Adventures with FDIC secrecy, cont.

By Felix Salmon
October 11, 2011
saw how the Federal Housing Finance Agency was above the law, with the government seemingly having no ability to tell it what to do. This week, it's the FDIC.

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Last week, we saw how the Federal Housing Finance Agency was above the law, with the government seemingly having no ability to tell it what to do. This week, it’s the FDIC. In the wake of its obstreporous obstructionism upon receipt of FOIA requests, the FDIC’s smug above-the-law impunity is now coming to light:

JunketSleuth worked for months with an attorney from the Office of Governmental Information Services, which mediates disputes between federal agencies and people requesting public records under FOIA.

The attorney was able to help persuade a number of other agencies to provide JunketSleuth with electronic and paper travel records. But she was unable to get the FDIC to provide the exact same types of records…

Federal agencies routinely violate FOIA, as they’ve done since the law was created decades ago. Still, few agencies have rejected requests identical to those that others have granted, especially when the government’s own attorneys (in this case at OGIS) have worked with the agencies to secure access to the records.

This letter, in particular, from the FDIC simply drips with contempt and condescension for anybody daring to file a FOIA from the FDIC. And the long history of correspondence in this case clearly exhibits an utter lack of goodwill at the FDIC, or any desire at all to comply with the spirit of the FOIA law.

In general, it’s the financial agencies within the government — the FHFA, the FDIC, the Federal Reserve (especially the NY Fed, which considers itself not to be a public entity at all), and of course Treasury — which are by far the worst when it comes to transparency and disclosure. We’re constantly told that certain information is commercially sensitive, for example, only to discover when it finally does get disclosed that there’s nothing commercially sensitive about it.

I’m not sure how to fix this. The White House doesn’t seem to be able to change anything: Barack Obama, for instance, released an executive memo on his inauguration day, making it clear that the Freedom of Information Act “should be administered with a clear presumption: In the face of doubt, openness prevails.” The financial arms of government barely blinked, and continued in their secretive ways.

But in this one particular case, at least, I think it might help if a sympathetic journalist started asking for the FDIC’s travel records independently from JunketSleuth. The FDIC doesn’t consider JunketSleuth a legitimate news organization, and seems to be treating it with especial prejudice. Would they send these kind of letters to an established mainstream news outlet which asked for the exact same information? There’s only one way to find out.

Update: Andrew Gray of the FDIC responds by email:

I’m regretting not getting involved the first time that this was raised but wanted to commit to you that I will personally look into it to see what the issues are.  From my experience, the FDIC is strongly in favor of the transparency required in both the letter and spirit of FOIA.  I know of at least two recent sensitive requests from your Reuters colleagues that were handled to their full satisfaction and have worked with numerous other news outlets and other outside individuals to ensure that their requests are handled appropriately and expeditiously.  While I still need to learn more about the facts in this specific request, I would submit that it is a bit of a stretch to cast a sweeping generalization about our commitment to FOIA based on this one case.

Particularly during the last few years, the FDIC has consistently demonstrated is commitment to openness and transparency.  We make public extremely detailed data about the banking industry, our P&A agreements from failed banks, structured sales and other programs.  During the crisis, we led the development, implementation and management of the Temporary Liquidity Guarantee Program, including posting public monthly reporting on debt issuances.  As an agency, we have led an unprecedented and voluntary transparency initiative throughout the implementation of Dodd/Frank, including posting the names and affiliations in all meetings with outside groups.  Our mission is public confidence – and our reputation as an agency has been enhanced by our willingness to be forthcoming with the public about our actions and views.

7 comments

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ThomsonReuters is an established mainstream news outlet, right?

Posted by TWAndrews | Report as abusive

Now where would we find such a well-placed person?

Posted by CambridgeChuck | Report as abusive

This is a worrying trend in US politics; the refusal by anyone with a Republican bent in any position of power disobeying the law to spite the Administration. Why do I blame the GOP? They’re the ones with all the hostility, the harsh words, the brinkmanship, and all the Bush appointees.

Do they think they are above the law? Of course they do.

Posted by FifthDecade | Report as abusive

Journalistic credentials have nothing to do with responses to the FOIA. i am only a dog (so i am not an expert), but i am not aware that the FOIA makes any special provision for journalists, “legitimate” or not.

On the other hand, getting media coverage could certainly affect the outcome. In fact, illegitimate might be better: it takes one to know one, and that would be a good way to get the bastards….

Posted by samadamsthedog | Report as abusive

One plausible explanation: revealing FDIC travel records could reveal where FDIC examiners are spending a disproportional amount of time — and hence what banks might be most likely to be taken over by the FDIC. If there are a large number of trips to a particular city with a bank rumored to be in trouble, it could indicate the FDIC is about to take action.

One example: when the FDIC took over a number of banks in Puerto Rico, the whole island was on the lookout for FDIC personnel to figure out what banks were failing and when that was likely to happen. Apparently the cover story — I believe it was a dentist’s convention?? — was seen through rather quickly.

In this case, revealing the FDIC’s travel records could allow stock analysts to short stocks of banks that are about to be taken over. Put it this way: would a hedge fund be interested in buying the travel records of the FDIC’s examiners? You bet they would. So it would therefore be dangerous to disclose this information.

Unfortunately, you may need to rely on the FDIC’s Inspector General (or equivalent) to enforce the travel policies.

Posted by BostonBlue | Report as abusive

I should have read the FDIC letter… the FDIC Chairman does not personally shut down banks. So they should be disclosing this. My bad.

Posted by BostonBlue | Report as abusive

Felix,
Smug? Above the law? You should take the time to read carefully all of the correspondence between Mr. Carollo and the FDIC, and also to consider the immense amount of travel that is part of the FDIC’s job. I’m an FDIC employee of some 23 years, and I have no problem with the agency divulging my travel records (they’ve already divulged my salary, by the way), and I don’t think the agency itself is essentially averse to giving Mr. Carollo the information he wants. What they are understandably averse to is spending thousands of dollars to comply with a single FOIA request. You will see in the correspondence that Mr. Carollo has not been helpful to his own cause–assuming his cause is not more about building up his journalistic persona than it is about getting the information he seeks. The FDIC’s response to his request regarding ALL travel records is that it cannot fulfill so general of a request. The correspondence shows that the agency has, in fact, conferred with the FDIC’s Division of Finance as to how it might meet Mr. Carollo’s request, and learned that it would be very costly and time consuming. Yet Mr. Carollo has been unbending in what he wants and how he wants it. He might be surprised at what he could accomplish by just being a little more flexible.

Posted by Anon1965 | Report as abusive