The New York Federal Reserve’s “Doomsday Book” Has Been (Partially) Revealed

I apologize for my long absence. I’ve been consumed with archival research in both the National Archives, Freedom of Information Act (FOIA) Requests and Online Archives. My next piece explains, and releases free to the public, 30,000 pages (!!!) I recently got from the Federal Reserve Board through FOIA. More generally, I am going to write quite a lot in the coming months on what I’ve unearthed in all that research. I hope that you will stick with me in this process.

As readers are well aware by now, I’ve become increasingly obsessed with the Freedom of Information Act, and using it to scrutinize the Federal Reserve System. I’ve been fairly successful so far, getting important memos and now even multiple books (previously unpublished). It would be fair to say that I’m the single individual most focused on using FOIA to examine the Federal Reserve. There are, of course, companies and law firms who specialize in FOIA requests of government agencies. I have many FOIA requests in process, and my next piece will be about a very interesting (and neglected) area of the Federal Reserve: the Board of Governors meeting. That piece will be framed around the 1967-1973 Board of Governors minutes, which I won through a FOIA request. In that piece I will also release them to the public — for free.

Yet, as successful as I have been at using FOIA regarding the Federal Reserve, I didn’t have the biggest Freedom of Information victory against the Federal Reserve System in 2023 (that had to wait for this year). Not by a long shot. The biggest victory on this front was instead accomplished by finance professor Emre Kuvvet. He got the index to the elusive “Doomsday Book” of the New York Federal Reserve. Yes, really: They themselves named it the “Doomsday Book”. More incredibly, in June 2006 they created a cover letter, written in Comic Sans. It is surreal, to say the least, to read “The Doomsday Book, however, assumes working computers and printers” written in Comic Sans.

Professor Kuvvet publicly revealed his “Freedom of Information” request success in a Wall Street Journal article entitled “Sun Shines on Fed ‘Doomsday Book’” on December 11th of last year. So what exactly is this “Doomsday Book”? Despite the dramatic name, its actual content is a long list of mostly legal memoranda, which explain the expansive powers of the Federal Reserve. More rarely, they set out its limits. I say that the Doomsday Book is only “partially” revealed, because while what professor Kuvvet got was quite valuable, he didn’t actually get the legal memos themselves. Instead, what he got was something like an “annotated bibliography”. It explains what powers the Federal Reserve “theoretically” has, and which legal opinions justify those interpretations. But it only provides a cursory understanding of what the legal memos themselves say. You can read a searchable version I’ve made of the Doomsday Book here.

The Doomsday Book first became public knowledge because of former New York Fed president and Obama Treasury secretary Timothy Geithner’s memoir. The fact that it existed captured the imagination of a public still angry over the 2008 bailouts. We learned more about this issue when AIG—who had the chutzpah to sue the Federal Reserve because its demand for nearly 80% of the company’s equity in exchange for billions of loans to save it—tried to get access to the Doomsday Book in legal discovery, and had former secretary Geithner testify about it.

The partial revelation of the New York Fed’s Doomsday Book set off a lot of furious labor on my part. I submitted over 120 FOIA requests related to the Doomsday Book, and I still have a number of these requests outstanding. I have also sent a few more requests here and there, and will likely continue to make requests based on the Doomsday book as they occur to me. Unfortunately, the vast majority of my requests were rejected because they were determined to be “Federal Reserve Bank of New York” records, rather than records of any recognized government agency. The legal issues surrounding the “agency status” of Federal Reserve Banks are extremely interesting and extremely complex, too complex in fact to get into in this piece. Suffice to say, the ability to shield the Federal Reserve System from FOIA scrutiny through generating the relevant records at the Federal Reserve Banks is an extremely troubling and problematic aspect of the Federal Reserve System.

In a certain sense, the requests informing me that something was a New York Federal Reserve record were still helpful because it confirmed, by omission or alternative response, what requests were indeed Federal Reserve Board records. Unfortunately, simply because a record is (currently) subject to FOIA does not mean I will get access to them. Recently, I got a number of rejections on the premise that the memos in question were exempt because of “attorney client privilege”. As the FOIA.gov website explains, this falls under the fifth exemption to FOIA:

Exemption 5: Privileged communications within or between agencies, including those protected by the:

Deliberative Process Privilege (provided the records were created less than 25 years before the date on which they were requested)

Attorney-Work Product Privilege

Attorney-Client Privilege

I mostly requested material from 25 years or older in order to avoid the deliberative process part of this exemption. However, as I knew from the beginning, there was always a chance of being denied everything. That’s because of the ability to invoke Attorney-Client privilege.

That’s part of a bigger picture: the ability to shield crucial interpretative issues in public policy under the banner of “attorney-client privilege” is a huge barrier to the effectiveness of FOIA. The disability the Deliberative Process exemption created for FOIA is what led to its limitation to a 25 year period in the FOIA Improvement Act of 2016. We need a similar limitation on invoking attorney client privilege. Answering general questions about one’s legal interpretation of the limits of the Federal Reserve act is not a matter of privacy, the way sending a memo on a specific court case is.

What’s especially amazing about this is the kind of material I’m getting denied. They denied me a 1975 memo on emergency lending which has been superseded in all sorts of ways in more recent decades.

“Direct Extension of Emergency Credit to a Nonmember Bank or Bank Holding Company on its Own Note” (FLO0S588) 01/17/75

They denied me a 1978 memo about whether the Fed had the legal authority to pay interest on reserves. The Fed of course got authorizing legislation to pay interest on reserves in 2006. What could be in this memo that’s still sensitive? I actually know a lot about the circumstances surrounding this fight over interest on reserves in 1978, and plan to write about that more in the future.

“Authority of Board to pay interest on required reserves of member banks” dated 06/19/1978

They also denied me a memo about the Fed’s legal authority to “independently” buy and sell foreign currencies from 1981.

“Authority of Federal Reserve to engage independently in foreign exchange transactions” (#212904) 09/14/81[.]

Most understandably, but also tantalizingly, they denied me a memo about the New York Fed engaging in negotiations with the Mexican government over refinancing the Treasury’s lending to Mexico.

“Potential Request of the Federal Reserve Bank of New York to Commence Negotiations in Connection with the Proposed Refinancing of a Portion of the Loans Extended to the United Mexican States by the U.S. Treasury(#335556) 05/24/96[.”]

I haven’t given up on these memos. I will come up with legal arguments—with help from others—on why they should be released to me. But the reality is that overcoming the invocation of “attorney client privilege” is very difficult. There’s a reason they invoke it, after all.

Still, the commentary in the “Doomsday Book” is itself extremely valuable and informative. The most important commentary in the entire Doomsday Book is a concise summary of the Federal Reserve’s lending “powers” and the New York Federal Reserve’s legal assessment of them:

The lending authority opinions are the most important. A constant theme runs through them all: the powers of a Federal Reserve Bank are far greater than is commonly supposed. The following bullet points capture the headlines of these opinions:

Reserve Banks may extend Section 10B credit on a non-recourse basis. This permits back-to-back Section 10B lending, perhaps as an alternative to Section 13(3) discounting. (The need for this has decreased with the 2001 amendments to the Federal Reserve Act that relaxed the Board quorum requirement for Section 13(3) discounting.) This power also permits Reserve Banks to provide price support in a panicking market, by extending nonrecourse loans based solely on collateral. This is tantamount to purchasing the collateral, with a repurchase option: an effective means of price support.

Section 13(3) lending has fewer constraints than one might think.

The Board can pre-authorize a Reserve Bank to lend under Section 13(3) at the Reserve Bank’s discretion, without disclosing this pre-authorization to the public.

Section 13(3) lending to banks might be permissible, without the liability scheme imposed by Section 10B, as amended by FDICIA.

Section 13(3) lending authority extends to municipalities. (There is no opinion on file extending this result to states or foreign governments.) There is also an independent Section 14(b)(1) lending authority for municipalities.

Section 13(3) credit may be extended to Federal Home Loan Banks, notwithstanding language in Section 14(b)(2) of the Federal Reserve Act.

Section 13(3) credit can be extended on the note of the obligor. (This has been generally accepted since the memo of [redacted] 1975, but it is useful to have a copy of the memo on hand.

Some of these bullet points I will explain at a later time. For now, what’s important is that the New York Federal Reserve took it as fact that the Federal Reserve had the legal authority to lend to municipalities using both 13(3) (its key expansive lending powers) — and its 14(b)(1) lending authority. This municipality point is especially extraordinary to me, because I made this precise legal argument at length in a piece I wrote on September 6th 2020 titled “Is It Legal For The Federal Reserve To Provide State & Local Governments Unlimited Credit Lines?” I could never imagine that my radical argument, an argument that has never been confirmed as true by any official source, was stated as a matter of fact in the New York Federal Reserve’s Doomsday Book. As I’ve been vindicated (to say the least) I will be returning to this issue in the future.

Another intriguing thing is that an entire bullet point is devoted to the 1975 memo I was denied on Attorney Client Privilege grounds. Nearly 50 years later, this key piece of the Federal Reserve’s emergency lending legal architecture is apparently too explosive for public view.

There’s simply too much in these 122 pages to discuss in this one piece. I will be relying on its content for years to come. On its own, it completely rewrites significant aspects of the Federal Reserve’s history. Even when the Doomsday Book doesn’t rewrite Federal Reserve history, it provides far more detail than you can get in any other source. This trove opens up so many fascinating research questions.

Unfortunately, the combination of the overly expansive use of the attorney client privilege exemption and the improper shielding of Federal Reserve Banks from FOIA will greatly inhibit pursuing these research questions. Most importantly, it keeps the legal history of the Federal Reserve’s emergency lending authority far too secret from the public — and thus to scrutiny. Luckily, the 30,000 pages of Board of Governors Minutes I got recently can help let in a little bit more light. We’ll talk about that next time — and for many years to come.