Fed Shrugged Off Warnings, Let Banks Pay Shareholders Billions

By Jesse Eisinger/ProPublica

In early November 2010, as the Federal Reserve began to weigh whether the nation’s biggest financial firms were healthy enough to return money to their shareholders, a top regulator bluntly warned: Don’t let them.

“We remain concerned over their ability to withstand stress in an uncertain economic environment,” wrote Sheila Bair, the head of the Federal Deposit Insurance Corp., in a previously unreported letter obtained by ProPublica.

The letter came as the Fed was launching a “stress test” to decide whether the biggest U.S. financial firms could pay out dividends and buy back their shares instead of putting aside that money as capital. It was one of the central bank’s most critical oversight decisions in the wake of the financial crisis.

Posted on March 5, 2012

Obama’s FOIA Fail

By The FOIA Project

When the Obama administration came to office in January 2009, it promised openness and transparency in government. On his first full day in office, President Barack Obama issued a memorandum concerning his administration’s beliefs on the Freedom of Information Act (FOIA), ordering federal officials to err on the side of openness. The President wrote that FOIA should be “administered with a clear presumption: In the face of doubt, openness prevails.” Pursuant to this memorandum, Obama’s new attorney general, Eric Holder, on March 19, 2009 issued a directive to emphasize the importance of the FOIA law’s purpose and “to ensure that it is realized in practice.”
This report considers whether a key component of that March 2009 directive which set forth new “defensive standards” for FOIA litigation has been obeyed. Henceforth, the AG’s memorandum stated, the Department of Justice would “defend a denial of a FOIA request only if (1) the agency reasonably foresees that disclosure would harm an interest protected by one of the statutory exemptions, or (2) disclosure is prohibited by law.”
After careful review of the record and interviews with numerous attorneys involved with FOIA litigation, TRAC found little evidence that these new standards are actually being followed. In fact, some individuals interviewed by TRAC expressed the opinion that Justice Department attorneys had become even more aggressive in defending anything that federal agencies chose to withhold.

Posted on March 2, 2012