Financial crisis case bypassed
on Mar 21, 2011 at 7:32 pm
The Supreme Court on Monday turned aside the first attempt to block the public disclosure of the terms of the Federal Reserve’s emergency lending to banks to help their cash and credit operations during the financial crisis of 2007 and 2008.  Although much of the data has already been disclosed, under the new Wall Street financial reform law, major commercial banks wanted protection from further releases.
As usual, the Court gave no explanation for denying review of a pair of cases filed by the Clearing House Association, a trade group and payments company for the world’s largest commercial banks. The Federal Reserve lost a case on disclosure of the borrowing terms, and had wanted to pursue an appeal of its own to the Supreme Court, but was denied the chance to do so by the U.S. Solicitor General’s office, which controls government appeals.
During the crisis, when the nation’s economy came close to collapse because of a drying up of credit and other money supplies, the Fed ran a series of emergency lending operations through the 12 regional Federal Reserve Banks. It also engaged in continued lending — as it has since 1914 — through the permanent program known as the “discount window,” used for making mostly overnight loans to banks.
The temporary emergency activity has ended, but the “discount window” operations continue. As the two cases reached the Supreme Court, they involved only an interpretation — under the Freedom of Information Act — of the Fed’s duty to disclose activity through the “discount window.” The emergency program’s details have been made public by the Fed, under Congress’s mandate in the so-called “Dodd-Frank Wall Street Reform and Consumer Protection Act” that took effect last July.
In response to FOIA requests by Bloomberg News and the Fox News Network, the Second Circuit Court ruled that FOIA does not protect the Fed from releasing the identities of banks that borrow from the Fed, and the actual terms of that lending — including what kind of security they posted to guarantee repayment.
In taking the case on to the Supreme Court, the Clearing House Association sought to challenge two rulings by the Second Circuit: first, that the borrowing does not fit within an exemption from FOIA disclosure for information that a government agency obtains from private parties, and, second, that the information about the banks’ identity and the loans’ terms is not confidential despite a claim that its public disclosure would impair the Fed’s lending operations. The Fed agreed with the Clearing House Association that the Circuit Court was wrong on both of those issues, but it opposed Supreme Court review, relying on the provision of the Dodd-Frank law.
Under the Dood-Frank law, the Fed was required to publish on its website information about the temporary emergency lending operations.  The Fed did so. The new law also changes the timing for release of such data on the Fed’s “discount window” operations. Generally, such information cannot be disclosed until after a two-year delay.
The Court’s denial of the two cases came in Clearing House Association v. Bloomberg (10-543) and Clearing House Association v. Fox News Network (10-660). The two petitions contended that disclosure that a bank has borrowed from the Fed may cause bank customers to worry about the financial soundness of the bank, thus discouraging banks from borrowing from the Fed and thus impairing its money supply activity.
The Court also denied review Monday in two other cases — one of which was almost totally cloaked in secrecy about its details, because all of the legal filings in the case have been kept under seal and the lower court ruling at issue is so heavily censored that its meaning and scope is obscured. That case was Ameziane v. Obama (10-447) — one of eight cases taken to the Court recently by Guantanamo Bay detainees. So far, the Court has now denied review of two of the eight, and, in both cases, Justice Elena Kagan took no part.
While nearly everything about the Ameziane case remains under a shroud of secrecy, enough has emerged to indicate that it was a plea to the Court to clarify what kinds of information the government can keep secret in Guantanam Bay cases, even when the data is not formally classified as secret information. As District Court judges have processed detainees’ challenges to their captivity at Guantanamo, they have created a category of what is called “protected information” — unclassified data, but data that the government believes is sensitive enough that it could affect national security if released. Although the breadth of the category is not known publicly, it is assumed to be quite wide.
In the case of Djamel Ameziane, an Algerian who has been held at Guantanamo since 2002, the D.C. Circuit Court ordered District judges not to closely second-guess decisions by the federal government as to what kinds of information had to be kept closed under the “protected” designation.
In the other significant denial of review on Monday, the Court turned down a petition by the Republican National Committee, joined by former Louisiana Republican Rep. Anh “Joseph” Cao.  Their petition (Cao, et al., v. Federal Election Commission, 10-776) claimed that the Constitution’s First Amendment protects national political parties’ financing of campaign ads that speak for the party, even when those ads are coordinated with a specific party candidate.
Their petition was an attempt to ease the federal campaign law’s restrictions on “coordinated” spending between national parties and individual candidates for Congress and for the presidency.
The Court granted two new cases, to be decided in the new Term that starts Oct. 3; one of the two is a case that the Court had been studying since its first Conference, before the current Term opened last October.  That case is Maples v. Maples (10-63), involving an Alabama death-row inmate, Cory R. Maples of Decatur.
The Court granted review only of the second question raised in Maples’ petition, testing whether an inmate seeking to challenge his conviction or sentence can be barred from pursuing a federal habeas plea for failure to meet a state court document filing deadline, at least when the inmate himself was not at fault, when court officials played some rule in the incident, and when the inmate’s attorneys had stopped representing him without telling the state courts.
The case will give the Court a chance to clarify when a failure to satisfy a state procedural rule bars an arguably blameless state inmate from taking his case on to the federal courts.
In the other newly granted case, the Justices will be examining whether to grant total legal immunity to a government official who initiates a criminal case against a private individual, and then testifies before an investigating grand jury, and allegedly lies to the grand jurors. The case involves a Georgia accountant, Charles A. Rehberg, who engaged in an anonymous campaign of “whistleblowing” about an Albany, Ga., hospital’s alleged unethical billing practices.
The accountant’s petition (Rehberg v. Paulk, et al., 10-788) argued that the hospital, in retaliation against Rehberg, got its close friends in the district attorney’s office to investigate Rehberg, and to file phony criminal charges against him that were later dismissed.
In another significant order Monday, the Court invited the federal government to offer its views on whether a foreign country — in this case, Spain — can be held liable in a U.S. court for allegedly keeping a Pissarro painting that the Nazis allegedly confiscated in 1939 from a Jewish woman, whose grandson was an American who sued for damages. The case is Kingdom of Spain, et al., v. Cassirer estate (10-786).
The Court is not expected to act on the case until the government offer its views; there is no deadline for that response.
