Professional Documents
Culture Documents
counsel, pursuant to Fed. R. Civ. P. 56, hereby moves for judgment as a matter of law, as there is
no genuine issue of material fact in dispute. The grounds for this motion are set forth in the
accompanying memorandum.
Motion; FHFA’s Statement of Material Fact; the Declarations of David A. Lee, Alfred M.
Pollard, and Frank R. Wright, and attachments. A Vaughn index has been attached to the Wright
Declaration.
JOHN R. TYLER
Assistant Director,
Federal Programs Branch
s/ Bradley H. Cohen
Mailing Address:
Post Office Box 883
Washington, D.C. 20044
Courier Address:
20 Massachusetts Ave, N.W.
Washington, D.C. 20001
-2-
Case 1:10-cv-01165-HHK Document 9 Filed 11/08/10 Page 3 of 3
CERTIFICATE OF SERVICE
I hereby certify that on November 8, 2010, a copy of the foregoing pleading, along with
Material Fact; the Declarations of David A. Lee, Alfred M. Pollard, and Frank R. Wright, and
attachments; and proposed order were filed electronically via the Court’s ECF system, which sent
s/ Bradley H. Cohen
BRADLEY H. COHEN
Trial Attorney
Federal Programs Branch
U.S. Department of Justice, Civil Division
Telephone: (202) 305-9855
Fax: (202) 318-0486
Email: bradley.cohen@usdoj.gov
-3-
Case 1:10-cv-01165-HHK Document 9-1 Filed 11/08/10 Page 1 of 21
TONY WEST
Assistant Attorney General
JOHN TYLER
Assistant Branch Director, Federal Programs
Branch
BRADLEY H. COHEN
Trial Attorney, Department of Justice, Civil
Division, Federal Programs Branch
Post Office Box 883
Washington, D.C. 20044
Tel: (202) 305-9855
Fax: (202) 616-8470
bradley.cohen@usdoj.gov
PRELIMINARY STATEMENT
This action arises out of a Freedom of Information Act (“FOIA”) request that the
Finance Agency (“FHFA”), seeking documents related to the September 7, 2008 announcement
by FHFA and the U.S. Department of the Treasury that FHFA would be placing the Federal
National Mortgage Association (“Fannie Mae”) and the Federal National Home Loan Mortgage
Corporation (“Freddie Mac”) into conservatorship. In particular, Plaintiff sought “[A]ny and all
systemic risk in addressing Fannie Mae and Freddie Mac, and in particular how the FHFA and
the Department of the Treasury determined that conservatorship was the preferred option to
avoid any systemic risk of placing Fannie Mae and Freddie Mac into receivership.” See Pl.
Compl. at ¶ 5 (Dkt. #1). Defendant FHFA moves for summary judgment pursuant to Rule 56(b)
As outlined below and in the attached declaration of David Lee, FHFA’s Chief FOIA
officer, executed November 8, 2010 (“Lee Decl.”), FHFA conducted a thorough search for
responsive documents, which included searching those offices involved with the conservatorship
decision that were responsible for assessing any systemic risk in addressing Fannie Mae and
Freddie Mac, and also included a search of FHFA’s electronic records. The Office of General
Counsel found three responsive documents, all of which are subject to privilege and were
therefore properly withheld under FOIA Exemption 5. Specifically, as explained below and in
the attached declaration of Frank Wright, Senior Counsel in the FHFA’s Office of General
Counsel, executed November 8, 2010 (“Wright Decl.”), all three documents were withheld in
their entirety based on the attorney work product doctrine and deliberative process privilege, and
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one of the three documents was also withheld because it is subject to the attorney-client
privilege. Accordingly, this Court should grant summary judgment in favor of FHFA.
BACKGROUND
Fannie Mae and Freddie Mac, collectively referred to as the “Enterprises,” 12 U.S.C. §
4502(10), are publicly traded corporations chartered by Congress, see 12 U.S.C. § 1723 (Fannie
Mae); id. § 1452 (Freddie Mac). The Enterprises’ activities are confined to the secondary
mortgage market. See Wright Decl., ¶ 5. They are the largest operators in that market, where
they buy mortgages from commercial banks, thrift institutions, mortgage banks, and other
primary lenders, and either hold these mortgages in their own portfolios or package them into
mortgage-backed securities for resale to investors. Id. These secondary mortgages are
instrumental in creating a ready supply of mortgage funds for American homebuyers, and they
enhance the availability of residential mortgage credit. Id. Fannie Mae and Freddie Mac,
combined, own or guarantee nearly $5.4 trillion in residential mortgages in the U.S., and play a
On July 30, 2008, Congress passed the Housing and Economic Recovery Act of 2008
(“HERA”), 12 U.S.C. §§ 4501 et seq., creating the Federal Housing Finance Agency (“FHFA”)
the roles previously filled by the Office of Federal Housing Enterprise Oversight (“OFHEO”)
and the Federal Housing Finance Board (“FHFB”). FHFA now serves as the primary regulatory
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HERA granted the Director of the FHFA the authority to place the Enterprises into
the affairs of [the Enterprises].” 12 U.S.C. § 4617(a). On September 6, 2008, pursuant to this
authority and after determining that the Enterprises could not continue to operate safely and
soundly, the Director placed the Enterprises under FHFA’s temporary conservatorship with the
objective of restoring them to a solvent financial condition. Wright Decl., ¶ 10. The Boards of
Directors for both Enterprises consented to conservatorship on that same day, and the
conservatorships were announced to the public the next day. Id. The review that OFHEO and
FHFA conducted prior to that decision and the rationale for the decision was explained by FHFA
Director Lockhart. See Statement of FHFA Director James B. Lockhart (Sept. 7, 2008),
available at http://www.fhfa.gov/webfiles/23/FHFAStatement9708final.pdf.
On Sunday, May 23, 2010, Mr. McKinley emailed his FOIA request for documents
relating to FHFA and Treasury’s decision to place Fannie Mae and Freddie Mac into
conservatorship. See Lee Decl., ¶ 11. Plaintiff’s FOIA request was acknowledged as being
officially received on Monday, May 24, 2010. Id., ¶ 12. On June 20, 2010, FHFA advised Mr.
McKinley that his request had been assigned to be processed on the complex track, and would be
processed as expeditiously as possible in accordance with FOIA and FHFA’s FOIA regulation.
FHFA also asked Mr. McKinley to provide the time period to be covered by his request. Id. On
June 23, 2010, Mr. McKinley informed the agency that the timeframe to be covered by the
As detailed below and in the attached Lee Decl., in response to the Plaintiff’s FOIA
request, FHFA staff thoroughly searched its various offices. In particular, FHFA contacted eight
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different offices within FHFA, each of which conducted separate reviews for potentially
responsive materials. Lee Decl., ¶¶ 13, 14. While seven offices responded that they did not
locate any responsive records, one of the offices, the Office of General Counsel, notified the
FOIA office that it had identified three documents that were potentially responsive. Lee Decl., ¶
15.
On July 23, 2010, FHFA notified Mr. McKinley that it had searched the agency’s files
and records and had located three documents responsive to his request. Lee Decl., ¶ 17. These
three documents were withheld in their entirety on the basis of the deliberative process privilege
On October 14, 2010, FHFA conducted a supplemental search to ensure that there were
no additional records responsive to Mr McKinley’s request. Lee Decl., ¶ 18. The FOIA office
included two additional offices responsible for addressing risk associated with the Enterprises.
Id., ¶ 19. The second notice described the request in more detailed language, specified the July
1, 2008 to September 30, 2008 time period, and required the offices to search both paper and
electronic records. Id., ¶ 18. As of November 4, 2010, FHFA had received responses from all
ten offices tasked with this supplemental search and none of them had located any additional
documents responsive to Mr McKinley’s request. Id., ¶ 20. As part of this supplemental effort,
the FOIA office also searched through former FHFA Director James Lockhart’s files and
FHFA’s database for examination and supervision workpapers. Id., ¶¶ 21, 22, 23. Neither of
these supplemental electronic searches yielded any additional responsive documents. Id.
Plaintiff filed this lawsuit on July 12, 2010 claiming that FHFA had violated FOIA by
failing to produce any and all non-exempt records responsive to Plaintiff’s FOIA request within
the required time limit. See Pl. Compl. at ¶ 15 (Dkt. #1). Because the agency has since
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responded to his request and has not improperly withheld any records, FHFA brings this motion
for summary judgment, demonstrating that it has conducted an adequate and reasonable search
for responsive records and has properly withheld the three documents at issue pursuant to FOIA
Exemption 5.
ARGUMENT
Congress between the public’s right to know and the government’s legitimate interest in keeping
certain information confidential.” Center for Nat’l Sec. Studies v. DOJ, 331 F.3d 918, 925 (D.C.
Cir. 2003). FOIA requires agencies to release documents responsive to a properly submitted
request, except for those documents (or portions of documents) subject to any of the statutory
In discharging this obligation, an agency must conduct a reasonable search for responsive
documents. “In order to obtain summary judgment, the agency must show that it made a good
faith effort to conduct a search for the requested records, using methods which can be reasonably
expected to produce the information requested.” Oglesby v. Dep’t of the Army, 920 F.2d 57, 68
(D.C. Cir. 1990). The agency’s search is evaluated on the basis of affidavits, and “affidavits that
explain in reasonable detail the scope and method of the search conducted by the agency will
suffice to demonstrate compliance with the obligations imposed by the FOIA.” Meeropol v.
While FOIA requires agency disclosure under certain circumstances, the statute
recognizes “that public disclosure is not always in the public interest.” Baldridge v. Shapiro, 455
U.S. 345, 352 (1982). The FOIA exemptions “reflect Congress’ recognition that the Executive
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Branch must have the ability to keep certain types of information confidential.” Hale v. DOJ,
973 F.2d 894, 898 (10th Cir. 1992), vacated on other grounds, 509 U.S. 918 (1993).
552(a)(4)(B), the agency may submit a declaration or index describing the withheld material with
reasonable specificity, explaining the reasons for non-disclosure, and demonstrating with
reasonable specificity that reasonably segregable material has been released. See U.S. Dep’t of
Justice v. Reporters Comm. for Freedom of the Press, 489 U.S. 749, 753 (1989). A court
reviews an agency’s response to a FOIA request de novo, see 5 U.S.C. § 552(a)(4)(B), but given
the unique nature of FOIA cases, an agency declaration is accorded substantial weight. See
Gardels v. CIA, 689 F.2d 1100, 1104 (D.C. Cir. 1982). “Ultimately, an agency’s justification for
invoking a FOIA exemption is sufficient if it appears ‘logical’ or ‘plausible.’” Wolf v. CIA, 473
F.3d 370, 374-75 (D.C. Cir. 2007). Thus, an agency should prevail if the declaration submitted
is clear, specific, reasonably detailed, and describes the withheld information in a factual and
nonconclusory manner. See Miller v. Casey, 730 F.2d 773, 776 (D.C. Cir. 1984); Hemenway v.
Hughes, 601 F. Supp. 1002, 1004 (D.D.C. 1985) (recognizing that, in FOIA cases, summary
judgment hinges not on the existence of a genuine issue of material fact but rather on the
Descriptions of FHFA’s search in this case are provided in sufficient detail by FHFA’s
Chief FOIA Officer, David Lee, and the factual predicates for its withholdings are set forth by
Senior Counsel Frank Wright, who was responsible for reviewing the documents for potential
exemptions and preparing a Vaughn index. In addition, the declaration of Alfred Pollard,
General Counsel of FHFA, executed November 8, 2010 (“Pollard Decl.”), explains who authored
these documents, with whom this information was shared, and for what purpose the documents
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were created. As explained below, and as demonstrated in the attached documents, FHFA’s
search was reasonable and adequate, and its withholdings are clearly described and well-
supported. Accordingly, the Court should enter summary judgment for FHFA.
An agency can show that it discharged its obligations under the FOIA and is entitled to
summary judgment by submitting declarations that “demonstrate that it has conducted a search
reasonably calculated to uncover all relevant documents.” Weisberg v. Dep’t of Justice, 745 F.2d
1476, 1485 (D.C. Cir. 1984) (internal citations omitted). “There is no requirement that an
agency search every record system.” Oglesby, 920 F.2d at 68. Failure to uncover a responsive
document does not render the search inadequate; “the issue to be resolved is not whether there
might exist any . . . documents possibly responsive to the request, but rather whether the search
for those documents was adequate.” Weisberg, 745 F.2d at 1485 (internal quotations omitted);
see also Meeropol, 790 F.2d at 952-53 (search is not presumed unreasonable simply because it
fails to produce all relevant material); Perry v. Block, 684 F.2d 121, 128 (D.C. Cir. 1982)
(agency need not demonstrate that all responsive documents were found and that no other
relevant documents could possibly exist). Conducting a “reasonable” search is a process that
requires “both systemic and case-specific exercises of discretion and administrative judgment
and expertise” and is “hardly an area in which the courts should attempt to micro manage the
executive branch.” Schrecker v. Dep’t of Justice, 349 F.3d 657, 662 (D.C. Cir. 2003) (quoting
Johnson v. Exec. Office for U.S. Attorneys, 310 F.3d 771, 776 (D.C.Cir. 2002)).
good faith which cannot be rebutted by purely speculative claims about the existence and
discoverability of other documents.” SafeCard Servs., Inc. v. SEC, 926 F.2d 1197, 1200 (D.C.
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Cir. 1991) (internal quotation and citation omitted); see also Ground Saucer Watch, Inc. v. CIA,
692 F.2d 770, 771 (D.C. Cir. 1981) (same). Declarations should be “sufficiently detailed,” but
“[t]he standard . . . is not ‘meticulous documentation [of] the details of an epic search.’” Texas
Indep. Producers Legal Action Ass’n v. IRS, 605 F. Supp. 538, 547 (D.D.C. 1984) (quoting
Perry, 684 F.2d at 127). To establish the sufficiency of its search, the agency’s affidavits need
only explain the “scope and method of the search” in “reasonable detail.” Kidd v. Dep’t of
FHFA’s search was reasonably calculated to uncover all documents responsive to Mr.
McKinley’s request, primarily through an individualized inquiry into the offices at FHFA that
would logically possess any responsive documents. See Lee Decl., ¶ 13 (explaining that the
FOIA office initially contacted eighteen agency officials believed to have personal knowledge of
the events in question for guidance on which offices to search). A supplemental search was later
conducted to address any possible interpretation of the request, see id., ¶¶ 18-19, identify any
additional electronic records, id., ¶¶ 18, 21-23, and confirm that the offices most likely to have
responsive records had properly searched their files, see id., ¶¶ 20-21.
FHFA’s FOIA Office initially selected eight offices to search because their respective
functions indicated that they would be the only places within FHFA where officials would have
participated in any communications relating to or concerning Mr. McKinley’s request. Id., ¶ 13.
These offices included the FHFA Office of the Director, Office of General Counsel, Division of
Policy Analysis and Research, Office of Credit Risk, and Office of the Chief Accountant. Id.
FHFA’s determination that conservatorship was the preferred option to receivership. Id., ¶ 14.
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Based on this understanding, the eight offices were asked to search their files. Id. Seven of the
offices that conducted their searches stated that they had not located any responsive records. Id.,
¶ 15. The eighth office, the Office of General Counsel, identified three documents potentially
An attorney with FHFA’s legal division, Frank Wright reviewed these three documents
for exemptions and determined that they were protected by the attorney work product doctrine
and deliberative process privilege. See Wright Decl., ¶¶ 16, 17, 18. They were withheld in full
because an agency is not required to segregate factual materials from documents protected by the
attorney work product doctrine. Id., ¶ 17; see Judicial Watch, Inc. v. Dep't of Justice, 432 F.3d
FHFA conducted a supplemental search on October 14, 2010 to ensure that its search
encompassed any possible interpretation of Mr. McKinley’s request, was focused on the time
period specified by Mr. McKinley, and included both paper and electronic records. Lee Decl., ¶
18. Two additional offices, the Office of Market Risk and the Office of Model Risk, were added
because these offices assess risks associated with Fannie Mae and Freddie Mac. Id., ¶ 19. As of
November 4, 2010, all ten offices (the eight original offices plus the Office of Market Risk and
Office of Model Risk) confirmed that they had searched for responsive records as instructed in
the second notice (i.e., they had searched based on the revised description of the request, had
done so for the time period specified by Mr. McKinley, and had searched for both hard copy and
electronic documents in their possession) and had not located any additional documents
Finally, as part of this supplemental effort, the FOIA office undertook a search for
responsive documents that might be found elsewhere, included searching through former FHFA
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Director James Lockhart’s files and FHFA’s xWorks database (FHFA’s database for
examination and supervision workpapers). Id., ¶¶ 21, 22, 23. Former Director Lockhart’s files
were personally searched by David Lee because Mr. Lockhart no longer works at FHFA. Id., ¶
21. Mr. Lee also searched the xWorks database because this database could have documents or
records regarding “systemic risk.” Id., ¶¶ 22, 23. The Lee Declaration lists the search terms
used for both searches. See id., ¶¶ 21, 23. These search terms were chosen as the most logical
means of identifying documents responsive to Mr. McKinley’s request. Id. Neither of these
The above discussion, and the additional details set forth in the attached declaration,
demonstrate that FHFA conducted an extensive search for records responsive to Mr. McKinley’s
request. The declaration attests to the offices and databases searched; the general processes
employed in those searches; the dates the searches were performed; the individuals that
conducted the searches; the search terms used; and the records located; thus, it provides “in
reasonable detail the scope and method of the search conducted by the agency [and] will suffice
to demonstrate compliance” with FOIA. Perry, 684 F.2d at 127. FHFA, through its various
offices, “made a good faith effort to search for the records requested,” and “its methods were
reasonably expected to produce the information requested,” Kidd, 362 F.Supp.2d at 294 (internal
quotations and citation omitted). Accordingly, the Court should enter summary judgment on this
FHFA processed the responsive records in accordance with FOIA and withheld certain
information pursuant to FOIA exemptions 5, as explained in detail below and in the attached
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letters which would not be available by law to a party . . . in litigation with the agency.” 5
U.S.C. § 552(b)(5). By this language, Congress intended to incorporate into the FOIA all the
normal civil discovery privileges. The Supreme Court has construed this language to “exempt
those documents . . . normally privileged in the civil discovery context.” NLRB v. Sears, Roebuck
& Co., 421 U.S. 132, 149 (1975); see also Renegotiation Bd. v. Grumman Aircraft Eng’g Corp.,
421 U.S. 168, 184 (1975) (“Exemption 5 incorporates the privileges which the Government
enjoys under the relevant statutory and case law in the pretrial discovery context.”). It therefore
covers “the attorney-client privilege, the attorney work-product privilege, or the executive
deliberative process privilege,” Rockwell Intern. Corp. v. DOJ, 235 F.3d 598, 601 (D.C. Cir.
2001). In this case, all three documents withheld by FHFA are protected by the attorney work-
product privilege and deliberative process privilege, and the first document is protected by the
The attorney work product doctrine protects materials prepared by an attorney or others
litigation and prelitigation counseling. See Fed. R. Civ. P. 26(b)(3); NLRB v. Sears, Roebuck &
Co., 421 U.S. at 154. This protection extends to “documents prepared in anticipation of
foreseeable litigation, even if no specific claim is contemplated.” Schiller v. NLRB, 964 F.2d
1205, 1208 (D.C. Cir. 1992); Delaney, Migdail & Young Chartered v. IRS, 826 F.2d 124, 127
(D.C. Cir. 1987). “[T]he ‘testing question’ for the work product privilege ... is whether in light
of the nature of the document and the factual situation in the particular case, the document can
fairly be said to have been prepared or obtained because of the prospect of litigation.” In re
Sealed Case, 146 F. 3d 881, 884 (D.C. Cir. 1998). To meet this standard, a party “must at least
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have had a subjective belief that litigation was a real possibility, and that belief must have been
“[T]he Supreme Court has made clear [that] the [attorney work product] doctrine should
be interpreted broadly and held largely inviolate.” Judicial Watch, 432 F.3d at 371 (citing
Hickman v. Taylor, 329 U.S. 495, 510-11 (1947)). “Without a strong work-product privilege,
lawyers would keep their thoughts to themselves, avoid communicating with other lawyers, and
hesitate to take notes.” In re Sealed Case, 146 F.3d at 884. The protection of the work product
doctrine continues beyond the termination of the particular situation for which the materials were
Thus, “[a]ny part of [a document] prepared in anticipation of litigation, not just the
portions concerning opinions, legal theories, and the like, is protected by the work product
doctrine and falls under exemption 5.” McKinley v. FDIC, No. 09-1263, 2010 WL 3833667 at
*10 (D.D.C. Sept. 29, 2010) (internal quotation and citation omitted). This means that the
privilege extends to the entire document identified as attorney work product, including factual
material appearing within the document, and thus, segregability is not required. Judicial Watch,
432 F.3d at 371; see also Martin v. Office of Special Counsel, 819 F.2d 1181, 1185-86
(D.C.Cir.1987) (unlike the deliberative process privilege, the work product protection
In this case, all three documents were prepared because of anticipated legal challenges to
FHFA’s contemplated decision. Pollard Decl., ¶ 14. Specifically, FHFA was aware that the
Board of Directors and management of the Enterprises had a statutory right to bring a legal
challenge against the institution of a conservatorship. Id. If FHFA issued a cease and desist
order, the Board and management could challenge it through administrative litigation. Id. If
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FHFA instituted a conservatorship or receivership, the Board and management could challenge
the conservatorship in federal court, arguing either that FHFA failed to comply with its
authorizing statute or violated the Constitution. Id. These challenges could be reasonably
expected given that FHFA was contemplating removal of some or all of the existing Board and
management of the Enterprises. Id. Presumably any litigation brought by these parties would
have occurred soon thereafter and would very possibly have included a request for emergency
injunctive relief. Id. Although management ultimately consented to the conservatorship, see
supra at 3, at the time the materials were prepared, counsel was confronted with an “articulable
claim, likely to lead to litigation” which was “fairly foreseeable.” Hertzberg v. Veneman, 273
F.Supp.2d 67, 75 (D.D.C.2003) (quoting Coastal States Gas Corp. v. Dep't of Energy, 617 F.2d
A review of the documents supports the application of attorney work product protection.
One of the issues specifically discussed in Doc. 2 is what FHFA could expect in terms of judicial
review of a legal challenge to the conservatorship in federal court. Wright Decl., ¶ 17. Another
concern addressed in Doc. 3 is the possibility of FHFA having to enforce a cease and desist order
used to effect changes in the Enterprises. Id. There is also discussion of the preparation of an
to FHFA’s actions. Wright Decl., ¶ 17. Such challenges to agency action occur regularly and it
was therefore reasonable for the FHFA to anticipate that such a challenge might be brought
against it. See, e.g., Haralson v. Federal Home Loan Bank Bd., 721 F.Supp. 1344, 1353 (D.D.C.
1989) (an APA challenge brought against the FHLB, in which the court found that the agency
gave fair and reasoned consideration to relevant factors before deciding to appoint conservator
for savings and loan association); Gibraltar Sav. v. Ryan, 772 F.Supp. 1290, 1293 (D.D.C. 1991)
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(an APA challenge brought against the OTS in which the court found that the agency considered
all relevant evidence in appointing a receiver); Hamilton Bank, N.A. v. Comptroller of the
Currency, 227 F.Supp.2d 1, 2-3, 16 (D.D.C. 2001) (an APA challenge in which the court denied
a request for emergency injunctive relief to vacate a cease and desist order issued by the OCC).
Thus, each of these three documents were prepared by attorneys advising their client
“regarding the risks of potential litigation,” and were not created simply in the ordinary course of
FHFA’s business. See In re Sealed Case, 146 F.3d 881, 887 (D.C. Cir. 1998) (internal
reasonable and similar to other cases in which application of the agency attorney work product
doctrine has been upheld. See Delaney, Migdail & Young Chartered, 826 F.2d at127 (protecting
agency memos which outlined the types of legal challenges likely to be mounted against a
proposed program and potential defenses available to the agency, describing them as “precisely
the type of discovery the Court refused to permit in Hickman v. Taylor”); Hertzberg, 273
F.Supp.2d at 79-81 (USDA could reasonably anticipate suits being brought as a result of a Forest
Service action and thus the documents in question were protected even though no claims had yet
determination as to whether any portion of the documents might include factual information that
is nonprivileged. See Judicial Watch, 432 F.3d at 372 (holding that because the documents in
question were attorney work product, their entire content, including facts, law, opinions, and
analysis, were all exempt from disclosure under FOIA). Accordingly, FHFA properly declined
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All three of the documents withheld in this case are also protected by the deliberative
process privilege and were properly withheld under exemption 5. Documents covered by the
deliberative process privilege and therefore exempt from release include those “‘reflecting
governmental decisions and policies are formulated.’” NLRB. v. Sears, Roebuck & Co., 421 U.S.
at 150 (quoting Carl Zeiss Stiftung v. V.E.B. Carl Zeiss, Jena, 40 F.R.D. 318, 324 (D.D.C.
1966)); In re Sealed Case, 121 F.3d 729, 737 (D.C. Cir. 1997) (same). As the Supreme Court
has explained:
The deliberative process privilege rests on the obvious realization that officials
will not communicate candidly among themselves if each remark is a potential
item of discovery and front page news, and its object is to enhance the quality of
agency decisions by protecting open and frank discussion among those who make
them within the Government.
Department of the Interior v. Klamath Water Users Protective Ass’n, 532 U.S. 1, 8-9
would be greatly hampered if, with respect to legal and policy matters, all Government
agencies were prematurely forced to ‘operate in a fishbowl.’” EPA v. Mink, 410 U.S. 73,
87 (1973).
question must both be predecisional (i.e., antecedent to an agency decision or action, whether or
not such decision or action was ever taken or made) and deliberative (i.e., reflecting the give-
and-take of the consultative process). See Coastal States, 617 F.2d at 865; Mapother v. DOJ, 3
F.3d 1533, 1537 (D.C. Cir. 1993). “To establish that a document is predecisional, the agency
need not point to an agency final decision, but merely establish what deliberative process is
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involved, and the role the documents at issue played in that process.” Judicial Watch v. Export-
Import Bank, 108 F. Supp. 2d 19, 35 (D.D.C. 2000) (citing Formaldehyde Inst. v. HHS, 889 F.2d
1118, 1223 (D.C. Cir. 1989)). Documents prepared by agency officials who “themselves lack
any authority to take final agency action . . . are necessarily predecisional.” Hopkins v. U.S.
Dep’t of Housing and Urban Dev., 929 F.2d 81, 85 (2d Cir. 1991).
Moreover, Exemption 5 protects not just deliberative material, but the decision-making
process itself. Montrose Chemical Corp. of California v. Train, 491 F.2d 63, 71 (D.C. Cir.
what constitutes . . . ‘part of the agency give-and-take — of the deliberative process — by which
the decision itself is made.’” Chem. Mfrs. Ass’n v. Consumer Prod. Safety Comm’n, 600 F.
Supp. 114, 118 (D.D.C. 1984) (quoting Vaughn v. Rosen, 523 F.2d 1136, 1144 (D.C. Cir. 1975)).
The agency is best situated “to know what confidentiality is needed ‘to prevent injury to the
quality of agency decisions . . . .’” Chem. Mfrs., 600 F. Supp. at 118 (quoting NLRB, 421 U.S. at
151).
In this case, the provenance of the documents in question clearly indicates that they are
“predecisional.” All three documents were created prior to FHFA’s September 6, 2008 decision
to place Fannie Mae and Freddie Mac into conservatorship. See Pollard Decl., ¶¶ 11, 12, 13.
Two of these documents are specifically labeled as “drafts” and no final version of any of the
documents has been located, id., ¶ 12, 13, leaving open the possibility of later modification and
refinement of policy. See, e.g., Pub. Employees for Envt’l Responsibility v. Bloch, 532
F.Supp.2d 19, 22 (D.D.C. 2008) (holding that “draft texts [of position statements] considered
along the way” fall within Exemption 5). Moreover, all three documents were created by the
Office of General Counsel, as opposed to the FHFA Director, who, by statute, has the actual
16
Case 1:10-cv-01165-HHK Document 9-1 Filed 11/08/10 Page 18 of 21
legal authority to institute the conservatorship. See 12 U.S.C. § 4617(a). If the author lacks
“legal decision authority,” the document should be considered predecisional. Pfeiffer v. CIA, 721
F.Supp. 337, 339 (D.D.C. 1989) (finding document “predecisional” where author lacked
authority “to speak finally and officially for the agency”); Tax Analysts v. IRS, 152 F.Supp.2d 1,
decisionmaking authority to a different component office” that had such authority), aff’d in part,
rev’d in part on other grounds and remanded, 294 F.3d 71 (D.C. Cir. 2002).
As described in the Wright Declaration, Pollard Declaration, and Vaughn index, these
documents reflect communications which are “deliberative” in that they involve counsel
describing a host of legal and policy options to address the deteriorating condition of Fannie Mae
and Freddie Mac. See Wright Decl., ¶ 15 (describing the various policy options being considered
by FHFA); Pollard Decl., ¶¶ 11-13 (explaining with whom the documents were shared). These
documents were not shared with anyone outside of FHFA and FHFA’s outside counsel. Wright
Decl., ¶ 15. Rather, they were used to discuss the strengths and weaknesses of the various
receivership and/or challenges of issuing a consent order or cease and desist order. Id., ¶ 17.
The second two documents (Docs. 2 and 3) were created for meetings with senior executives at
FHFA to discuss various policy options that the agency could take with regard to the Enterprises
and were provided to these senior policymakers in order to assist their decision-making. Pollard
Decl., ¶¶ 12, 13. These are precisely the sort of deliberations meant to be protected by the
privilege. See Mead Data Ctr. v. U.S. Dep’t of the Air Force, 566 F.2d 242, 257 (D.C. Cir.
1977) (“Discussions among agency personnel about the relative merits of various positions
which might be adopted ... are as much a part of the deliberative process as the actual
17
Case 1:10-cv-01165-HHK Document 9-1 Filed 11/08/10 Page 19 of 21
recommendations and advice which are agreed upon.”); Lewis-Bey v. DOJ, 595 F.Supp. 2d 120,
133 (D.D.C. 2009) (material considered “deliberative” where it reflects “candid discussions of
the strengths and weaknesses” of the agency’s case and disclosure “would have the effect of
These combined features indicate that the documents in question were “prepared in order
Corp., 421 U.S. at 184. FHFA properly withheld these documents under Exemption 5. And as
explained above, FHFA was not required to review this material for segregable factual
information because these same documents were also protected by the attorney work product
privilege.1
C. Attorney-Client Privilege
FHFA has also withheld Document 1 based on the protection of the attorney-client
privilege. Communications protected by the attorney-client privilege, like those protected by the
attorney work product and deliberative process privileges, are exempt from disclosure under
Exemption 5. U.S. v. Weber Aircraft Corp., 465 U.S. 792, 799 (1984). The attorney-client
privilege protects confidential communications from client to attorney when the information
being shared is for purposes of securing legal advice or services. See In re Sealed Case, 737
1
Because these same documents are protected attorney work product, FHFA has not
undertaken an examination of whether non-exempt factual information might be reasonably
segregable from these documents. Should the Court determine that the attorney work product
and/or attorney-client privileges do not apply, then FHFA reserves the right to undertake such a
review to determine whether withheld factual material would reveal FHFA’s deliberative
process. See, e.g., Horowitz v. Peace Corps, 428 F.3d 271, 277 (D.C. Cir. 2005) (protecting
requested document where decisionmaker’s “thought processes are woven into document to such
an extent” that any attempt at segregating out information would reveal agency deliberations);
Rein v. U.S. Patent & Trademark Office, 553 F.3d 353, 375 (4th Cir. 2009) (protecting factual
portions of document because such information, when viewed as part of a larger document
“would reveal the very predecisional and deliberative material Exemption 5 protects.”).
18
Case 1:10-cv-01165-HHK Document 9-1 Filed 11/08/10 Page 20 of 21
F.2d 94, 98-99 (D.C. Cir. 1984). Communications from attorney to client are shielded if they
rest on confidential information obtained from the client. Mead Data Central, 566 F.2d at 254.
This privilege applies in the context of federal agencies, in which agency clients and
agency attorneys can have privileged attorney-client relationships. Coastal States, 617 F.2d at
863. A government agency, like a private party, “needs … assurance of confidentiality so it will
not be deterred from full and frank communications with its counselors.” In re Lindsey, 148
F.3d 1100, 1105 (D.C. Cir. 1998). The privilege “is not limited to communications made in the
context of litigation or even a specific dispute, but extends to all situations in which an attorney's
counsel is sought on a legal matter.” Coastal States, 617 F.2d at 862. Moreover, “when the
client is by nature a group, as is true of both the government and corporations, the courts have
agreed that the privilege should not be defeated by some limited circulation beyond the attorney
and the person within the group who requested the advice.” Id. at 863. Rather, the court should
look to see if a reasonable effort was made to limit disclosure of the documents to agency
personnel responsible for agency policy or decision in question. See id. at 863-64.
protected by the attorney-client privilege and was properly withheld by FHFA pursuant to
Exemption 5. This one-page document was created by the Office of General Counsel and was
specifically marked to be shared with outside counsel. Pollard Decl., ¶ 11. Mr. Pollard, FHFA’s
General Counsel and the author of this document, shared its contents with FHFA’s lead outside
counsel, Arnold & Porter, in the course of seeking legal advice on behalf of FHFA about legal
issues to be addressed prior to a conservatorship or receivership for the Enterprises. Id. This
communication occurred during a meeting between Pollard and Arnold & Porter attorneys in
19
Case 1:10-cv-01165-HHK Document 9-1 Filed 11/08/10 Page 21 of 21
which no third parties were present. Id. Hence, FHFA properly withheld this document pursuant
to Exemption 5.
CONCLUSION
For the foregoing reasons, this Court should grant FHFA’s motion for summary
judgment.
JOHN R. TYLER
Assistant Director,
Federal Programs Branch
s/ Bradley H. Cohen
Mailing Address:
Post Office Box 883
Washington, D.C. 20044
Courier Address:
20 Massachusetts Ave, N.W.
Washington, D.C. 20001
20
Case 1:10-cv-01165-HHK Document 9-2 Filed 11/08/10 Page 1 of 26
)
)
VERN MCKINLEY, )
)
Plaintiff, )
)
v. ) Civ. No. 1:10-CV-01165 (HHK)
)
)
FEDERAL HOUSING )
FINANCE AGENCY, )
)
Defendant. )
)
case:
1. I am the Chief Freedom of Information Act Officer for FHFA and have been an FHFA
employee since FHFA was created. Paragraphs 4 through 6 of this Declaration provide a
employee, I was an employee at the Federal Housing Finance Board, where I began
Director for Human Resources and Administration, and Deputy Director and Director of
obtained in the course of performing my duties as assigned, reports from other FHFA
1
Case 1:10-cv-01165-HHK Document 9-2 Filed 11/08/10 Page 2 of 26
employees, and the review of certain documents generated or kept in the course of
agency business.
2. I am aware of the above-captioned litigation and of the request filed by the Plaintiff under
3. The purpose of this declaration is to establish certain facts underlying FHFA’s response
to the FOIA request, and to describe the search for responsive documents that was
undertaken.
FHFA
4. FHFA was created on July 30, 2008 by the passage of the Housing and Economic
Recovery Act of 2008 (HERA), Public Law 110-289, 122 Stat. 2654, which amended the
Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. §§
4501 et seq.) (Safety and Soundness Act), and the Federal Home Loan Bank Act (Bank
Federal Government.
5. HERA abolished and combined the staffs of the Office of Federal Housing Enterprise
Oversight (OFHEO), the Federal Housing Finance Board (FHFB), and the Government-
Sponsored Enterprise (GSE) mission office at the Department of Housing and Urban
Development (HUD). By pooling the expertise of the staffs of OFHEO, FHFB, and the
GSE mission at HUD, Congress intended to strengthen the regulatory and supervisory
oversight of Fannie Mae, Freddie Mac and the 12 Federal Home Loan Banks. A key
purpose of FHFA was, in part, to create one regulator with all of the authorities necessary
to oversee critical components of the national housing market. The staffs of OFHEO, the
FHFB and the HUD GSE mission office were transferred to FHFA, and FHFA succeeded
2
Case 1:10-cv-01165-HHK Document 9-2 Filed 11/08/10 Page 3 of 26
to the statutory duties and responsibilities of those agencies under the Safety and
6. OFHEO was created by the Safety and Soundness Act in 1992 to regulate Fannie Mae
and Freddie Mac. While FHFA was created by HERA on July 30, 2008, OFHEO was
not abolished until July 30, 2009, one year later. The OFHEO staff was transferred to
FHFA on October 27, 2008. During the transition period between the creation of FHFA
and the transfer of OFHEO personnel, the OFHEO staff was charged with carrying out
the statutory duties and responsibilities of FHFA under the Safety and Soundness Act as
amended by HERA. FHFA remains responsible for maintaining the agency records of
OFHEO.
7. FOIA requests submitted to FHFA are processed in a manner consistent with both the
FOIA and the FHFA FOIA regulation, 12 C.F.R. § 1202. Under the agency’s FOIA
process, the FHFA FOIA Office acknowledges receipt of the request, and then
determines whether to seek further information from the requestor that would clarify an
8. The FHFA FOIA Office then assigns the request to one of the tracks in its multi-track
system for processing pursuant to 12 C.F.R. § 1202.7. Routine requests that will require
little or no search time, review or analysis are assigned to the Standard Track, while more
9. The FHFA FOIA Office then identifies the offices within the agency that are most likely
to have documents responsive to the FOIA request. The FOIA Office contacts officials
within those offices and asks them to determine whether it is likely that the files and
3
Case 1:10-cv-01165-HHK Document 9-2 Filed 11/08/10 Page 4 of 26
records of their offices would contain responsive documents. The officials are also asked
to identify other offices and individuals within the agency whose files should be checked
for responsive documents. If an office within FHFA indicates that it might have
10. If the more detailed search identifies potential responsive documents, those documents
are reviewed by an FHFA attorney to determine whether any of the documents or any of
the material within the documents may be protected by one or more of the statutory
exemptions to the FOIA under 5 U.S.C. § 552(b). Once that determination has been
made, FHFA notifies the FOIA requestor of the results of the search, and produces any
11. On May 23, 2010, FHFA received a FOIA request from the Plaintiff, Vern McKinley,
seeking:
A true and accurate copy of that request is attached to this declaration as Attachment A.
The FOIA Office assigned a tracking number (FHFA 2010-71) and began processing the
request.
12. On May 26, 2010, FHFA acknowledged receipt of the Plaintiff’s FOIA request on May
24, 2010. A true and accurate copy of this acknowledgment is attached to this
declaration as Attachment B. On June 20, 2010, FHFA advised Mr. McKinley that his
4
Case 1:10-cv-01165-HHK Document 9-2 Filed 11/08/10 Page 5 of 26
request had been assigned to be processed on the Complex Track, and would be
regulation. FHFA also asked Mr. McKinley to provide the time period to be covered by
his request. A true and accurate copy of this communication is attached to this
declaration as Attachment C. On June 23, 2010, Mr. McKinley informed the agency
that the timeframe to be covered by the request would be from July 1, 2008 to September
30, 2008. A true and accurate copy of this communication is attached to this declaration
as Attachment D.
13. To determine whether the agency maintained records responsive to Mr. McKinley’s
request, the FHFA FOIA Office contacted 18 agency officials regarding Mr. McKinley’s
request who were believed to have personal knowledge of the events in question and
were most likely to have knowledge of where any responsive documents would be
located. Notice of Mr. McKinley’s FOIA request was sent to eight FHFA offices
including the Office of the Director, Office of General Counsel, Division of Enterprise
Policy Analysis and Research, Office of Credit Risk, and Office of the Chief Accountant.
These offices were selected because their respective functions indicate that they would be
the only places within FHFA where officials would have participated in any
14. These eight offices were asked to search for “all communications or records concerning
or relating to how the FHFA and the Department of Treasury determined that
conservatorship was the preferred option to avoid any systemic risk of placing Fannie
Mae and Freddie Mac into receivership.” The determination that conservatorship was
5
Case 1:10-cv-01165-HHK Document 9-2 Filed 11/08/10 Page 6 of 26
the preferred option to receivership was understood to be the central focus of Plaintiff’s
request. Agency officials were asked to advise the FOIA Office whether they had
records responsive to that request, and were asked to identify any other individuals that
15. Seven offices responded to the request and stated that they did not locate any responsive
records. One office, the Office of General Counsel, indicated that it might have
FHFA FOIA practice, a more detailed search and review of agency files within the Office
documents.
16. These three documents were reviewed by an FHFA attorney to determine whether the
documents fell within one of the statutory FOIA exemptions. The process used by FHFA
to determine whether the documents fell within one of the statutory FOIA exemptions is
12-19.
17. After establishing that FHFA did not maintain any non-exempt records responsive to Mr.
McKinley’s request, FHFA notified Mr. McKinley on July 23, 2010 that a search of the
agency’s files and records had located three documents responsive to his request, and that
those three documents were being withheld in their entirety on the basis of the
deliberative process privilege and the attorney work-product privilege. A true and
18. In order to satisfy myself that there were no additional responsive records, I oversaw a
supplemental search on October 14, 2010 to locate any additional agency records
6
Case 1:10-cv-01165-HHK Document 9-2 Filed 11/08/10 Page 7 of 26
responsive to any possible interpretation of Mr. McKinley's request. This revised request
included the assessment of an adverse impact on systemic risk in addressing Fannie Mae
and Freddie Mac. Thus, I specifically asked that agency officials search for “any and all
impact on systemic risk in addressing Fannie Mae and Freddie Mac, and in particular
how the FHFA and the Department of the Treasury determined that conservatorship was
the preferred option to avoid any system risk of placing Fannie Mae and Freddie Mac
into receivership.” These officials were informed that the search for responsive records
should be for the time period from July 1, 2008 to September 30, 2008. They were also
instructed to search not just paper records but also electronic records, including emails
drive is the local storage area on the FHFA network for an individual to save and store
19. This second notice was sent to the eight original offices and two other offices I believed
that could possibly have relevant information to the request, the Office of Market Risk
and the Office of Model Risk. The Office of Market Risk and Office of Model Risk were
added because they address risks associated with the Enterprises and were suggested as
20. As of November 4, 2010, all ten offices confirmed that they had searched for responsive
documents as instructed in the second notice (i.e., they had searched based on the revised
description of the request, had done so for the time period specified by Mr. McKinley,
and had searched for both hard copy and electronic documents in their possession) and
21. Because former Director James Lockhart is no longer working at FHFA, I personally
searched his correspondence files as well as his email communications for the July 1,
2008 to September 30, 2008 time period. I used the following terms to conduct this
“receivership”; and “adverse impact”. These search terms were chosen as the most
request. My search did not locate any documents responsive to Plaintiff’s request.
22. To address the “systemic risk” portion of Plaintiff’s request, I oversaw a separate
workpapers. The xWorks database is FHFA's official repository for work papers, reports
and documents created by the agency's supervision staff while carrying out the
that this database was not likely to have any documents relating to the decision to
institute the conservatorship; however, this database could have documents or records
23. The database was searched for all documents containing the term "systemic risk" during
the relevant time period of July 1, 2008 to September 30, 2008. The term “systemic risk”
was used because it seemed to be the most logical and straightforward way of identifying
documents relating to the first clause of Plaintiff’s request (i.e., “the assessment of an
adverse impact on systemic risk in addressing Fannie Mae and Freddie Mac.”) The
search identified two documents during the relevant time period. However, a review of
those two documents indicated that they were not responsive to Mr. McKinley’s request.
8
Case 1:10-cv-01165-HHK Document 9-2 Filed 11/08/10 Page 9 of 26
Case 1:10-cv-01165-HHK Document 9-2 Filed 11/08/10 Page 10 of 26
ATTACHMENT A
Case 1:10-cv-01165-HHK Document 9-2 Filed 11/08/10 Page 11 of 26
FOIA2010-71_Initial request
From: McKinley Vern [vern_mckinley@yahoo.com]
Sent: Sunday, May 23, 2010 12:31 AM
To: !FOIA Office
Subject: FOIA Request
In the joint statement by the Department of the Treasury and Federal Housing
Finance Agency (FHFA) action to place Fannie Mae and Freddie Mac into
conservatorship, a number of references were made to systemic risk:
http://www.ustreas.gov/press/releases/hp1129.htm
Thank you
Page 1
Case 1:10-cv-01165-HHK Document 9-2 Filed 11/08/10 Page 12 of 26
ATTACHMENT B
Case 1:10-cv-01165-HHK Document 9-2 Filed 11/08/10 Page 13 of 26
FOIA2010-71_confirmation letter
From: Hall, Kimberly
Sent: Wednesday, May 26, 2010 10:22 AM
To: McKinley Vern
Cc: Ratchford, Jeanne
Subject: FOIA2010-71
Dear Mr. Vern:
Your request was received in the FOIA office on May 24,2010, and assigned the
Federal Housing Finance Agency (FHFA) FOIA request number 2010-71. Please
refer to this tracking number in any correspondence concerning your request.
Your FOIA request is releasable to the public under subsequent FOIA requests.
In responding to these requests, FHFA does not release personal privacy
information, such as home address and home phone number, all of which is
protected from disclosure under Exemption 6.
If you have questions concerning your request, you may contact Jeanne
Ratchford at 202-414-6425 or by email at foia@fhfa.gov.
Sincerely,
Kimberly Hall
Information Management Assistant
-----Original Message-----
From: McKinley Vern [mailto:vern_mckinley@yahoo.com]
Sent: Sunday, May 23, 2010 12:31 AM
To: !FOIA Office
Subject: FOIA Request
In the joint statement by the Department of the Treasury and Federal Housing
Finance Agency (FHFA) action to place Fannie Mae and Freddie Mac into
conservatorship, a number of references were made to systemic risk:
http://www.ustreas.gov/press/releases/hp1129.htm
Page 1
Case 1:10-cv-01165-HHK Document 9-2 Filed 11/08/10 Page 14 of 26
FOIA2010-71_confirmation letter
Thank you
Page 2
Case 1:10-cv-01165-HHK Document 9-2 Filed 11/08/10 Page 15 of 26
ATTACHMENT C
Case 1:10-cv-01165-HHK Document 9-2 Filed 11/08/10 Page 16 of 26
RE FOIA2010-71_6_20 (2)
From: Ratchford, Jeanne
Sent: Sunday, June 20, 2010 1:53 PM
To: McKinley Vern
Subject: RE: FOIA2010-71
Dear Mr. Vern:
I am writing to advise you that your request has been assigned to the complex
track and will be processed as expeditiously as possible in accordance with
FOIA (5 U.S.C. Section 552) and the Federal Housing Finance Agency's (FHFA)
FOIA regulation (12 CFR Part 1202).
http://www.fhfa.gov/webfiles/384/Foiafinal11509.pdf
In order for me to process your request, it is necessary that you provide the
time period covered by your request. I also need in writing your agreement
to pay the fees associated with the search, review, and duplication of
responsive records. I have attached a link to the FHFA's FOIA fee schedule
for your convenience.
http://www.fhfa.gov/Default.aspx?Page=46
Please be advised that I suspect that by the subject of the records you are
requesting that many may be exempt from disclosure. You will be charged fees
for search and review time even if the records are subsequently determined to
be exempt from disclosure.
Please provide me with the dollar amount you are willing to pay for the cost
of processing your request as well as the time period covered by your request.
I will advise you if I expect the cost to process your request will exceed the
amount you authorized.
Sincerely,
Jeanne Ratchford
FOIA Officer
FOIA@fhfa.gov
-----Original Message-----
From: McKinley Vern [mailto:vern_mckinley@yahoo.com]
Sent: Sunday, June 20, 2010 6:32 AM
To: Hall, Kimberly
Cc: !FOIA Office
Subject: Re: FOIA2010-71
Kimberly,
I note that the required response time under law is approaching. Please
provide the requested information expeditiously.
Thank you,
Vern McKinley
RE FOIA2010-71_6_20 (2)
> request. Your request is being reviewed and you will be contacted
> once it is determined if additional information or clarification is
> needed.
>
> Your request was received in the FOIA office on May 24,2010, and
> assigned the Federal Housing Finance Agency
> (FHFA) FOIA request number 2010-71. Please refer to this tracking
> number in any correspondence concerning your request.
>
> Your FOIA request is releasable to the public under subsequent FOIA
> requests. In responding to these requests, FHFA does not release
> personal privacy information, such as home address and home phone
> number, all of which is protected from disclosure under Exemption 6.
>
> If you have questions concerning your request, you may contact Jeanne
> Ratchford at 202-414-6425 or by email at foia@fhfa.gov.
>
> Sincerely,
>
>
> Kimberly Hall
> Information Management Assistant
>
>
>
> -----Original Message-----
> From: McKinley Vern [mailto:vern_mckinley@yahoo.com]
> Sent: Sunday, May 23, 2010 12:31 AM
> To: !FOIA Office
> Subject: FOIA Request
>
> In the joint statement by the Department of the Treasury and Federal
> Housing Finance Agency (FHFA) action to place Fannie Mae and Freddie
> Mac into conservatorship, a number of references were made to systemic
> risk:
>
> http://www.ustreas.gov/press/releases/hp1129.htm
>
> Additionally, based on the legislative framework in place at the time,
> the FHFA had the alternative option of placing Fannie Mae and Freddie
> Mac into receivership. It is very clear that there was a desire to
> avoid the option of receivership as revealed in this sentence in the
> noted joint
> statement: “This commitment will eliminate any mandatory triggering of
> receivership and will ensure that the conserved entities have the
> ability to fulfill their financial obligations.”
>
> I am requesting any and all communications and records concerning or
> relating to the assessment of an adverse impact on systemic risk in
> addressing Fannie Mae and Freddie Mac, and in particular how the FHFA
> and the Department of the Treasury determined that conservatorship was
> the preferred option to avoid any systemic risk of placing Fannie Mae
> and Freddie Mac into receivership.
>
> Please contact by email at the following address if you have any
> questions regarding this FOIA request:
>
> vern_mckinley@yahoo.com
>
> Thank you
>
> --------------------------------------------------------------------
Page 2
Case 1:10-cv-01165-HHK Document 9-2 Filed 11/08/10 Page 18 of 26
RE FOIA2010-71_6_20 (2)
>
> Confidentiality Notice: The information contained in this e-mail and
> any attachments may be confidential or privileged under applicable
> law, or otherwise may be protected from disclosure to anyone other
> than the intended recipient(s). Any use, distribution, or copying of
> this e-mail, including any of its contents or attachments by any
> person other than the intended recipient, or for any purpose other
> than its intended use, is strictly prohibited. If you believe you have
> received this e-mail in error: permanently delete the e-mail and any
> attachments, and do not save, copy, disclose, or rely on any part of
> the information contained in this e-mail or its attachments. Please
> call 202-414-8920 if you have questions.
>
Page 3
Case 1:10-cv-01165-HHK Document 9-2 Filed 11/08/10 Page 19 of 26
ATTACHMENT D
Case 1:10-cv-01165-HHK Document 9-2 Filed 11/08/10 Page 20 of 26
RE FOIA2010-71_6_23
From: McKinley Vern [vern_mckinley@yahoo.com]
Sent: Wednesday, June 23, 2010 10:09 PM
To: Ratchford, Jeanne
Subject: RE: FOIA2010-71
Sorry, additionally the timeframe to be covered should be from July 1, 2008 to
September 30, 2008.
--- On Wed, 6/23/10, McKinley Vern <vern_mckinley@yahoo.com> wrote:
RE FOIA2010-71_6_23
> > http://www.fhfa.gov/webfiles/384/Foiafinal11509.pdf
>
> >
> > In order for me to process your request, it is
> necessary
> > that you provide the time period covered by your request. I also
> > need in writing your agreement to pay the fees associated with the
> > search, review, and duplication of responsive records. I
> have
> > attached a link to the FHFA's FOIA fee schedule for
> your
> > convenience.
> >
> > http://www.fhfa.gov/Default.aspx?Page=46
>
> >
> > Please be advised that I suspect that by the subject
> of the
> > records you are requesting that many may be exempt
> from
> > disclosure. You will be charged fees for search and review time
> > even if the records are subsequently
> determined
> > to be exempt from disclosure.
> >
> > Please provide me with the dollar amount you are
> willing to
> > pay for the cost of processing your request as well as
> the
> > time period covered by your request. I will advise you
> if I
> > expect the cost to process your request will exceed
> the
> > amount you authorized.
> >
> > Sincerely,
> >
> > Jeanne Ratchford
> > FOIA Officer
> > FOIA@fhfa.gov
> >
> >
> > -----Original Message-----
> > From: McKinley Vern [mailto:vern_mckinley@yahoo.com]
> >
> > Sent: Sunday, June 20, 2010 6:32 AM
> > To: Hall, Kimberly
> > Cc: !FOIA Office
> > Subject: Re: FOIA2010-71
> >
> > Kimberly,
> >
> > I note that the required response time under law is approaching.
> > Please provide the requested information expeditiously.
> >
> > Thank you,
> > Vern McKinley
> >
> >
> > --- On Wed, 5/26/10, Hall, Kimberly <Kimberly.Hall@fhfa.gov>
> > wrote:
> >
> > > From: Hall, Kimberly <Kimberly.Hall@fhfa.gov>
Page 2
Case 1:10-cv-01165-HHK Document 9-2 Filed 11/08/10 Page 22 of 26
RE FOIA2010-71_6_23
> > > Subject: FOIA2010-71
> > > To: "McKinley Vern" <vern_mckinley@yahoo.com>
> > > Cc: "Ratchford, Jeanne" <Jeanne.Ratchford@fhfa.gov>
> > > Date: Wednesday, May 26, 2010, 10:21 AM Dear Mr. Vern:
> > >
> > > This e-mail confirms receipt of your Freedom of
> > Information
> > > Act (FOIA) request. Your request is being
> reviewed
> > and
> > > you will be contacted once it is determined if
> > additional
> > > information or clarification is needed.
> > >
> > > Your request was received in the FOIA office on
> May
> > > 24,2010, and assigned the Federal Housing
> Finance
> > Agency
> > > (FHFA) FOIA request number 2010-71. Please
> refer to
> > > this tracking number in any correspondence
> concerning
> > your
> > > request.
> > >
> > > Your FOIA request is releasable to the public
> under
> > > subsequent FOIA requests. In responding to
> these
> > > requests, FHFA does not release personal privacy information, such
> > > as home address and home phone
> > number, all
> > > of which is protected from disclosure under
> Exemption
> > 6.
> > >
> > > If you have questions concerning your request,
> you
> > may
> > > contact Jeanne Ratchford at 202-414-6425 or by
> email
> > at foia@fhfa.gov.
> > >
> > > Sincerely,
> > >
> > >
> > > Kimberly Hall
> > > Information Management Assistant
> > >
> > >
> > >
> > > -----Original Message-----
> > > From: McKinley Vern [mailto:vern_mckinley@yahoo.com]
> > > Sent: Sunday, May 23, 2010 12:31 AM
> > > To: !FOIA Office
> > > Subject: FOIA Request
> > >
> > > In the joint statement by the Department of the
> > Treasury
> > > and Federal Housing Finance Agency (FHFA) action
> to
> > place
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RE FOIA2010-71_6_23
> > > Fannie Mae and Freddie Mac into conservatorship,
> a
> > number of
> > > references were made to systemic risk:
> > >
> > > http://www.ustreas.gov/press/releases/hp1129.htm
>
> >
> > >
> > > Additionally, based on the legislative framework
> in
> > place
> > > at the time, the FHFA had the alternative option
> of
> > placing
> > > Fannie Mae and Freddie Mac into receivership. It
> is
> > very
> > > clear that there was a desire to avoid the option
> of
> > > receivership as revealed in this sentence in the
> noted
> > joint
> > > statement: “This commitment will eliminate any
> > mandatory
> > > triggering of receivership and will ensure that
> the
> > > conserved entities have the ability to fulfill
> their
> > > financial obligations.”
> > >
> > > I am requesting any and all communications and
> > records
> > > concerning or relating to the assessment of an
> > adverse
> > > impact on systemic risk in addressing Fannie Mae
> and
> > Freddie
> > > Mac, and in particular how the FHFA and the
> Department
> > of
> > > the Treasury determined that conservatorship was
> the
> > > preferred option to avoid any systemic risk of
> > placing
> > > Fannie Mae and Freddie Mac into receivership.
> > >
> > > Please contact by email at the following address
> if
> > you
> > > have any questions regarding this FOIA request:
> > >
> > > vern_mckinley@yahoo.com
> > >
> > > Thank you
> > >
> > >
> >
> --------------------------------------------------------------------
> > >
> > > Confidentiality Notice: The information contained
> in
> > this
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RE FOIA2010-71_6_23
> > > e-mail and
> > > any attachments may be confidential or
> privileged
> > under
> > > applicable
> > > law, or otherwise may be protected from
> disclosure to
> > > anyone other
> > > than the intended recipient(s). Any use,
> distribution,
> > or
> > > copying of
> > > this e-mail, including any of its contents or
> > attachments
> > > by any
> > > person other than the intended recipient, or for
> any
> > > purpose other
> > > than its intended use, is strictly prohibited. If
> you
> > > believe you have
> > > received this e-mail in error: permanently delete
> the
> > > e-mail and any
> > > attachments, and do not save, copy, disclose, or
> rely
> > on
> > > any part of
> > > the information contained in this e-mail or its attachments.
> > > Please call 202-414-8920 if you have questions.
> > >
> >
> >
> --------------------------------------------------------------------
> >
> > Confidentiality Notice: The information contained in
> this
> > e-mail and
> > any attachments may be confidential or privileged
> under
> > applicable
> > law, or otherwise may be protected from disclosure to anyone other
> > than the intended recipient(s). Any use, distribution,
> or
> > copying of
> > this e-mail, including any of its contents or
> attachments
> > by any
> > person other than the intended recipient, or for any purpose other
> > than its intended use, is strictly prohibited. If you believe you
> > have received this e-mail in error: permanently delete the e-mail
> > and any attachments, and do not save, copy, disclose, or rely
> on
> > any part of
> > the information contained in this e-mail or its attachments. Please
> > call 202-414-8920 if you have questions.
> >
>
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ATTACHMENT E
Case 1:10-cv-01165-HHK Document 9-2 Filed 11/08/10 Page 26 of 26
SUBJECT: Freedom of Information Act Request, Federal Housing Finance Agency Request
No. 2010-71
Your request was processed in accordance with the FOIA (5 U.S.C. Section 552)
and the FHFA’s FOIA regulation (12 CFR Part 1202).
If you wish to appeal any aspect of FHFA’s decision on your request, you should
forward within 30 days:
· A copy of your initial request;
· A copy of this letter;
· A statement of the circumstances, reasons, or arguments for seeking
disclosure of the affected record(s).
Sincerely,
Jeanne Ratchford
FOIA Officer
foia@fhfa.gov
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ATTACHMENT A
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McKinley v. FHFA, No. 10-01165 (D.D.C.)
FHFA — Final Vaughn Index — November 8, 2010
Doc. Page
Description Explanation/Justification for Withholding
Count
1 1 Untitled draft thoughts on legal issues to be Deliberative Process, Attorney Client Privilege, and Attorney Work Product. This document is being
considered prior to conservatorship or withheld pursuant to exemption (b)(5) under the deliberative process privilege, attorney-client privilege, and
receivership prepared by the Office of General as attorney work product.
Counsel.
This one-page document was created by the Office of General Counsel to identify legal issues to be
addressed prior to a receivership or conservatorship for the Enterprises. The document was marked to be
shared with agency’s outside counsel and frames legal issues to be addressed by the agency’s outside
counsel. The issues include potential grounds for a conservatorship or receivership, questions regarding a
possible administrative record, suggestions for possible tasks for FHFA to complete prior to a
conservatorship or receivership, options available to FHFA in a conservatorship or receivership and
implications for parties that would be affected by a conservatorship or receivership, such as counterparties,
shareholders, employees and management.
2
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ATTACHMENT B
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STATEMENT
Good Morning
Fannie Mae and Freddie Mac share the critical mission of providing stability and
liquidity to the housing market. Between them, the Enterprises have $5.4 trillion
equal to the publicly held debt of the United States. Their market share of all new
mortgages reached over 80 percent earlier this year, but it is now falling. During
the turmoil last year, they played a very important role in providing liquidity to the
conforming mortgage market. That has required a very careful and delicate
balance of mission and safety and soundness. A key component of this balance has
been their ability to raise and maintain capital. Given recent market conditions, the
1
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balance has been lost. Unfortunately, as house prices, earnings and capital have
particular, the capacity of their capital to absorb further losses while supporting
Today’s action addresses safety and soundness concerns. FHFA’s rating system is
Earnings and Enterprise Risk which includes credit, market and operational risk.
There are pervasive weaknesses across the board, which have been getting worse
in this market.
Over the last three years OFHEO, and now FHFA, have worked hard to encourage
the Enterprises to rectify their accounting, systems, controls and risk management
issues. They have made good progress in many areas, but market conditions have
The result has been that they have been unable to provide needed stability to the
market. They also find themselves unable to meet their affordable housing
mission. Rather than letting these conditions fester and worsen and put our markets
in jeopardy, FHFA, after painstaking review, has decided to take action now.
2
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Key events over the past six months have demonstrated the increasing challenge
faced by the companies in striving to balance mission and safety and soundness,
and the ultimate disruption of that balance that led to today’s announcements. In
the first few months of this year, the secondary market showed significant
deterioration, with buyers demanding much higher prices for mortgage backed
securities.
removed the portfolio caps on each company, but they did not have the capital to
3
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In May OFHEO lifted its 2006 Consent Order with Fannie Mae after the company
completed the terms of that order. Subsequently, Fannie Mae successfully raised
$7.4 billion of new capital, but Freddie Mac never completed the capital raise
promised in March.
Since then credit conditions in the mortgage market continued to deteriorate, with
alarming levels. FHFA intensified its reviews of each company’s capital planning
and capital position, their earnings forecasts and the effect of falling house prices
In getting to today, the supervision team has spent countless hours reviewing with
each company various forecasts, stress tests, and projections, and has evaluated the
meetings with each company’s management teams, and have had frank exchanges
regarding loss projections, asset valuations, and capital adequacy. More recently,
we have gone the extra step of inviting the Federal Reserve and the OCC to have
some of their senior mortgage credit experts join our team in these assessments.
4
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The conclusions we reach today, while our own, have had the added benefit of
After this exhaustive review, I have determined that the companies cannot continue
to operate safely and soundly and fulfill their critical public mission, without
capitalization;
Therefore, in order to restore the balance between safety and soundness and
mission, FHFA has placed Fannie Mae and Freddie Mac into conservatorship.
5
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objective of returning the entities to normal business operations. FHFA will act as
appreciate the cooperation we have received from the boards and the management
of both Enterprises. These individuals did not create the inherent conflict and
flawed business model embedded in the Enterprises’ structure. I thank the CEOs
The goal of these actions is to help restore confidence in Fannie Mae and Freddie
Mac, enhance their capacity to fulfill their mission, and mitigate the systemic risk
that has contributed directly to the instability in the current market. The lack of
confidence has resulted in continuing spread widening of their MBS, which means
that virtually none of the large drop in interest rates over the past year has been
passed on to the mortgage markets. On top of that, Freddie Mac and Fannie Mae,
in order to try to build capital, have continued to raise prices and tighten credit
standards.
FHFA has not undertaken this action lightly. We have consulted with the
6
Case 1:10-cv-01165-HHK Document 9-3 Filed 11/08/10 Page 19 of 22
Bernanke, who was appointed a consultant to FHFA under the new legislation. We
have also consulted with the Secretary of the Treasury, not only as an FHFA
Oversight Board member, but also in his duties under the law to provide financing
undertaken now.
First, Monday morning the businesses will open as normal, only with stronger
backing for the holders of MBS, senior debt and subordinated debt.
Second, the Enterprises will be allowed to grow their guarantee MBS books
without limits and continue to purchase replacement securities for their portfolios,
Third, as the conservator, FHFA will assume the power of the Board and
management.
Fourth, the present CEOs will be leaving, but we have asked them to stay on to
7
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Fifth, I am announcing today I have selected Herb Allison to be the new CEO of
Fannie Mae and David Moffett the CEO of Freddie Mac. Herb has been the Vice
Chairman of Merrill Lynch and for the last eight years chairman of TIAA-CREF.
David was the Vice Chairman and CFO of US Bancorp. I appreciate the
willingness of these two men to take on these tough jobs during these challenging
times. Their compensation will be significantly lower than the outgoing CEOs.
Sixth, at this time any other management action will be very limited. In fact, the
new CEOs have agreed with me that it is very important to work with the current
Seventh, in order to conserve over $2 billion in capital every year, the common
stock and preferred stock dividends will be eliminated, but the common and all
8
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Lastly and very importantly, there will be the financing and investing relationship
with the U.S. Treasury, which Secretary Paulson will be discussing. We believe
that these facilities will provide the critically needed support to Freddie Mac and
which will be not only for Fannie Mae and Freddie Mac, but also for the 12
Federal Home Loan Banks that FHFA also regulates. The Federal Home Loan
Banks have performed remarkably well over the last year as they have a different
business model than Fannie Mae and Freddie Mac and a different capital structure
that grows as their lending activity grows. They are joint and severally liable for
the Bank System’s debt obligations and all but one of the 12 are profitable.
the many regulations needed to implement the new law. Some of the key
9
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This decision was a tough one for the FHFA team as they have worked so hard to
help the Enterprises remain strong suppliers of support to the secondary mortgage
housing markets over-whelmed all the good and hard work put in by the FHFA
teams and the Enterprises’ managers and employees. Conservatorship will give
the Enterprises the time to restore the balances between safety and soundness and
provide affordable housing and stability and liquidity to the mortgage markets. I
want to thank the FHFA employees for their work during this intense regulatory
process. They represent the best in public service. I would also like to thank the
employees of Fannie Mae and Freddie Mac for all their hard work. Working
together we can finish the job of restoring confidence in the Enterprises and with
the new legislation build a stronger and safer future for the mortgage markets,
10
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Pursuant to LCvR 7(h) and LCvR 56.1, Defendant, Federal Housing Finance Agency
(“FHFA”), by and through undersigned counsel, submit the following Statement of Material
Facts.
1. On May 23, 2010, FHFA received a FOIA request from the Plaintiff, Vern McKinley,
seeking:
The FOIA Office assigned a tracking number and began processing the request.
2. On May 26, 2010, FHFA acknowledged receipt of the Plaintiff’s FOIA request on May
24, 2010. On June 20, 2010, FHFA advised Mr. McKinley that his request had been
Case 1:10-cv-01165-HHK Document 9-5 Filed 11/08/10 Page 2 of 6
as possible in accordance with FOIA and FHFA’s FOIA regulation. FHFA also asked
Mr. McKinley to provide the time period to be covered by his request. On June 23, 2010,
Mr. McKinley informed the agency that the timeframe to be covered by the request
would be from July 1, 2008 to September 30, 2008. Lee Decl., ¶ 12.
3. FHFA FOIA Office contacted 18 agency officials regarding Mr. McKinley’s request who
were believed to have personal knowledge of the events in question and were most likely
to have knowledge of where any responsive documents would be located. Lee Decl., ¶
13.
4. Notice of Mr. McKinley’s FOIA request was initially sent to eight FHFA offices
including the Office of the Director, Office of General Counsel, Division of Enterprise
Policy Analysis and Research, Office of Credit Risk, and Office of the Chief Accountant.
Lee Decl., ¶ 13. According to David Lee, these offices were selected because their
respective functions indicate that they would be the only places within FHFA where
5. These eight offices were asked to search for “all communications or records concerning
or relating to how the FHFA and the Department of Treasury determined that
conservatorship was the preferred option to avoid any systemic risk of placing Fannie
Mae and Freddie Mac into receivership.” Agency officials were asked to advise the
FOIA Office whether they had records responsive to that request, and were asked to
identify any other individuals that might have responsive records. Lee Decl., ¶ 14.
-2-
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6. FHFA notified Mr. McKinley on July 23, 2010 that a search of the agency’s files and
records had located three documents responsive to his request, and that those three
documents were being withheld in their entirety on the basis of the deliberative process
7. FHFA conducted a supplemental search on October 14, 2010 in order to ensure that its
search encompassed any possible interpretation of Mr. McKinley’s request, was focused
on the time period specified by Mr. McKinley, and included both paper and electronic
8. This second notice was sent to the eight original offices and two other offices that FHFA
believed could have relevant information to the request, the Office of Market Risk and
the Office of Model Risk. Lee Decl., ¶ 19. These two additional offices, the Office of
Market Risk and the Office of Model Risk, were added because they assess risks
9. As of November 4, 2010, all ten offices confirmed that they had searched for responsive
documents as instructed in the second notice (i.e., they had searched based on the revised
description of the request, had done so for the time period specified by Mr. McKinley,
and had searched for both hard copy and electronic documents in their possession) and
had not located any responsive records to Mr. McKinley’s request. Lee Decl., ¶ 20.
10. The FOIA office also undertook a search for responsive documents that might be found
elsewhere, including searching through former FHFA Director James Lockhart’s files
and FHFA’s xWorks database, which is FHFA’s database for examination and
-3-
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11. Former Director Lockhart’s correspondence files and emails were searched using the
12. The xWorks database was searched for all documents containing the term "systemic risk"
during the relevant time period of July 1, 2008 to September 30, 2008. Lee Decl., ¶ 23.
13. All three documents listed on the Vaughn index were created by attorneys in the Office of
General Counsel. All three documents were prepared in the course of addressing the
to address the deteriorating condition of Fannie Mae and Freddie Mac. These documents
were not shared within anyone outside of FHFA and FHFA’s outside counsel.
14. When the three documents listed on the Vaughn index were created, FHFA was aware
that the Board of Directors and management of the Enterprises had a statutory right to
prepare for a possible legal challenge given that FHFA was contemplating removal of
some or all of the existing Board and management of the Enterprises. Declaration of
15. Document 1 on the Vaughn index includes a list of legal issues to be addressed prior to a
receivership or conservatorship for the Enterprises. One of these legal issues is the
Document 3 discusses the ability of FHFA to seek a cease and desist order to effect
-4-
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16. The first document on the Vaughn index was created sometime in late August or early
September 2008, before FHFA made the decision to institute a conservatorship of the
counsel at Arnold & Porter, during a meeting at Alexander’s office. The attendees at this
meeting included Pollard, Alexander, and several other Arnold & Porter attorneys. Mr.
Pollard shared this document in the course of seeking legal advice on behalf of FHFA
document was not shared with anyone outside of FHFA and its outside counsel. Pollard
Decl., ¶ 11.
17. The second document on the Vaughn Index was a confidential draft chart prepared by an
attorney in the Office of General Counsel. It outlines the strengths and weaknesses of
sometime in late August or early September 2008, before FHFA made the decision to
institute a conservatorship of the Enterprises. This document was created for meetings
with senior executives at FHFA to discuss various legal options that the agency could
take with regard to the Enterprises, including a consent order or conservatorship. It was
provided to these senior policymakers to assist in their deliberations. Pollard Decl., ¶ 12.
18. The third document on the Vaughn Index was a draft memorandum prepared by an
attorney in the Office of General Counsel discussing options for addressing a troubled
regulated entity. This document is dated August 18, 2008. This document was created
for meetings with senior executives at FHFA to discuss various options that the agency
could take with regard to the Enterprises, including the ramifications of choosing either
-5-
Case 1:10-cv-01165-HHK Document 9-5 Filed 11/08/10 Page 6 of 6
order or cease and desist order. It was provided to these senior policymakers to assist in
JOHN R. TYLER
Assistant Director,
Federal Programs Branch
s/ Bradley H. Cohen
Mailing Address:
Post Office Box 883
Washington, D.C. 20044
Courier Address:
20 Massachusetts Ave, N.W.
Washington, D.C. 20001
-6-
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[PROPOSED] ORDER
for cause shown, it is hereby ORDERED that judgment be entered in favor of the DEFENDANT
Dated: ________________________________