Judicial Watch, Corruption Chronicles
Press Office 202-646-5172, ext 305
Washington, DC — March 20, 2010
Judicial Watch, the public interest group that investigates and prosecutes government corruption, announced today that it filed a Freedom of Information Act (FOIA) lawsuit on May 11 against the Board of Governors of the Federal Reserve system related to the financial bailouts of American International Group (AIG) and Lehman Brothers on behalf of former FDIC employee Vern McKinley. The lawsuit is part of Judicial Watch’s comprehensive investigation to determine under what legal authorities and lawful rationales the federal government initiated the Wall Street bailouts.
With his March 21, 2010, FOIA request targeting information related to the AIG bailout McKinley requested: “…any and all communications and records concerning or relating to the Board [of Governors’] decision that detail that ‘the disorderly failure of AIG was likely to have a systemic effect on financial markets that were already experiencing a significant level of fragility,’ as described in the [Board] meeting minutes.”
With his March 28, 2010, FOIA request targeting information related to the Lehman Brothers bailout, McKinley requested: “…any and all communications and records regarding analysis undertaken regarding Lehman Brothers and the assessment in September 2008 or earlier of what ‘contagion’ might have flowed from Lehman Brother’s filing of bankruptcy, as the word contagion was used in the case of the Board of Governors’ deliberations over Bear Stearns…or ‘systemic effect of financial markets’ that may have flowed from a Lehman Bankruptcy as the phrase was used in the Board of Governors’ deliberations over American International Group…”
The Board of Governors acknowledged receipt of both FOIA requests but failed to respond within the statutory allotted time period, prompting Judicial Watch’s lawsuit.
The Federal Reserve Board of Governors used Section 13(3) of the Federal Reserve Act to justify its decision to radically break from precedent and authorize these massive financial bailouts. (As Judicial Watch noted in a previous FOIA lawsuit, “Not since the Great Depression had the Board exercised its authority…to authorize a loan to a non-banking entity.”) However, the Fed has provided few details regarding its internal deliberations and the analysis used to arrive at the conclusion that these bailouts were absolutely essential. The Obama administration continues to stonewall the release of documents that could shed light on the matter, even documents from the Bush administration.
“We are now trillions of taxpayer dollars into these financial bailouts and a fundamental question remains unanswered: Under what authority did the federal government take such a radically intrusive approach to the financial crisis? The Federal Reserve and the Obama administration owe the American people an explanation,” said Judicial Watch President Tom Fitton.
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