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How the Fed and the Treasury Stonewalled Mark Pittman to His Dying Breath

ilene's picture




 

This is a really sad reflection on state of lawlessness in the federal government. Reminds me of this quote by Justice Louis Brandeis: 

The government is the potent omnipresent teacher. For good or ill it teaches the whole people by its example. Crime is contagious. If the government becomes a lawbreaker, it breeds contempt for law; it invites every man to become a law unto himself; it invites anarchy. To declare that the end justifies the means -- to declare that the government may commit crimes -- would bring terrible retribution.

- Ilene 

How the Fed and the Treasury Stonewalled Mark Pittman to His Dying Breath

Courtesy of PAM MARTENS

NEW YORK - MAY 02:  Reporter Mark Pittman on stage at the premiere and panel discussion of 'American Casino' during the 2009 Tribeca Film Festival at Directors Guild Theater on May 2, 2009 in New York City.  (Photo by Amy Sussman/Getty Images for Tribeca Film Festival)

Originally published at CounterPunch

On the President’s first day in office on January 21, 2009, he issued an Open Government memo promising the American people a new era of transparency. On March 19, 2009, under the President’s orders, the Attorney General’s office issued detailed guidelines on how Federal agencies were to respond going forward to Freedom of Information Act (FOIA) requests.  The guidelines instructed the agencies as follows:

“The key frame of reference for this new mind set is the purpose behind the FOIA. The statute is designed to open agency activity to the light of day. As the Supreme Court has declared: ‘FOIA is often explained as a means for citizens to know what their Government is up to.' NARA v. Favish, 541 U.S. 157, 171 (2004) (quoting U.S. Dep't of Justice v. Reporters Comm. for Freedom of the Press, 489 U.S. 749, 773 (1989)…The President’s FOIA Memoranda directly links transparency with accountability which, in turn, is a requirement of a democracy. The President recognized the FOIA as ‘the most prominent expression of a profound national commitment to ensuring open Government.’  Agency personnel, therefore, should keep the purpose of the FOIA -- ensuring an open Government -- foremost in their mind.” 

It pains me to inform you, Mr. President, but the Treasury Department, Board of Governors of the Federal Reserve, and Securities and Exchange Commission (the trio that has been variously distracted minting trillions in currency, trading cash for trash with Wall Street, surfing for porn, or mishandling multiple voluminous tips on Bernie Madoff’s Ponzi scheme) have misplaced your memo or, as many suspect, take their marching orders not from you but from Wall Street -- perhaps because they perceive that this is where you take your orders too.

On October 6, 2010, I filed three FOIA requests with the Securities and Exchange Commission (SEC).  I had come by information that the official government report on the stock market’s “Flash Crash” of May 6, 2010 was materially wrong and I wanted to buttress my investigative report to the public with documents the SEC had obtained or compiled in conducting its investigation.

I followed the SEC’s FOIA instructions and emailed the requests to foiapa@sec.gov as instructed by the web site, asking for a small amount of very specific information.  (You should know, Mr. President, that you may need a technology overhaul, along with a personnel overhaul at the SEC because, according to their written response, it took six days to receive my email.  The SEC emailed me as follows on October 12: “This letter is an acknowledgment of your FOIA Request dated October 06, 2010, and received in this office on October 12, 2010, regarding Flash Crash of May 06…” A cynical person might entertain the idea that this is a standard response to postal requests and the SEC didn’t notice that my request came in via email.)

According to Congress, the SEC was required, under the 1996 amendments to the FOIA,

”to  determine within 20 days (excluding Saturdays, Sundays, and legal holidays) after the receipt of a request whether to comply with the request.  The actual disclosure of documents is required to follow promptly thereafter. If a request is denied in whole or in part, the agency must tell the requester the reasons for the denial. The agency must also tell the requester that there is a right to appeal any adverse determination to the head of the agency or his or her designee.  The FOIA permits an agency to extend the time limits up to 10 days in unusual circumstances. These circumstances include the need to collect records from remote locations, review large numbers of records, and consult with other agencies. The agency is supposed to notify the requester whenever an extension is invoked.”

My response was not answered within 20 business days and I was not informed it would be delayed.  On the 24th business day, I was informed by three separate emails that all three of my requests were denied in their entirety.  In reviewing the transmission detail on each email, it took seconds for the SEC’s outgoing emails to reach me, whereas the SEC would have me believe that their incoming emails take six days.

One request was denied on the basis of FOIA exemption number 8.  Congress defines that exemption as follows: “The eighth exemption protects information that is contained in or related to examination, operating, or condition reports prepared by or for a bank supervisory agency such as the Federal Deposit Insurance Corporation, the Federal Reserve, or similar agencies.”  The SEC supervises and regulates broker-dealers and securities trading, not banks.  Moreover, I was seeking documents related to a specific stock market event, the Flash Crash of May 6, 2010, not a report or examination of a bank’s condition. 

The second request was denied on the basis of FOIA exemption number 5.  Congress defines that exemption as applying to internal government documents. 

“An example is a letter from one government department to another about a joint decision that has not yet been made. Another example is a memorandum from an agency employee to his supervisor describing options for conducting the agency’s business.  The purpose of the fifth exemption is to safeguard the deliberative policymaking process of government…For example, the exemption protects the policymaking process, but it does not protect purely factual information…Protection for the decision making process is appropriate only for the period while decisions are being made. Thus, the fifth exemption has been held to distinguish between documents that are pre-decisional and therefore may be protected, and those which are post-decisional and therefore not subject to protection.”

My request was for factual information and not policy deliberations.  Since the official report on the May 6, 2010 Flash Crash was released on October 1, 2010 and my request was made on October 6, 2010, all documents sought would have been post-decisional and not subject to protection. 

My third request was denied on the basis that the SEC did not have the information but their letter referenced only half the information I sought and was silent on the other half.

A brief flash of a movie scene came to mind as I reflected on the government’s maniacal refusals to turn over Wall Street documents since the financial crisis began.  In “The Rainmaker,” based on the John Grisham novel, young Donny Ray dies of leukemia because the evil insurance company, Great Benefit, won’t approve a bone marrow transplant. After repeatedly denying the mother’s treatment requests for her dying son, the company sends her a final denial letter calling her “stupid, stupid, stupid” for failing to just go away.  As it turns out, wearing the requester down with denials is a formalized practice for corporate benefit; there is no “Great Benefit” ever intended for the public.

The movie flashback reminded me of Mark Pittman’s FOIA battle. Pittman was a revered and trusted Bloomberg News financial reporter who died on November 25, 2009 at age 52 after his government essentially told him they thought he was “stupid, stupid, stupid” for not just going away.  The government stonewalled him to his last breath. 

Pittman’s legacy is now memorialized in Bloomberg v. Board of Governors of the Federal Reserve System which was decided in Bloomberg’s favor by the Second Circuit Court of Appeals on March 19, 2010.  Pittman had asked the Federal Reserve Board, under a FOIA request in April and May of 2008, for details of four lending programs, including the borrowers’ names and the amounts borrowed.  The programs were the Discount Window, the Primary Dealer Credit Facility, the Term Securities Lending Facility, and the Term Auction Facility. Pittman’s curiosity was piqued by the astronomical amount of borrowing taking place at the Fed by Wall Street banks during the crisis in 2008.  After averaging approximately $250 million a week in prior years, lending at the Fed’s Discount Window spiraled to over $100 billion in October 2008.

By law, the Federal Reserve had 20 business days to make a determination on the FOIA request.  Instead, according to the Bloomberg lawsuit: On June 19, 2008, the Fed invoked its right to extend the response time to July 3, 2008.  On July 8, 2008, the Fed called Bloomberg News to say it was processing the request.  The Fed called Bloomberg again on August 15, 2008, wherein Alison Thro, Senior Counsel and another employee, Pam Wilson, informed the business wire service that their request was going to be denied by the end of September 2008.  No further communication came, including the denial. 

On November 7, 2008, Bloomberg News filed a lawsuit in the U.S. District Court for the Southern District of New York, charging that: “…the Fed has vastly expanded its lending programs to private financial institutions.  To obtain access to this public money and to safeguard the taxpayers’ interests, borrowers are required to post collateral. Despite the manifest public interest in such matters, however, none of the programs themselves make reference to any public disclosure of the posted collateral or of the Fed’s methods in valuing it.  Thus, while the taxpayers are the ultimate counterparty for the collateral, they have not been given any information regarding the kind of collateral received, how it was valued, or by whom.”

It’s now two years later, Bloomberg has won at both the U.S. District Court and the Second Circuit Appeals Court and the information is still being withheld. While the Federal Reserve Board is not appealing to the U.S. Supreme Court, many of the same Wall Street banks the taxpayers bailed out, including Bank of America, JPMorganChase, Citigroup and Wells Fargo, are appealing to stop the release of the information through a consortium called The Clearing House Association LLC.  At least one person doesn’t believe that appeal presents a solid basis to withhold the information.  Matthew Winkler, Editor in Chief at Bloomberg News, wrote in an October 28, 2010 OpEd in the Wall Street Journal: “Now that the Fed is no longer pursuing the case, it may be able to release the information Bloomberg seeks at any time. We call on it to do so.”

Pittman’s battle with the Fed has been widely publicized.  Less known is the specious handling of his FOIA request by the U.S. Treasury.

On Jan. 28, 2009, Pittman filed a FOIA with the U.S. Treasury asking it to identify the $301 billion in securities owned by Citigroup that the government had agreed to guarantee to help shore up the troubled bank and to provide details of any contracts the Treasury had with outside firms hired to calculate the assets’ values. Pittman died 10 months later still waiting for a response.

According to a Bloomberg News story reported by Bob Ivry on October 25th of this year, it took the Treasury over 20 months to finally respond, after allowing Citigroup to have input in what was to be disclosed.  “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?’… 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.”  The headline of the article read “Treasury Shielding Citigroup With FOIA Deletions.”  A subhead might have been “Citigroup Calls the Shots at Treasury.”

What does Winkler (and this writer) think the withheld facts might show?  In Winkler’s OpEd of October 28 he noted: “Such disclosure would show whether the central bank may have violated the law by lending to any insolvent banks for extended periods.”

Did Pittman have any particular bank in mind when he filed his FOIAs?  Well, he did want to know about that $301 billion guarantee to Citigroup. 

I commend Pittman and Winkler for not just going away and I share their concerns.  In my CounterPunch column of November 24, 2008, titled “The Rise and Fall of Citigroup,” I noted that

“As of last Friday’s close, Citigroup had $2 trillion in ‘assets’ and $20.5 billion in stock market value, strongly suggesting the term ‘assets’ is a misnomer on Wall Street. Late last night the U.S. government agreed to dump hundreds of billions more into this black hole without any survival plan required of the company as demanded of the auto makers: apparently if you make those four wheel machines that get us to work you’re suspect; if you manufacture losses in unintelligible derivatives, you’re good to go…[Citigroup’s] stock lost 60 per cent last week and 87 per cent this year.  The company’s market value has now fallen from more than $250 billion in 2006 to $20.5 billion on Friday, November 21, 2008.” 

At that point in time, Citigroup’s market value was $4.5 billion less than the company owed taxpayers from the U.S. Treasury’s bailout program.

Pam Martens worked on Wall Street for 21 years; she has no security position, long or short, in any company mentioned in this article.  

 

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Fri, 11/19/2010 - 14:34 | 741681 Dirtt
Dirtt's picture

Waterboard the domestic terrorists..

Fri, 11/19/2010 - 01:27 | 740321 DisparityFlux
DisparityFlux's picture

Proprietary truths and proprieties.

Manifest destinies must ensure the former become the latter.

Fri, 11/19/2010 - 01:04 | 740295 Douglasnew
Fri, 11/19/2010 - 00:59 | 740288 honestann
honestann's picture

Yup.  government == complete lawlessness.

Fri, 11/19/2010 - 00:49 | 740264 iDealMeat
iDealMeat's picture

burning man

Fri, 11/19/2010 - 00:19 | 740196 DisparityFlux
DisparityFlux's picture

Did you fold, spindle or mutilate the request form?

Thu, 11/18/2010 - 23:42 | 740119 Miles Kendig
Miles Kendig's picture

ilene .. This is all you need to know about FOIA and governing the financial infrastructure..

http://www.businessweek.com/bwdaily/dnflash/may2006/nf20060523_2210.htm?...

Thu, 11/18/2010 - 23:35 | 740102 gkm
gkm's picture

Just got around to reading Matt Taibbi's article as well.  Man the US is simply fubared.  

http://www.rollingstone.com/politics/news/17390/232611?RS_show_page=0

 

Thu, 11/18/2010 - 23:23 | 740070 twittering as s...
twittering as stocktradr's picture

where do you think you, america?

Thu, 11/18/2010 - 23:12 | 740043 2discern
2discern's picture

Transparency? The liar-in-chief very first executive order 1/21/09 sealed his entire past life. No vetting was ever done.

http://www.archives.gov/federal-register/executive-orders/2009-obama.html

 

 

Thu, 11/18/2010 - 23:08 | 740041 SwingForce
SwingForce's picture

A wise man has said, "Better to be 2 years early than 10 minutes too late".

The Top 4 have no assets listed in my name. Protect yourself.

Thu, 11/18/2010 - 23:04 | 740029 Cone of Uncertainty
Cone of Uncertainty's picture

You must mean the "small people."

Thu, 11/18/2010 - 22:49 | 739991 merehuman
merehuman's picture

stand by for anal insertion. This is only a test!

Results dont matter, follow procedure. Now bend!

Thu, 11/18/2010 - 22:19 | 739902 janchup
janchup's picture

The phrase "criminal enterprise" keeps going through my mind.

Thu, 11/18/2010 - 21:58 | 739823 rlouis
rlouis's picture

The pressure of meeting timelines is no doubt at times difficult with FOIA requests, but the untenable [cough/hack/choke]claim that it took 6 days for the e-mail to arrive demonstrates how bAnal the daily practice of lying is. No doubt they gave the same serious consideration before checking the box on the denial of request form.  Socialism American Style... and we used to feel so superior to the USSR. 

Thu, 11/18/2010 - 21:33 | 739745 Bagbalm
Bagbalm's picture

Laws are for little people.

Thu, 11/18/2010 - 21:24 | 739728 Cleanclog
Cleanclog's picture

So very frustrating.

Basically, Americans are getting to the point that we don't trust anyone/thing anymore. Even once revered institutions like schools and hospitals and the military are not admired or trusted. Do we even trust farmers or ranchers now?  Doctors, nurses and teachers?  Auto workers, scientists, cyberbuilders.   Add police, lumberjacks, and postal service.  Especially insurance employees, banks, real estate affiliates, lawyers, and elected officials.

Who do you trust?  Your parent, spouse, child, neighbor, soldier.  That's where we start.

Thu, 11/18/2010 - 21:19 | 739716 knukles
knukles's picture

Oh, I'm sorry, I wasn't listening.  What paper work?  Must have been misplaced. Oh, he no longer works here.  Let me transfer you.  That's being handled in a different department.  Let me transfer you.  That department was absorbed into the other department when the departments were discontinued and transferred to the other department.  There is no such agency.  Let me transfer you.  I'm sorry, you have a wrong number.  Oh, we don't recognize that authority here.  Let me transfer you to my supervisor.  The operator can help you.  He was general counsel when that subject was placed under seal and his records are not accessible.  Maybe Attorney General Ashcroft can help you.  No, we don't have his birth certificate.  You'll either need to step into the body scanner or be felt up by that old smelly perv in the uniform, take your pick.  Don't call here again.  I know where you live, asshole.  That JimBillyBob Oscar?  Shoot I went to school with him.  Whaddya want him for?  Let me transfer you.  Sorry, but the court order does not require us to comply.  Not on your national security, asshole.  Fuck you.  Well, I'll have to pass this along to my supervisor, but she's been transferred to the Madigascar embassy for a while.  Who?  Never heard of it.  The law doesn't apply here.  You'll have to fill in these seventy three forms in triplicate, no blue ink or number 2 pencil, no hanging chads.  They're not here.  Fuck you, sir.  Please leave a message at the tone.  The mailbox is full.

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Fri, 11/19/2010 - 00:33 | 740231 Dr. No
Dr. No's picture

The items you requested are a privilege and can be revoked at any time.  Officers are only avaialble to help from 9-4, mon-thurs.

Thu, 11/18/2010 - 22:45 | 739984 merehuman
merehuman's picture

no loitering!

Thu, 11/18/2010 - 21:12 | 739704 apberusdisvet
apberusdisvet's picture

It would be nice to think that we are not all pissing in the wind; unfortunately we are until a catastrophic event occurs.  But at least this is a good site to vent.

Thu, 11/18/2010 - 21:55 | 739817 Harbourcity
Harbourcity's picture

"Knowing is half the battle..."

Thu, 11/18/2010 - 22:15 | 739883 rocker
rocker's picture

Accordingly, is this where Sharron Engle says the second amendment should apply ???

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