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  • Federal Reserve's Partial FOIA Denial On Goldman Sachs To Inner City Press' Request

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    Matthew Russell Lee
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    FOIA Response to ICP Shows Goldman Met Fed in May on GE, Pre-Reviewed By Matthew R. Lee, Exclusive NEW YORK, October 23 -- The lack of seriousness in US bank regulation grows from the relatively smaller to the largest banks, with Goldman Sachs the most recent, example. Goldman is trying to speed through Federal Reserve approval to buy $16 billion in insured deposits from GE Capital, and the Fed, documents just released to Inner City Press under the Freedom of Information Act show, is inappropriately bent on helping. It began by overbroad withholding of basic parts of Goldman's application, click here to view, which Goldman in an October 14 submission to the Fed, here, says has been cured (it has not been). Now the Federal Reserve has belatedly responded to Inner City Press / Fair Finance Watch's September 2 FOIA request, with some of its internal documents, many heavily redacted. While Inner City Press is appealing, even as released the documents show that Goldman Sachs through its law firm Sullivan & Cromwell reached out to Fed General Counsel Scott Alvarez in May 2015 about the transaction, and was largely able to vet it with the Fed's staff by July, even receiving an "additional information" request before any application was filed. Since the public cannot comment or ask questions before a transaction is announced, this "pre-review" by the Fed in essence cuts public review and transparency out of the process. The Fed's rules against ex-parte communications can't be triggered before there is an application. But should Fed review be held, and apparently completed, before there is any public notice? The documents Inner City Press has obtained under FOIA show that on May 14 and May 18, Goldman Sachs and its outside counsel Rodgin "Rodge" Cohen of Sullivan & Cromwell told the Fed and its General Counsel Scott Alvarez of their plans for GE Capital Bank. On May 28, the Fed met with Goldman which presented a "deck" of information about "Project Apple," much of it still redacted as provided to Inner City Press (which is appealing under FOIA). As precedents, Goldman Sachs cited Capital One - ING and RBC - City National (see below). This was followed by a May 29, 2015 letter from "Rodge" to the Fed's Scott Alvarez, asking for confidential treatment of everything including the letter, and including from any Governmental inquiry. (Page 28 of FOIA response to ICP.) A similar letter was submitted by Cohen on June 16, attaching a letter the Fed has redacted in full from Goldman Sachs' Esta E. Stecher. Scott Alvarez took the conversation onto the telephone, not subject to FOIA, on June 16. His accompanying e-mails, as redacted, only say "Thanks! Scott." On June 26, the Fed' Alison Thro wrote that "Rodgin Cohen was in today briefly to discuss, among other things, GS’s plans to acquire the deposits of GE’s ILC. He asked what the next steps might be." What were those "other things"? On July 13, the Fed sent Cohen a "request for additional information concerning the proposal by GS Bank to purchase certain assets and assume the deposit liabilities of GE Capital Bank." A request for additional information is usually what the Fed sends a bank or bank holding company after it has submitted an application; a commenter would get a copy. Here, the Fed was pre-reviewing Goldman Sachs' proposal, entirely outside of any public scrutiny. (The later public questions are as if by rote: the fix was already in.) On Friday, July 17 the Fed's Thomas Baxter wrote to Scott Alvarez that the transaction would be public announced the next Monday -- AFTER the Fed's "additional information request" -- based on a long voicemail from Harvey Schwartz of Goldman Sachs. (Page 59 of FOIA response to ICP). Alvarez was on the phone with "Esta of GA and Rodge Cohen." Alvarez said he was willing to talk with Goldman Sachs on Sunday, July 19. Cohen had written to Alvarez: "In view of the various communications on Friday and the intended

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    FOIA Response to ICP Shows Goldman Met Fed in May on GE, Pre-Reviewed By Matthew R. Lee, Exclusive NEW YORK, October 23 -- The lack of seriousness in US bank regulation grows from the relatively smaller to the largest banks, with Goldman Sachs the most recent, example. Goldman is trying to speed through Federal Reserve approval to buy $16 billion in insured deposits from GE Capital, and the Fed, documents just released to Inner City Press under the Freedom of Information Act show, is inappropriately bent on helping. It began by overbroad withholding of basic parts of Goldman's application, click here to view, which Goldman in an October 14 submission to the Fed, here, says has been cured (it has not been). Now the Federal Reserve has belatedly responded to Inner City Press / Fair Finance Watch's September 2 FOIA request, with some of its internal documents, many heavily redacted. While Inner City Press is appealing, even as released the documents show that Goldman Sachs through its law firm Sullivan & Cromwell reached out to Fed General Counsel Scott Alvarez in May 2015 about the transaction, and was largely able to vet it with the Fed's staff by July, even receiving an "additional information" request before any application was filed. Since the public cannot comment or ask questions before a transaction is announced, this "pre-review" by the Fed in essence cuts public review and transparency out of the process. The Fed's rules against ex-parte communications can't be triggered before there is an application. But should Fed review be held, and apparently completed, before there is any public notice? The documents Inner City Press has obtained under FOIA show that on May 14 and May 18, Goldman Sachs and its outside counsel Rodgin "Rodge" Cohen of Sullivan & Cromwell told the Fed and its General Counsel Scott Alvarez of their plans for GE Capital Bank. On May 28, the Fed met with Goldman which presented a "deck" of information about "Project Apple," much of it still redacted as provided to Inner City Press (which is appealing under FOIA). As precedents, Goldman Sachs cited Capital One - ING and RBC - City National (see below). This was followed by a May 29, 2015 letter from "Rodge" to the Fed's Scott Alvarez, asking for confidential treatment of everything including the letter, and including from any Governmental inquiry. (Page 28 of FOIA response to ICP.) A similar letter was submitted by Cohen on June 16, attaching a letter the Fed has redacted in full from Goldman Sachs' Esta E. Stecher. Scott Alvarez took the conversation onto the telephone, not subject to FOIA, on June 16. His accompanying e-mails, as redacted, only say "Thanks! Scott." On June 26, the Fed' Alison Thro wrote that "Rodgin Cohen was in today briefly to discuss, among other things, GS’s plans to acquire the deposits of GE’s ILC. He asked what the next steps might be." What were those "other things"? On July 13, the Fed sent Cohen a "request for additional information concerning the proposal by GS Bank to purchase certain assets and assume the deposit liabilities of GE Capital Bank." A request for additional information is usually what the Fed sends a bank or bank holding company after it has submitted an application; a commenter would get a copy. Here, the Fed was pre-reviewing Goldman Sachs' proposal, entirely outside of any public scrutiny. (The later public questions are as if by rote: the fix was already in.) On Friday, July 17 the Fed's Thomas Baxter wrote to Scott Alvarez that the transaction would be public announced the next Monday -- AFTER the Fed's "additional information request" -- based on a long voicemail from Harvey Schwartz of Goldman Sachs. (Page 59 of FOIA response to ICP). Alvarez was on the phone with "Esta of GA and Rodge Cohen." Alvarez said he was willing to talk with Goldman Sachs on Sunday, July 19. Cohen had written to Alvarez: "In view of the various communications on Friday and the intended

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    85 views2 pages

    Federal Reserve's Partial FOIA Denial On Goldman Sachs To Inner City Press' Request

    Uploaded by

    Matthew Russell Lee
    FOIA Response to ICP Shows Goldman Met Fed in May on GE, Pre-Reviewed By Matthew R. Lee, Exclusive NEW YORK, October 23 -- The lack of seriousness in US bank regulation grows from the relatively smaller to the largest banks, with Goldman Sachs the most recent, example. Goldman is trying to speed through Federal Reserve approval to buy $16 billion in insured deposits from GE Capital, and the Fed, documents just released to Inner City Press under the Freedom of Information Act show, is inappropriately bent on helping. It began by overbroad withholding of basic parts of Goldman's application, click here to view, which Goldman in an October 14 submission to the Fed, here, says has been cured (it has not been). Now the Federal Reserve has belatedly responded to Inner City Press / Fair Finance Watch's September 2 FOIA request, with some of its internal documents, many heavily redacted. While Inner City Press is appealing, even as released the documents show that Goldman Sachs through its law firm Sullivan & Cromwell reached out to Fed General Counsel Scott Alvarez in May 2015 about the transaction, and was largely able to vet it with the Fed's staff by July, even receiving an "additional information" request before any application was filed. Since the public cannot comment or ask questions before a transaction is announced, this "pre-review" by the Fed in essence cuts public review and transparency out of the process. The Fed's rules against ex-parte communications can't be triggered before there is an application. But should Fed review be held, and apparently completed, before there is any public notice? The documents Inner City Press has obtained under FOIA show that on May 14 and May 18, Goldman Sachs and its outside counsel Rodgin "Rodge" Cohen of Sullivan & Cromwell told the Fed and its General Counsel Scott Alvarez of their plans for GE Capital Bank. On May 28, the Fed met with Goldman which presented a "deck" of information about "Project Apple," much of it still redacted as provided to Inner City Press (which is appealing under FOIA). As precedents, Goldman Sachs cited Capital One - ING and RBC - City National (see below). This was followed by a May 29, 2015 letter from "Rodge" to the Fed's Scott Alvarez, asking for confidential treatment of everything including the letter, and including from any Governmental inquiry. (Page 28 of FOIA response to ICP.) A similar letter was submitted by Cohen on June 16, attaching a letter the Fed has redacted in full from Goldman Sachs' Esta E. Stecher. Scott Alvarez took the conversation onto the telephone, not subject to FOIA, on June 16. His accompanying e-mails, as redacted, only say "Thanks! Scott." On June 26, the Fed' Alison Thro wrote that "Rodgin Cohen was in today briefly to discuss, among other things, GS’s plans to acquire the deposits of GE’s ILC. He asked what the next steps might be." What were those "other things"? On July 13, the Fed sent Cohen a "request for additional information concerning the proposal by GS Bank to purchase certain assets and assume the deposit liabilities of GE Capital Bank." A request for additional information is usually what the Fed sends a bank or bank holding company after it has submitted an application; a commenter would get a copy. Here, the Fed was pre-reviewing Goldman Sachs' proposal, entirely outside of any public scrutiny. (The later public questions are as if by rote: the fix was already in.) On Friday, July 17 the Fed's Thomas Baxter wrote to Scott Alvarez that the transaction would be public announced the next Monday -- AFTER the Fed's "additional information request" -- based on a long voicemail from Harvey Schwartz of Goldman Sachs. (Page 59 of FOIA response to ICP). Alvarez was on the phone with "Esta of GA and Rodge Cohen." Alvarez said he was willing to talk with Goldman Sachs on Sunday, July 19. Cohen had written to Alvarez: "In view of the various communications on Friday and the intended

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    FEDERAL RESERVE SYSTEM October 20, 2015, Mr. Matthew Lee Inner City Press P.O, Box 20047 New York, NY 10017 i : innereitypress@gmail.com Re: Freedom of Information Act Request No, F-2015-0336 Dear Mr. Lee: ‘This isin response to your e-mail message dated and received by the Board's Freedom of Information Office on September 2, 2015. Pursuant to the Freedom of Information Act (“FOIA”), 5 U.S.C. § 552, you request the entirety of the application to the Board by Goldman Sachs Bank USA to acquire certain deposit liabilities and non- financial assets of GE Capital Bank. You also seek all records reflecting Federal Reserve staf communications with Goldman Sachs Bank USA regarding the application for the ppast twelve months." ‘Staff searched Board records and located documents that are responsive to your FOIA request. ‘The Board’s Freedom of Information Office previously provided you with the public portions of the application on September 3, 2015. Additionally, the Board's Freedom of Information Office provided you with the revised public portion of the pplication on September 9, 2015. The remaining responsive records consist of the confidential version of the application, the confidential exhibits to the application, and pre-and post-filing correspondence. Several ofthese documents will be provided to you in their entirety. have determined, however, that certain documents contain or consist ‘of confidential commercial and financial information regarding Goldman Sachs Bank USA or GE Capital (e.., business plans and internal strategies, nonpublic pro forma balance sheet data, financial projections, unpublished financial calculations and capital ratios, and negotiation details) that could result in substantial competitive harm if disclosed; certain internal pre-decisional analyses, recommendations, and supervisory assessments; personal details regarding individuals (c-., personal telephone numbers and conference call passcodes); and information related to the supervision and examination of " Board staf init search for responsive records on September 8 2015. Accordingly, staf applied an “end. date” to the search for responsive records of September 8, 2015 ‘a regulated financial institution, Such information is subject to withholding and will be ‘withheld under the authority of exemptions 4,5, 6, and 8 of the FOIA, respectively, 5 US.C. §§ 552(b)(4), (5), (6), and (8). The documents containing the exempt information have been reviewed under the requirements of subsection (b) of the FULA, 5S USC. § 552(b), and all reasonably segregable nonexempt information will be provided to you. The documents being released to you will indicate the amount of information that hhas been withheld and the applicable exemptions. ‘Your request for information, therefore, is granted in part and denied in part for the reasons stated above. The Board's Freedom of Information Office will provide you with a copy of the documents being made available to you pursuant to this authorization under separate cover. If you believe that you have a legal right to any information that is being withheld, you may appeal this determination.” Very truly yours, Mn Marea Deputy Secretary of the Board lease noe that an appeal must be ied (that is, received by the Board) within 10 working days of the date on which this determination was issed of, inthe cae of a partial rant, the date on which any documents were transite, whichever i ater, You ay submit your appeal by mal, addressed to the Freedom of Information Office, Board of Governors ofthe Federal Reserve Sysiem, 20th Street & Constitution Avenue NW, Washington, DC 20551; by fesimile, to 202-872-7565; or electronically, to OIA-Appeals@iia.gov, Please be advised that submitng an appeal by postal mal an result in delays due to mal processing. The Board's regulations regarding FOIA appeals are located at 12 CFR 261 D

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