Sweeney’s Thoughtful Rationale for Sweeping Away Government’s Privilege Claims
- October 5, 2016
If U.S. Court of Federal Claims Judge Margaret Sweeney’s 80-page opinion rejecting the government’s rationale for trying to conceal 56 documents relevant to the Net Worth Sweep could be summed up in a single phrase it would be this: Enough already!
For over a year, Sweeney has been dismantling the wall of secrecy the government erected. Released Monday, her opinion detailing her recent decision to grant Fairholme Funds’ motion to compel the government to share these documents was a howitzer strike on that wall and will possibly reveal new evidence that the government has simply not been honest in its Sweep narrative. The government has withheld 12,000 documents under claims of privilege of the deliberative process, of bank examination and of presidential communications.
Declaring that the “‘the public’s right to know’ is basic tenant of our democracy,” Sweeney dismantles the government’s rationale for asserting presidential communications privilege on four documents and the claim of deliberative process privilege and the bank examination privilege on the other 52 items. On top of that, she thinks the government’s claims are so feeble that she has given the government ten days to explain why it should not have to pay the legal costs Fairholme incurred fighting to unseal the documents.
The documents could have a direct bearing on Fairholme’s contention that the Net Worth Sweep resulted in the unconstitutional taking of property. The documents included forecasts of Fannie and Freddie’s earnings, the implications of modifying the Preferred Stock Purchase Agreements, discussions about housing finance reform and overall housing policy. In other words, the specific matters officials at Treasury, the Federal Housing Finance Agency and the White House would have considered in the process of conceiving, justifying and implementing the Net Worth Sweep in 2012. Additionally, these communications involve top Administration officials. Time will tell if these documents can demonstrate that senior policymakers made a conscious decision to tap revenues projected for Fannie and Freddie but then later misrepresented the impetus or the need for the Sweep.
Sweeney reviewed the documents in camera, that is, privately and securely within her chambers. She examined the requirements needed to justify the assertion of each privilege by the government, juxtaposing these requirements with the contents of each document and at which point in the decision-making process each would have a bearing on the adoption of the Sweep. At the end of this painstaking process, she could not find a single case where the public’s right to know, and the plaintiffs’ right to information to make their case, was subordinate to the government’s desire for secrecy. As Investors Unite Founder and Chairman Tim Pagliara said in an interview in Fortune, “[Judge Sweeney] gave the government every benefit of the doubt as she did so, and then she ruled that the plaintiffs need to know this information in the pursuit of justice.”
This tracks with her previous rulings based on her view that deliberations going back five years ago or more pose no threat to the marketplace and that sparing public officials from embarrassment was not enough to keep information locked away from view.
Sweeney’s opinion focuses on the sworn declarations of senior associate director of the FHFA’s division of enterprise regulation Christopher Dickerson, Treasury’s executive secretary David Pearl and deputy White House counsel Nicholas McQuaid. These officials were in a position to know in detail what was being discussed.
The stonewalling Sweeney takes issue with in this case is part of a pattern of secrecy in the Obama Administration that has been exhibited on many occasions. In fact, this week health insurance giants Aetna and Humana formally requested that sanctions be imposed on the government for failing to meet discovery obligations on documents essential to settling a dispute over the marketing of Medicare Advantage. The complexity of the proposed merger of the two companies notwithstanding, the administration of justice requires facts and this Administration seems determined to make it as hard as possible to obtain documents where those facts can be found. No wonder some critics have charged that what was supposed to be the most transparent administration in history has become the least transparent.
It is possible that this prevailing opacity is wearing thin on Judge Sweeney. In addition to granting Fairholme’s motion to compel, Judge Sweeney directed the United States to file a memorandum by Oct. 14 explaining why the court should not require it “to pay [plaintiffs’] reasonable expenses incurred in making the motion, including attorney’s fees.” In other words, if you want to keep wasting the court’s time, it is going to cost you money.