April 14, 1997
Mr. Kunal V. Randery
Cornerstone Research
University Place
124 Mount Auburn Street
Cambridge, MA 02138
Re: Freedom of Information Act Appeal
(Your March 13, 1997 Letter)
Dear Mr. Randery:
On January 7, 1997, you submitted a Freedom of Information Act
(FOIA) request to Patricia Slye, NCUA's Regulatory Affairs Specialist.
You requested two categories of documents. First, for all federally
insured credit unions receiving assistance under Section 208 of
the Federal Credit Union Act, from 1985 to the present, you requested
the name, charter number, state of location, asset size, date
assistance was provided, type of assistance, and cost of providing
assistance. Second, for all federally insured credit unions you
requested the name, charter number, state of location, and CAMEL
code for each year from 1985 - 1995. Richard S. Schulman, NCUA's
FOIA Officer, denied your request on February 26, 1997. We received
your appeal on March 17, 1997. Your appeal is denied pursuant
to exemption 8 of the FOIA as explained below.
Exemption 8 of the FOIA exempts information:
Contained in or related to examination, operating, or condition
reports prepared by, on behalf of, or for the use of an agency
responsible for the regulation or supervision of financial institutions.
5 U.S.C. 552(b)(8). CAMEL code ratings are assigned at the conclusion
of NCUA (or in some cases the state regulator or NCUA/state joint)
examination. Decisions on assistance provided pursuant to Section
208 of the Federal Credit Union Act are based on examinations
of credit unions. All of the information requested is clearly
within the purview of exemption 8.
The courts have discerned two major purposes for exemption 8 from
its legislative history: 1) to protect the security of financial
institutions by withholding from the public reports that contain
frank evaluations of a bank's stability; and 2) to promote cooperation
and communication between employees and examiners. See
Atkinson v. FDIC, 1 GDS 80,034, at 80,102 (D.D.C. 1980).
Either purpose is sufficient reason to withhold examination information.
The NCUA regulation implementing exemption 8 of the FOIA is found
at 12 C.F.R. 792.3(a)(8). Section 792.3(a)(8) repeats exemption
(8) and adds:
This includes all information, whether in formal or informal report
form, the disclosure of which would harm the financial security of
credit unions or would interfere with the relationship between
NCUA and credit unions.
Courts have interpreted exemption 8 broadly and have declined
to restrict its all- inclusive scope. Consumers Union of United
States, Inc. v. Heimann, 589 F.2d 531 (D.C. Cir. 1978). Examination
reports, including the findings of examinations (in this case
the CAMEL code rating), have been withheld from disclosure pursuant
to exemption 8. In addition, matters that are related to such
reports (examination follow-up - in this case a determination
to provide 208 assistance) have been withheld from disclosure.
See Atkinson, at 80,102. Records pertaining to
a financial institution no longer in operation can be withheld
pursuant to exemption 8. Gregory v. FDIC, 631 F.2d 896
(D.C. Cir. 1980). The information you requested is indicative
of the financial condition of the credit unions.
Disclosure of what credit union members may perceive to be a negative
CAMEL rating can clearly affect the credit union's financial security.
We note that it is long-standing NCUA policy not to disclose
any CAMEL rating, be it a CAMEL 1 or a CAMEL 5. Disclosure of
only CAMEL 1 and 2 credit unions could certainly have a negative
affect on credit unions not receiving such ratings. The financial
security and stability of credit unions could clearly be affected
by release of some or all CAMEL ratings. The CAMEL code information
continues to be withheld pursuant to exemption 8.
Similarly, members may perceive provision of 208 assistance to
indicate a weak and unstable credit union. You noted you have
already received information requested on credit unions that received
208 assistance that were later either liquidated or merged. Although
we believe such information could have been withheld pursuant
to exemption 8 (see Gregory, supra), it was released
pursuant to NCUA's discretionary authority. Information on operating
credit unions that have received 208 assistance can and will be
withheld pursuant to exemption 8 since its release could affect
the financial security of the operating credit unions. You note
that you would accept all of the reqested information on the 208-assisted
credit unions with the credit union names and charter numbers
deleted. We believe that even with this information deleted,
it would be possible to identify the names of some of the credit
unions receiving 208 assistance. Hence, we will not disclose
the requested 208 information, with or without names and charter
numbers.
Pursuant to 5 U.S.C. 552(a)(4)(B), you may seek judicial review of this determination by filing suit to enjoin NCUA from withholding the documents you requested and to order production of the documents. Such a suit may be filed in the United States District
Court in the district where you reside, where your principal place of business is located,
the District of Columbia, or where the documents are located (the
Eastern District of Virginia.)
Sincerely,
Robert M. Fenner
General Counsel
GC/HMU:bhs
SSIC 3212
97-0321