Federal Reserve Goes Silent About Our Freedom of Information Request on Greece

Posted on by

The negotiations between Greece and its creditors has gone through so many small and large faceoffs that it can sometimes be difficult to keep track of all of the chapters of this saga. But the first and largest pitched battle was over whether Greece would accept an extension of a €172 billion rescue program which was due to expire at the end of February.

The new Greek government had originally said it would reject a €7.2 billion payment it would receive in connection with completing the current program, which included implementing so-called structural reforms like reducing pensions and “liberalizing” its labor markets that the incoming government had promised to reverse. Finance Minister Yanis Varoufakis had called for an overall restructuring of the creditors’ arrangements with Greece in light of the abject failure of the austerity program. He urged the adoption of pro-growth policies and restructuring debts so that the lenders would benefit if the Greek economy staged a real recovery.

However, Greece’s leaders capitulated to the creditors’ demands and signed a memorandum with the Eurogroup in late February agreeing to a four-month extension of the rescue program (now widely referred to as “the bailout”). The Greek government was required to submit a detailed list of structural reforms that needed to be reviewed and approved by the Troika and then the Eurogroup before the €7.2 billion would be disbursed.

The United States initially weighed in on the side of Greece. As the Wall Street Journal reported:

“You cannot keep on squeezing countries that are in the midst of depression. At some point there has to be a growth strategy in order for them to pay off their debts to eliminate some of their deficits,” Mr. Obama said in an interview with CNN’s Fareed Zakaria aired Sunday.

He said Athens needs to restructure its economy to boost its competitiveness, “but it’s very hard to initiate those changes if people’s standards of livings are dropping by 25%. Over time, eventually the political system, the society can’t sustain it.”

The Administration later reversed itself, with Treasury Secretary Jack Lew calling Varoufakis to urge him to conclude a bailout deal with the creditors “to find a constructive path forward in partnership with Europe and the IMF to build on the foundation that exists to advance growth and reform.” Needless to say, the “foundation that exists,” meaning the then-current structural reform program, had clearly not produced anything dimly resembling growth. But the US had apparently decided to hew to the European party line that Greece’s disastrous experience resulted from the country not trying hard enough, so the beatings would continue until morale improved.

During this time, the Federal Reserve remained silent, in keeping with its supposedly independent, meaning apolitical, role. Yet given the central bank’s mandate to preserve stability, as well as personal relationships between some Federal Reserve board members and officials at the ECB, such as between Fed vice chairman Stanley Fischer and his former student, now ECB head Mario Draghi, it seemed inconceivable that Federal Reserve Board governors and staff had not discussed the Greek negotiations internally and with their counterparts at the ECB.

We sent this Freedom of Information Act (“FOIA”) request to the Federal Reserve Board of Governors as stipulated on its website:

The full text of all e-mails, faxes, and letters sent or received by any employee of the Board of Governors of the Federal Reserve System, including the Governors themselves, from January 1, 2015 through and including February 27, 2015, containing any of the following words/terms: Greece, Syriza, Tsipras, Varoufakis, Grexit, ELA.

Any memoranda, notes to file, or meeting notes prepared by any employee of the Board of Governors of the Federal Reserve System, including the Governors themselves, from January 1, 2015 through and including February 27, 2015, containing any of the following words/terms: Greece, Syriza, Tsipras, Varoufakis, Grexit, ELA.

A list of phone calls and meetings of any Board of Governors member or staff member from January 1, 2015 to present with any officers or employees of the following organizations;  the IMF, the European Parliament, the European Commission and  the European Central Bank with the name of the Board of Governors member, the name of the foreign official, the date, time and duration of the call/meeting, and any information about the substance of the conversation, including but not limited to phone calls and meetings with President of the European Central Bank Mario Draghi, President of the Eurogroup Jeroen Dijsselbloem, and President of Deutsche Bundesbank Jens Weidmann. 

As you will see from the document embedded at the end of this post, we received an acknowledgement from Jeanne M. McLaughlin on March 2. Note that under the Freedom of Information Act, a Federal agency is required to make a response within 20 days. On March 30, Ms. McLaughlin sent an e-mail stating that the Fed would extent its period for their response till April 14, invoking a provision in the FOIA that allowed the recipient to have an additional ten days.

On April 24, we e-mailed Ms. McLaughlin stating that we did not seem to have received any response and requesting that she send us a response or resend one on the off chance that an e-mail had gone astray. We have yet to receive any reply.

It is sadly typical for bodies that are subject to FOIA to deny or ignore information requests even when the basis for not supplying the sought-after information is tenuous or non-existent. Stonewalling has become so common that the House Oversight Committee has taken interest in the problem. From a May 6 story in Politico:

The House Oversight Committee is reaching out to reporters, asking them to relay some of their Freedom of Information Act horror stories in preparation for a hearing next month on how to improve the FOIA process.

“Over the years I have heard from many of you that the FOIA process is broken,” House Oversight Committee spokesperson Melissa Subbotin Sillin wrote in an email to reporters. “Many requests go unaddressed, come back heavily redacted for no apparent reason, or are ignored altogether. Both majority and minority committee members are coming together to do a deep analysis to find where the problems exist and what fixes need to be made. In order to do so, we need your help.”…

Issues with the FOIA process are longstanding. On Wednesday, the Associated Press’ general counsel Karen Kaiser testified before the Senate Judiciary Committee in support of the FOIA Improvement Act, outlining how much more difficult the FOIA process has become.

“We are witnessing a breakdown in the system – both on the procedural front, in the form of continual delays and agency non-responsiveness, and on the substantive front, with the vast over-use of exemptions and redactions,” Kaiser said.

Based on our understanding of FOIA, it is hard to see how the Federal Reserve has a basis for not completing our request. We are not seeking confidential supervisory information. It also seems unlikely that internal or external counsel would have been involved in what would be political and economic discussions with the ECB regarding Greece, and therefore most and likely all of the material would not be subject to attorney-client privilege. Finally, the central bank has sought to deny some past FOIAs by claiming the information resides at member banks like the New York Fed, which are not subject to FOIA. Our request is clearly limited to communications and information at the Federal Reserve Board of Governors and hence should be subject to disclosure.

One of our Congressional contacts has forwarded our correspondence to the House Oversight Committee, so we hope they take an interest in our matter and press the Fed to complete outstanding FOIA requests, including ours. This page lists the members of the committee. If you are a voter in any of their districts, we would very much appreciate it if you could call or e-mail their office (contact information here). Tell them you applaud this effort. Judge Louis Brandeis said, “Publicity is justly commended as a remedy for social and industrial diseases. Sunlight is said to be the best of disinfectants.” That spirit is the foundation of all freedom of information laws, and they are taking up an important fight to make sure that these rules retain their power as a key protection of the public interest. Please cite our FOIA as an example of the sort of non-compliance that you hope that they can remedy.

Extension Letter F-2015-00147

Print Friendly, PDF & Email


  1. Larry

    Thanks so much for the update, and for keeping the pressure on the Fed to release the information.

  2. ShawnD

    Great work Yves! My representative on the House Oversight Committee has been contacted.

      1. Older & Wiser

        Yves, yes great work yes… but… could your basic premise be wrong in that the Federal Reserve is NOT a government agency per se and thus not subject to FOIA disclosure ?

        For starters, the Federal Reserve bears the most gloriously bloated oxymoron misnomer in history.
        The (supposedly) ‘Federal Reserve’ is as “Federal” as Federal Express and for all intent and purposes has (almost) zero reserves.

        Now I understand that constant daily mis-use of the term ‘Federal Reserve’ does lead to everybody’s confusion, possibly yours also.
        But just as a reminder, the Fed is a private cabal with a life of its own and the fact that the US President appoints its Chairperson does not change the above one bit.

        1. Tom Flattery

          WRONG! The Board of Governors, the guys based at the Fed in Washington, D.C. is a government agency. The building is 100% occupied by government employees that are subject to FOIA. The 12 Reserve Banks are not Federal Government entities; neither are the persons therein government employees. The balance sheet issued by the Board is a consolidation of the assets, liabilities and net worth of the 12 Reserve Banks.

        2. Yves Smith Post author

          No, the Board of Governors is absolutely subject to FOIA. The Fed even has a web page for the submission of FOIA requests and the reply invoked a section of the FOIA statute. By contrast, the regional Feds are what amount to peculiar public/private partnerships and are not subject to FOIA, although they take the position that they voluntarily comply with FOIA (if you believe that, I have a bridge I’d like to sell you).

          For instance, the Board of Governors lost a suit with Bloomberg for trying to deny a FOIA request. The suit would have been tossed immediately if the Board of Governors were not subject to FOIA:


        3. Older & Wiser

          Okay, okay… so we (apparently) have the Fed on the one hand (NOT a government agency you say)… and then we have the Board of Governors of the Fed, ‘the guys based at the Fed in D.C.’ (sic) on the other hand that (supposedly) are members of a government agency, right ?


          Then …”(sic) The 12 Reserve Banks are not Federal Government entities; neither are the persons therein government employees…”

          Further hmmmmm….

          And then you guys readily acknowledge that we have…”…(sic) peculiar public/private partnerships…”

          You know what ?
          I’m sick and tired (am I the only one ?) of all this mumbo jumbo game whereby the final result is that we just DON’T have money, just mere currency which (mind you) in definetly NOT the same.

          And until we all get to that part of the Grand Scheme, we’d be all playing games which shall necessarily end VERY badly.

          Take care guys !

          1. Yves Smith Post author

            If you won’t make the effort of doing the minimal work it takes to understand the structure of the Fed, which you can find clearly explained if you use Google, I can’t help you. I don’t mean to sound churlish, but this site is not in the business of giving personal tutorials to people who don’t take basic steps to find public information that is readily available.

          2. Older & Wiser

            Despite what may amount to be your technical correctness on the FOIA applicability, there still remains more than a grain of truth in what I have described regarding the Federal Reserve “system” of sorts responsible for the dollar’s undergoing demise process as the world’s reserve currency. And that is what will really matter and not anything else.

            The fact remains that since 2008 the Fed has been propping up the world’s banking system with huge infusions of free cash, fully distorting the notion of “money” as we know it and expect it to perform.

            1. Yves Smith Post author

              The dollar is not undergoing any demise as reserver currency. To be a reserve currency, you have to be willing to run sustained trade deficits. That means exporting jobs. Despite China’s efforts to develop new institutions, it is not willing to take the steps to have the renminbi become a reserve currency.

              The Fed has only been propping up the US banking system. The ECB and Bank of England have acted independently to support theirs.

              1. skippy

                Exporting jobs tho does mean importing consumption, as a flow, and at some junction will change.

                Skippy… which leaves the big question of whom holds the stock at the end of the day.

            2. Older & Wiser

              The Fed has fully supported the ECB and the Bank of England through its infamous fx swaps. China doesn’t have any interest in having its renminmbi as reserve currency (they are not stupid). Yes, for that you must be willing to run sustained both fiscal and trade deficits (the US since 1971) but the rest of the world also has to accept it, and that is changing 180 degrees.
              The dollar’s demise as reserve currency is a work in progress. The worldwide debacle therein will claw back on us also. Ron Paul re “End The Fed”. FOIA or not, the Fed will play every game in town except revealing its secrets.

              1. Yves Smith Post author

                The swap lines were used only for a short period in the crisis and they were to enable the banks to lend against the dollar exposures of foreign banks. The US is the lender of the last resort in the dollar, just as the ECB is the lender of the last resort in the euro. We had to provide FX lines to those central banks because our banks sold toxic garbage to them.

                Who do you think clears dollar exposures of foreign banks? They all use the US tri party repo system, and the clearing banks are JP Morgan and Bank of New York Mellon. The currency swap lines were necessary to keep the US dollar repo market, and in particular JPM and BoNY afloat. Yes, it was also propped up foreign banks, but that was necessary to preserve key US players.

                The ECB has not had any outstanding balances on the FX swap lines for years yet the European banks by all standards remain undercapitalized and QE is still propping them up. So your initial claim, that the Fed is assisting foreign banks, is not true.

                I am a big critic of the Fed, but you need to be accurate. Mischaracterizing what the Fed does plays into their hand. They can say, “The public and media don’t begin to understand what we do, and you should ignore them.”

  3. financial matters

    Very interesting. It did seem like Obama was actually displaying some common sense at first. It doesn’t seem unlikely that the reversal came as people with a greater understanding of the overall solvency situation of the global banking system (the Fed) talked him back from this common sense position.

    We need this sunlight because these efforts to save the global banking system have benefitted the financial institutions and 1% while putting the austerity burden on the rest.

    When Randy Wray did his detailed study on the Fed’s reaction to the crisis, http://www.levyinstitute.org/pubs/rpr_4_13.pdf, he also didn’t find the information easy to get.

    “”the rescue was mostly formulated and conducted in virtual secrecy. Even after the fact, the Fed refused to release information related to its actions. It took a major effort by Congress (led by Senator Bernie Sanders and Representative Alan Grayson) plus a Freedom of Information Act lawsuit (by Bloomberg) to get the data released. When the Fed finally provided the data, it was in a form that made analysis extremely difficult. Only a tremendous amount of work by Bloomberg and by our team of researchers made it possible to get a complete accounting of the Fed’s actions. The crisis response was truly unprecedented. It was done behind closed doors. There was almost no involvement by elected representatives, almost no public discussion (before or even immediately after the fact), and little accountability. All of this subverts democratic governance.””

    You would also seem to have an ally in Bernie Sanders. The appendix to the above report contains some information on how JP Morgan managed to get by.

    1. Extracts from Bernie Sanders, “Banks Play Shell Game with Taxpayer Dollars,” Press Release, April 26, 2011

    The Federal Reserve propped up banks with big infusions of cash during the depths of the financial crisis in 2008 and 2009. Banks that took billions of dollars from the Fed then turned around and loaned money back to the federal government. It was a sweet deal for the bankers. They received interest payments on the government securities that were up to 12 times greater than the Fed’s rock bottom rates, according to a Congressional Research Service analysis conducted for Sen. Bernie Sanders….
    The study found, for example, that:

    • In the 1st quarter of 2008, JPMorgan Chase had an average of $1.2 billion in outstanding Fed loans with a 2.1 percent interest rate while it held $2.2 billion in U.S. government securities with an average yield of 4.6 percent.

    • In the 4th quarter of 2008, JPMorgan Chase had an average of $10.1 billion in outstanding Fed loans with a 0.6 percent interest rate while it held $10.3 billion in U.S. government securities with an average yield of 1.7 percent.

    • In the 1st quarter of 2009, JPMorgan Chase had an average of $29.2 billion in outstanding Fed loans with a 0.3 percent interest rate and held $34.6 billion in U.S. government securities with an average yield of 2.1 percent.

    • In the 2nd quarter of 2009, JPMorgan Chase had an average of $7.6 billion in outstanding Fed loans with an interest rate of 0.25 percent interest. Meanwhile, it held $34.6 billion in U.S. government securities with an average yield of 2.3 percent.””

  4. Tsigantes

    Bravo Yves! We appreciate this as much as, and maybe more than, Americans. I am distributing this to Greece’s Democrats Abroad for action. Thanks!

  5. RUKidding

    Well done! Keep up the good work. This is similar to your efforts with CalPers. Don’t let the bastards grind you down!

  6. susan the other

    This is good. I am way curious. I assume if the information is given it will expose the connection of our banks, mostly Goldman Sachs, in league with our military and with NATO to always keep Greece afloat. Been that way forever I’d bet. Which almost makes me wonder, in light of the weird stuff going on politically, if there is a post cold war plan which does not support Greece in the old ways, using it as an outpost to counter the Russians, but as an entry point into the Black Sea. The last party they want in power is Syriza. And after reading Orlov yesterday about Macedonia it seems to make sense.

    1. susan the other

      I’m increasingly suspicious that we are not anti-Russia at all. We want to accomplish things that “capitalism” failed to do economically. Failed miserably. The contradictory behavior of John Kerry, for one thing. The generous behavior of Lavrov for another. And even Putin is still, in spite of so much bashing, very cordial toward us.

      1. NotTimothyGeithner

        The Russians don’t want to play into anti-Russian propaganda especially when Versailles is declining on its own. The gulf leaders are snubbing Obama. Obama calls Russia the enemy. The Russians are being cordial. How does this play in Africa and South America?

        The MIC needs a scary Russia to develop franking here and to sell arms. The Russians and Chinese are smart enough to not appease them. The Indians and Pakistanis have both used similar phrasing in recent months. They described the relationship as partnerships not as a vassal situation. The Germans were gaining in colonial before 1914 because they offered less onerous deals, and the British coerced Germany into a war because the British needed to paint Germany as a threat to justify stamping down on the colonies or at least demonstrating that the Germans will bring war. Even during WWII, Nehru and Gandhi argued over the state of the resistance. Nehru understood the Nazis had to be stopped, but it’s the same thing. Russia threatens the arms industry, the energy industry, and the tech industry just by not being run by Yeltsin. Also, Obama is still upset over his war in Syria being averted, and Putin pushing for the destruction of chemical weapons.

  7. WorldisMorphing

    I admit curiosity on this matter is gnawing my insides …

    Perhaps the deliberate withholding of information is to avoid an “unnecessary scandal” since a default could be imminent…
    But then again, I surprise myself thinking Europe is being told, or is silently telling itself “careful what you wish for” …

  8. Jackrabbit

    Yves, the info you provide in this post leads me to believe more strongly that Syriza is NOT incompetent or “sellouts” but is steadfastly pursuing a sound strategy.

    In a classic game of chicken, each side engages in risky/irresponsible behavior that brings them closer to disaster with each passing minute. They expend resources (real, emotional and psychic) while hurling toward each other at great speed. The one with the most to lose is likely to be the one to change course.

    With regards to Greece, critics too often depict little Greece as having no chance against the Troika/Institutions in this game of chicken. Like an old rusty VW bug vs. a Mac truck. But imagine, if you will, that the Mack truck is hauling a container with valuable goods that will be damaged or destroyed if there is a crash. In such a case, the truck driver might have more to lose – especially if the VW bug driver has little to lose (maybe he is a victim of austerity and wants his family to collect the insurance money!).

    Saying that Syriza is incompetent and weakening Greece by making payments is like complaining that the VW bug driver is speeding and wasting of gas. It ignores the reason behind the action and the intended outcome. (Note: I too was a critic until I realized this myself).

    It says a lot that:

    – it wasn’t the Troika that withheld the 7.2 billion euro bailout money – Syriza never wanted that money!

    – The Obama Administration supported Greece when it seemed that Greece was going to play ball with the Troika but was critical of Greece when it became evident that they were sticking to their anti-austerity strategy


    I look forward to hearing more about your FOIA Request. I applaud your insightfulness in making that request.

    H O P

    1. Yves Smith Post author

      Huh? Syriza reversed itself on wanting the bailout money, in February. The Greek media widely described it as a “kolotumba” which literally means somersault but I gather has the inference of also falling flat on one’s ass.

      It is also hard to see how a strategy can be depicted as winning when it has inflicted real costs on the Greek population (even faster economic contraction, draining of domestic cash reserves to pay the Troika so they can continue negotiating when default or capitulation still looks like the most probable outcome) and seems no closer to succeeding that it did in February.

      I doubt the Administration reversal had anything to do with Syriza. I suspect it had a lot more to do either with 1. The Germans, who are already pretty unhappy with various US behaviors (spying, then trying to support its tech companies’ positions that they don’t have to obey well-established privacy laws by saying the laws are bad for innovation, groan, and of course Ukraine, where the US has pushed Europe into a higher level of conflict than most Germans, particularly businessmen, want) saying “butt out, this is our issue” and 2. The government getting assurances that the officialdom was confident it could handle a worst-case scenario, a Grexit, and the US concerns about threats to global stability were unfounded.

  9. Jackrabbit

    It seems to me that they are being agreeable but non-cooperative. Their strategy necessarily weakens Greece just as a game of chicken brings one closer to death. I have expressed dismay that they would chose such a strategy but that’s what they did. The strategy seems sound -IF- they have a good chance of winning the game of chicken (they seem to think so).

    I think the Obama Administration is going to naturally side with the Troika.

    We shall see how it turns out. If Syriza ‘sells out’ I would be the first to denounce them. But I wonder if Syriza will be allowed to succeed. The attacks on Syriza as incompetent and ‘security concerns’ regarding an independent Greece could be used as pretext for a coup.

  10. ewmayer

    “…how to improve the FOIA process…”

    Um, enforce the law, and do so in a timely with-teeth fashion? Crazy notion, I know.

    Good luck Yves — may you see your FOIA succeed, and I don’t mean posthumously, which was e’er the timeframe desired by the secrets-keepers on the rare occasions when they are held to account.

Comments are closed.