In a bid for more information about how consultants landed lucrative contracts to review bank foreclosures, Williams & Connolly filed a Freedom of Information Act suit against the Office of the Comptroller of the Currency on behalf of an unnamed client.
The suit, brought by partner David Aufhauser in U.S. District Court for the District of Columbia, seeks documents that detail the OCC’s criteria for hiring "independent" consultants to review bank foreclosures.
The OCC and the Federal Reserve in 2011 directed mortgage servicers including Bank of America, Citibank, Wells Fargo and Goldman Sachs to hire 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. As OCC head Thomas Curry put it in a February speech, the independent foreclosure review “proved to be much more complicated than anyone anticipated.”
In January, banking regulators pulled the plug on the program, striking deals with 13 servicers to pay more than $9.3 billion in cash payments and other assistance to help borrowers.
In its FOIA suit, filed on March 27, Williams & Connolly wants to know exactly what guidance OCC provided to mortgage services for hiring the independent consultants. The suit seeks “All documents and/or records relating to the OCC’s definition of independence,” including “Any documents and/or records relating to determining whether any particular independent consultant…was or was not independent.”
Companies including Promontory Financial Group, PricewaterhouseCoopers, Ernst & Young and Deloitte & Touche were hired by mortgage servicers to conduct the reviews.
The OCC initially refused Williams & Connolly’s request in full, citing FOIA subsection (b)(8), which exempts information “contained in or related to examination, operating, or condition reports prepared by… an agency responsible for the regulation or supervision of financial institutions.”
Williams & Connolly appealed the request to the OCC in September, and “specifically noted that the OCC could not withhold the documents under the stated exemption,” according to the complaint.
The OCC in December released five pages of partially redacted documents related to its definition of independence and provided documents that were publically available on its website. Also, the agency offered new grounds for withholding information, citing subsection (b)(5) which exempts “inter-agency or intra-agency memorandums or letters which would not be available by law to a party other than an agency in litigation with the agency.”
Aufhauser argued in the complaint that Williams & Connolly has a “right of access to the documents requested, and Defendant has no legal basis for its actions in withholding the right of access to such documents.” The suit also seeks attorneys’ fees.
Aufhauser, who did not respond to a request for comment, previously served as general counsel of the Treasury Department.