(Photo: Diego M. Radzinschi/NLJ.)
Williams & Connolly was rebuffed in its bid for more information about how consultants landed lucrative contracts from the Office of the Comptroller of the Currency to review bank foreclosures.
U.S. District Judge Reggie Walton of the District of Columbia denied the firm’s Freedom of Information Act Request, ruling on April 30 that the agency could keep the information confidential because doing so “encourages banks to be candid and transparent with the comptroller.”
The fight began in 2012, when Williams & Connolly sought information from OCC on behalf of its client Allonhill, a mortgage review firm that has since filed for Chapter 11 bankruptcy protection.
Allonhill had been hired by Aurora Bank to review its foreclosure practices. Aurora and other mortgage servicers such as Bank of America and Wells Fargo Bank in 2011 had been directed by OCC and the Federal Reserve to retain independent consultants to embark on a case-by-case review of hundreds of thousands of foreclosures.
The goal: to determine whether borrowers were afforded all of the protections they were entitled to under the law and to provide compensation to homeowners harmed by bank errors. But the process seemed mainly to benefit the consultants,who raked in nearly $2 billion through November 2012 without a single borrower receiving compensation.
Allonhill, however, missed out—the company’s services were terminated before Aurora’s foreclosure review process was completed. According to court papers, the firing was “at the direction of [the comptroller” because of an alleged “conflict presented by [Allonhill’s] previous work and the independence requirements of the [comptroller].”
Williams & Connolly associate Andrew Elliott and partners David Aufhauser and Stephen Andrews in March 2013 brought the FOIA suit seeking documents that detailed the OCC’s definition of independence and records showing how any particular consultant was determined to be independent.
OCC said no, invoking exemption 8 of the Freedom of Information Act. The exemption protects information “related to examination, operating, or condition reports” used by agencies that regulate financial institutions.
Williams & Connolly argued that the documents at issue weren’t about banks, but rather pertained to third-party consultants and should be disclosed. “Plaintiff does not seek documents about the substance of the underlying foreclosure reviews themselves (which, in any event, were performed by the outside consultants, not the OCC); it seeks only the documents that relate directly to the issue of independence of those outside consultants,” the lawyers wrote.
Walton didn’t buy it, writing that the documents were “prepared in furtherance” of the comptroller’s responsibility to regulate financial institutions. He also found that withholding the documents “furthers one of the exemptions underlying purposes”—for banks to be “forthright and open” with the agency without worrying about the information being made public.
Aufhauser, who was general counsel of the Treasury Department from 2001 to 2004, did not respond to a request for comment.
Contact Jenna Greene at firstname.lastname@example.org, on Twitter @jgreenejenna.