Think tank sues US Treasury over 2014 letter involving Berkshire Hathaway
Then, on April 26, 2017, Alex Pollock referenced the letter in testimony before the House Financial Services Committee. Pollock is a distinguished senior fellow at the R Street Institute, a free market think tank. Pollock suggested in his testimony that the letter could shed light on deal-making among FSB participants to match domestic systemic risk designations with global ones. The House Financial Services Committee had long chastised FSOC for an alleged lack of transparency in its designation process, with some parties fearing the designations had been partially arranged beforehand on the global stage.
“This letter allegedly reveals the international discussions about American companies, including it is said, whether Berkshire Hathaway should be designated a systemically important insurer (an idea not politically popular with the Obama administration),” Pollock testified. “A Freedom of Information Act request for the letter has previously been denied by the Treasury, which admits however that it exists.” He then urged Congress to “immediately request a copy” of the letter while considering the “international processes” section of the proposed Financial CHOICE Act, a sweeping Republican financial reform package.
“While at it, Congress should request any other correspondence regarding possible agreements within the FSB,” Pollock told the committee.
The committee did not respond to queries about whether it submitted such requests.
The letter triggers a lawsuit
After its FOIA request was denied, the Competitive Enterprise Institute (CEI) filed a lawsuit Aug. 9, 2017, in the U.S. District Court for the District of Columbia against Treasury, alleging an improper denial of plaintiff’s requests.
The lawsuit cites the document, a “letter from The Bank of England and Financial Stability Board head Mark Carney sent to U.S. Treasury Secretary Jacob Lew in September 2014, asking why Berkshire Hathaway Inc.’s reinsurance operation was not included in the Financial Stability Board’s provisional list of systemically important financial institutions.”
When asked why the letter was classified, a Treasury spokeswoman noted via email Aug. 4, 2017, that the document was deemed to meet Treasury’s classification guidelines. She said this is “not uncommon when it comes to materials from foreign governments relating to economic or national security matters.” Treasury did not return emails asking about the CEI lawsuit.
Sam Kazman, general counsel of CEI, told S&P Global Market Intelligence that while CEI awaits a response, he personally was “dubious about the agency’s new-found national security rationale for keeping this document under wraps.” In part, he stated, “this is because its previous rationale, that the letter did not belong to Treasury, was so baseless, and because the agency has dragged its feet on this document for over two years.”
Pollock believes the letter could shed light on key governance questions: “to what extent were U.S. regulators and central bankers making deals with foreign regulators outside the process and control of U.S. law? Do international regulatory committees think they have the authority to instruct the U.S. about what to do?”
