Washington, D.C, Nov. 2, 2011 Vern McKinley, Research Fellow at the Independent Institute and formerly with the Federal Reserve, announced today that he has filed a petition with the U. S. Supreme Court asking for a review of a lower court ruling that validated the Federal Reserves decision to withhold documents about its $29 billion bailout of Bear Stearns (Vern McKinley v. Board of Governors of the Federal Reserve System (No. 11-544)).
Although the U.S. District Court and the U.S. Court of Appeals previously ruled in favor of the Federal Reserve and dismissed Mr. McKinleys lawsuit, the rulings mark a departure from Supreme Court precedent and the Freedom of Information Act (FOIA). Judicial Watch, the public interest organization that investigates and prosecutes government corruption, filed the petition on McKinleys behalf on October 27, 2011.
Judicial Watch argues that FOIA prohibits the federal government from withholding documents under the deliberative process privilege (FOIA Exemption 5) without demonstrating that the release of the documents would result in specific harm to government agency decision-making.
The Bear Stearns lawsuit, originally filed by Mr. McKinley in July 2009, seeks records related to the Boards unprecedented act to authorize the Federal Reserve Bank of New York (FRBNY) to provide temporary emergency financing to The Bear Stearns Companies, Inc., on March 14, 2008. This particular bailout financed the infamous, nonrecourse loan to J.P. Morgan, which in turn provided the financing to Bear Stearns.
McKinley exposes the economic casualties of such bailouts in his forthcoming book, Financing Failure: A Century of Bailouts, releasing New Years Day.
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