flag at what ever the cost and pick between two dysfunctional parents. Yet alone string a coherent thought about styles of government, blinded by bling…eh…sigh.

      Skippy…if only as much effort was utilised to preserve the living space we all share, over the chimera of wealth and its false security.

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