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UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA __________________________________________ ) UNITED WESTERN BANK, ) ) Plaintiff, ) ) v. ) ) OFFICE OF THE COMPTROLLER, ) OF THE CURRENCY, et al., ) ) Defendants. ) __________________________________________)

CIVIL ACTION

Case No. 11-408 (ABJ)

FDIC-CORPORATES MOTION FOR LIMITED INTERVENTION TO ADDRESS PRODUCTION OF FDIC DOCUMENTS The Federal Deposit Insurance Corporation in its corporate capacity (FDIC-C) has been advised that the Court, on February 7, 2012, granted Plaintiffs Motion to Compel in part and directed the Office of the Comptroller of the Currency (OCC) to produce certain FDIC documents, and further confirmed that order on February 9, 2012. The FDIC-C believes that such a production would be improper because the OCC is not permitted to produce the FDICs privileged documents without the FDICs consent, and because the documents contain material that is protected by the deliberative process privilege, the bank examination privilege, or both. Accordingly, the FDIC-C respectfully seeks leave to intervene on a limited basis to explain to the Court why it was proper for the OCC to withhold the documents. The FDIC-C respectfully acknowledges the Courts February 9, 2012 order noting that the FDIC did not previously seek leave to intervene to address this matter. When Plaintiff moved to compel, the FDIC discussed the matter with the OCC, and learned that

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the OCC planned to explain to the Court that the applicable statute and regulations prohibited the OCC from producing the FDICs privileged material. The FDIC agreed with the OCCs position and believed that the Motion to Compel should be denied on that basis, and elected not to make a separate filing that argued the same points. Further discussion with the OCC following the February 7, 2012 conference call has indicated that there may be confusion about the basis of the FDICs objections to the OCCs production of the documents, and the FDIC accordingly prepared this motion for limited intervention to dispel that confusion. We apologize for any inconvenience to the Court. In recognition of the imminent end of the discovery period and the need for prompt resolution of this issue, the FDIC-C is willing to expedite this matter. If, as the governing regulations provide, see 12 C.F.R. 309.6(b)(8)(i), Plaintiff submits its request for waiver of privilege directly to the FDIC, the FDIC will respond within no more than three business days. If the FDIC elects not to waive its privileges as to any of the documents, it will submit those documents to the Court for in camera review simultaneously with its response to Plaintiffs request. Alternatively, if the Court prefers, the FDIC will provide them for the Courts review immediately upon request. In either event, however, the FDIC respectfully requests fair consideration of its privilege concerns, and requests that the Court (1) grant the FDIC-C leave to intervene on a limited basis, and (2) amend its February 7, 2012 and February 9, 2012 orders to deny Plaintiffs Motion to Compel as to the FDIC materials in the OCCs custody. Pursuant to Local Rule 7(m), the FDIC-C has conferred with counsel for the parties. Plaintiff opposes this motion. Defendants do not oppose this motion.

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STATUTORY AND REGULATORY BACKGROUND When banking agencies share privileged documents with each other, as they often do, federal law requires them to safeguard that privilege: A [banking] agency shall not be deemed to have waived any privilege applicable to any information by transferring that information to or permitting that information to be used by . . . any other [banking] agency. 12 U.S.C. 1821(t)(1). The FDICs regulations further provide that its privileged documents may not be disclosed without its consent: In any instance in which any person has possession, custody or control of FDIC exempt records or information contained therein, all copies of such records shall remain the property of the Corporation and under no circumstances shall any person, entity or agency disclose or make public in any manner the exempt records or information without written authorization from the Director of the Corporation's Division having primary authority over the records or information as provided in this section. 12 C.F.R. 309.6(a). Specifically, third parties holding privileged FDIC records are required to decline to produce them without FDIC authorization: (b) If any . . . person who has custody of records belonging to the FDIC, is served with a subpoena, court order, or other process requiring . . . the production of any exempt record of the Corporation, such person shall promptly advise the General Counsel of such service, of the testimony and records described in the subpoena, and of all relevant facts which may be of assistance to the General Counsel in determining whether the individual in question should be authorized to testify or the records should be produced. . . . (c) Appearance by person served. Absent the written authorization of the Corporation's General Counsel, or designee, to disclose the requested information, any . . . person having custody of records of the Corporation, who is required to respond to a subpoena or other legal process, shall attend at the time and place therein specified and respectfully decline to produce any such record . . . basing such refusal on this section. 12 C.F.R. 309.7. The proper method for seeking privileged FDIC documents is a written request to the FDIC:

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Third parties seeking disclosure of exempt records or testimony in litigation to which the FDIC is not a party shall submit a request for discretionary disclosure directly to the General Counsel. Such request shall specify the information sought with reasonable particularity and shall be accompanied by a statement with supporting documentation showing in detail the relevance of such exempt information to the litigation, justifying good cause for disclosure, and a commitment to be bound by a protective order. 12 C.F.R. 309.6(b)(8)(i). FACTUAL BACKGROUND In connection with this litigation, the OCC reviewed the documents in its custody that were responsive to Plaintiffs discovery requests and determined that those documents included certain materials authored by FDIC personnel. Notably, the OCC found in its custody (pursuant to the responsibilities of then-Acting OTS Chairman John Bowman as Director on the FDIC Board) certain materials in connection with an FDIC Board meeting on November 9, 2010, consisting of a memorandum from the Directors of the FDICs Division of Resolutions and Receiverships and Division of Supervision and Consumer Protection addressing a possible receivership for United Western, an agenda reflecting the matters to be considered by the Board at the meeting, and e-mails forwarding the above materials.1 The OCC also determined that it had certain e-mails sent by FDIC examiners to OTS personnel regarding United Westerns liquidity, discussing the banks assets and summarizing the discussions between United Western and government regulators. The OCC informed the FDIC about those materials, and on October 7, 2011, the FDIC directed the OCC not to produce them, citing the prohibition

Plaintiff speculates, see Memorandum in Support of Motion to Compel (Mem.) at 13-14, that the documents in question are not FDIC materials. As detailed above, the documents were authored by FDIC personnel, and Plaintiffs assertion that the documents consist of numerous versions of the OTS Regulatory Profile of the Bank that are records created and maintained by the OTS is incorrect. Mem. at 13-14.

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in 12 C.F.R. 309.7(c) on the production of privileged FDIC material by third parties. Exhibit A. The OCC advised Plaintiff on October 11, 2011, that certain FDIC documents were being withheld, and forwarded to Plaintiff the FDICs October 7, 2011 letter, explaining that the FDIC had asserted privilege, that the OCC was required to respect the FDICs privilege, and that Plaintiff should contact the FDIC directly to request any waiver of that privilege. See Exhibit B. In light of the FDICs position, the OCC told Plaintiff that it should address any questions regarding the FDICs assertion of its privileges to that agency. Id. Inexplicably, Plaintiff failed to do so. Instead, Plaintiff wrote to the OCC on October 26, 2011, demanding that the OCC produce a privilege log regarding the withheld documents. The OCC responded on October 27, 2011, again pointing out that it had no authority to produce the documents and encouraging Plaintiff to contact the FDIC directly, and attaching a privilege log reflecting that all of the referenced documents were FDIC records withheld at the direction of the FDIC. Rather than heeding that advice, Plaintiff moved to compel, ignoring the statutory and regulatory authority set forth above. ARGUMENT The FDIC-C requests that the Court reconsider the portion of its February 7, 2012 and February 9, 2012 orders that granted Plaintiffs Motion to Compel as to the FDIC materials held by the OCC and identified by the OCC as responsive to Plaintiffs discovery requests. Under the governing statute and regulations, the proper avenue for seeking those documents is a request posed directly to the FDIC, and Plaintiff has made no such request. Furthermore, the documents plainly contain privileged material and

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should not be produced in any event. As noted above, should the Court direct Plaintiff to comply with 12 C.F.R. 309.6(b)(8)(i) by submitting a request directly to the FDIC, the FDIC will render its decision in no more than three business days, and will submit any documents not produced to the Court for in camera review, with proposed redactions of segregable factual information. Alternatively, the FDIC will submit the documents to the Court for its review immediately upon request. I. FDICS INTERVENTION TO DEFEND ITS PRIVILEGE IS APPROPRIATE. Federal Rule of Civil Procedure 24(a)(2) permits intervention by third parties who claim[] an interest relating to the property or transaction that is the subject of the action if disposing of the action may as a practical matter impair or impede the movants ability to protect its interests and existing parties do not fully represent the third partys interests. Here, the FDIC has an interest in preserving privileges attached to documents authored by its personnel, the courts February 7, 2012 order will destroy those privileges, and the OCC does not have the same interests as the FDIC in regard to the FDICs privileges. Hence, it is appropriate to permit the FDIC-C to intervene in his matter for the limited purposes of defending its privilege. Courts routinely permit intervention under Rule 24(a) by third parties seeking to protect privileges. See, e.g., United States v. AT&T Co., 642 F.2d 1285, 1292 (D.C. Cir. 1980) (Without the right to intervene in discovery proceedings, a third party with a claim of privilege in otherwise discoverable materials could suffer the obvious injustice of having his claim erased or impaired by the court's adjudication without ever being heard.) (citations omitted); see also Church of Scientology v. United States, 506 U.S. 9,

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11 (1992); CFTC v. Weintraub, 471 U.S. 343, 347 (1985); In re Sealed Case, 494 F.3d 139, 141 (D.C. Cir. 2007); In re Grand Jury, 475 F.3d 1299, 1304 (D.C. Cir. 2007); In re Sealed Case, 237 F.3d 657, 664 (D.C. Cir. 2001). The Court should likewise permit the FDIC to intervene on a limited basis to address this narrow discovery issue. II. THE OCC SHOULD NOT BE DIRECTED TO PRODUCE THE MATERIALS. The OCC should not be required to produce materials protected by the FDICs privilege. The governing statutes and regulations expressly forbid the OCC from producing the FDICs documents, as the OCC has repeatedly explained to Plaintiff. Specifically, 12 U.S.C. 1821(t)(1) states that [a] [banking] agency shall not be deemed to have waived any privilege applicable to any information by transferring that information to or permitting that information to be used by . . . any other [banking] agency. The FDICs regulations provide that FDIC materials remain the property of the FDIC even when they are in the possession, custody or control of another person, and require such a person to decline to produce those materials absent the FDICs consent. 12 C.F.R. 309.6(a), 309.7(c). Hence, the proper avenue for Plaintiff to pursue the materials in question was a request directed to the FDIC under 12 C.F.R. 309.6(b)(8)(i), under which a party seeking production of privileged or exempt material for purposes of litigation may submit a request to the FDICs General Counsel, specifying the information with reasonable particularity, showing good cause for disclosure, and agreeing to be bound by a protective order. Plaintiff has taken none of those steps. Plaintiff asserted in its motion that a party cannot refuse to produce documents on the basis of a third partys privilege, Memorandum in Support of Motion to Compel

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(Mem.). at 13, but that argument ignores common exceptions to that principle. In fact, it is routine for parties to resist discovery on the basis of privileges asserted by third parties, typically in the setting of common interest or joint defense agreements under which the sharing of privileged documents does not waive the privilege. See, e.g., United States v. Deloitte LLP, 610 F.3d 129, 141 (D.C. Cir. 2010); In re Sealed Case, 29 F.3d 715, 719 (D.C. Cir. 1994). Here, Congress has expressly provided that privileged material shared among banking agencies remains privileged, see 12 U.S.C. 1821(t); obviously, that provision would be meaningless if the agency holding the privileged material cannot refuse to produce it. Furthermore, Plaintiffs contention in its Motion to Compel that the FDICs regulations governing privileged material do not justify the withholding of that material because they are nothing more than Touhy regulations, Mem. at 14, ignores the law. Indeed, the D.C. Circuit, in a decision that Plaintiff cited repeatedly in its own Motion to Compel, reversed a district court holding that materials protected by the FDICs Touhy regulations (along with the Federal Reserves Touhy regulations) can be obtained from third parties: [T]he district courts assertion that Schreiber could obtain the bank examination reports and related correspondence from Bancorp was erroneous. The reports and records gathered or created by the agencies in the course of performing their regulatory responsibilities are deemed the records of the agencies; thus, the information Schreiber requests is available from Bancorp only with the permission of the agencies. See 12 C.F.R. 261.2, 261.11(g), 261.13, 261.14, 309.6(c)(6). Schreiber v. Society of Savings Bancorp, Inc., 11 F.3d 217, 222 (D.C. Cir. 1993).2 Many

Plaintiff asserts that Schreiber is distinguishable because the OCC is a federal agency, see Reply in Support of Motion to Compel (Reply) at 7, but that is a distinction without a difference. The FDICs regulations, cited in Schreiber, expressly prohibit any person, entity or agency from releasing FDIC materials without the FDICs consent. 12 C.F.R. 309.6(a) (emphasis added). Plaintiff also contends that

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other courts, considering these same regulations, have agreed. See, e.g., Bay Bank v. F/V Order of Magnitude, 2007 WL 737344, *2 (W.D. Wash. Mar. 7, 2007) (denying motion to compel production of FDIC documents from third party where requesting party had not sought the documents from the FDIC, as required by the FDICs regulations); Frankford Trust Co. v. Advest, Inc., 1995 WL 491300, *2 (E.D. Pa. Aug. 17, 1995) ([T]he bank examination privilege belongs to the agency that conducted the inspection, and the reports of the examination may only be obtained with permission from the [state banking agency] and the FDIC and not from third parties); National Union Fire Ins. Co. v. Midland Bancor, Inc. 159 F.R.D. 562, 571 (D. Kan. Jan. 11, 1995) (FDICs regulations prohibit the production of the examination reports by financial institutions, such as defendants) (citations omitted); In re One Bancorp Secs. Litig., 134 F.R.D. 4, 9 (D. Me. 1991) (The FDIC regulations explicitly state that its reports and documents remain the property of the FDIC and that they may not be released without its consent. The Court concludes that the bank examination reports are not in the custody, possession or control of One Bancorp within the meaning of Rule 34 of the Federal Rules of Civil Procedure, and thus they are not discoverable by Plaintiffs.); see also Interstate Production Credit Assn v. Firemans Fund Ins. Co., 128 F.R.D. 273, 276 (D. Or. 1989) (similar Touhy regulations prohibit production by third parties); Federal Home Loan Bank Bd. v. Superior Court of Ariz., 494 F. Supp. 924, 927 (D. Ariz.1980) (same); Colonial Savings and Loan Assn v. St. Paul Fire and Marine Ins. Co., 89 F.R.D. 481,

these regulations may be ignored because Plaintiffs discovery requests are court-approved, Reply at 7, but the Court had no occasion, when Plaintiff presented its proposed discovery, to address privilege concerns, as the OCC had not at that time identified the FDICs documents as responsive to the requests.

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483 (D. Kan. 1980) (same).3 The governing statute, 12 U.S.C. 1821(t), unequivocally preserves the FDICs privileges even when its materials are in another banking agencys custody, and the FDICs implementing regulations, 12 C.F.R. 309.6(a), 309.7(c), prohibit the OCC from producing the FDICs documents without the FDICs consent. The FDIC has not consented, see Exhibit A, and the Motion to Compel should therefore be denied. III. THE MATERIALS AT ISSUE ARE PRIVILEGED. In light of the above, the merits of the FDICs assertions of privilege are not before the Court; the Motion to Compel should be denied, and Plaintiff, should it wish to pursue these materials further, should seek them directly from the FDIC via a request under 12 C.F.R. 309.6(b)(8)(i). Should the Court believe it appropriate to consider further whether the materials are in fact privileged, however, it should find that the documents contain material that is protected by the deliberative process privilege and/or the bank examination privilege. A. The Deliberative Process Privilege Protects Board Materials.

The deliberative process privilege safeguards confidential intra-agency advisory opinions ... disclosure of which would be injurious to the consultative functions of government. NLRB v. Sears, Roebuck & Co., 421 U.S. 132, 149 (1975); Tax Analysts v.

Plaintiffs Motion to Compel relies on Merchants Bank v. Vescio, 205 B.R. 37, 40-41 (D. Vt. 1997), for the proposition that Touhy regulations do not authorize third parties to withhold protected material, Mem. at 14, but that is not the law in this Circuit. Plaintiff also relies on Watts v. SEC, 482 F.3d 501 (D.C. Cir. 2007), Houston Bus. Journal, Inc. v. OCC, 86 F.3d 1208, 1212 (D.C. Cir. 1996), and SEC v. Selden, 484 F. Supp. 2d 105, 108-09 (D.D.C. 2007), Mem. at 14, but all of those cases deal with subpoenas directed at the agencies asserting the privilege. Plaintiff has not obtained any such subpoenas here. As for McElya v. Sterling Medical, Inc., 129 F.R.D. 510 (W.D. Tenn. 1990), cited in Plaintiffs Reply, the governing statute expressly provided that [t]his section does not authorize withholding information from the public or limiting the availability of records to the public, and the court relied on that statute in holding that a third partys deposition testimony was not subject to the Navys control. Here, however, the relevant statute explicitly directs the OCC to maintain the FDICs privilege. 12 U.S.C. 1821(t).

10

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IRS, 294 F.3d 71, 80 (D.C. Cir. 2002). The privilege recognizes that officials will not communicate candidly among themselves if each remark is a potential item of discovery and front page news; the purpose of the privilege is to enhance the quality of agency decisions by protecting open and frank discussion among those who make them within the Government. Department of the Interior v. Klamath Water Users Protective Assn, 532 U.S. 1, 8-9 (2001). The deliberative process privilege protects documents reflecting advisory opinions, recommendations, and deliberations comprising part of a process by which governmental decisions and policies are formulated. Taxation with Representation Fund v. IRS, 646 F.2d 666, 677 (D.C. Cir. 1981). The privilege applies only to predecisional communications reflecting an agencys internal deliberations, however, and not to communications that explain a decision that has already been made. Tax Analysts, 294 F.3d at 80 (citations omitted); see also Judicial Watch, Inc. v. FDA, 449 F.3d 141, 151 (D.C. Cir. 2006) The Board materials in question plainly fall within the ambit of the deliberative process privilege. All of them are predecisional, in that they relate to and predate the FDIC Boards November 9, 2010 decision to authorize the FDICs Division of Resolutions and Receiverships to act as a receiver for United Western, and all of them are deliberative, in that they include recommendations (or brief summaries of recommendations for the Boards agenda) that are part of the FDICs decisionmaking process. These materials lie at the very heart of the deliberative process privileges concern for promoting candid discussions among agency decisionmakers, and the OCC properly withheld them.

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B.

All of the Materials Are Protected by the Bank Examination Privilege.

Furthermore, both the Board materials and the liquidity reports from the FDIC to OTS are protected by the bank examination privilege. That privilege, like the deliberative process privilege, protects agency opinions and recommendations. Schreiber v. Society of Savings Bancorp, Inc., 11 F.3d at 222. It is intended to ensure that communications between banks and government regulators are open and candid: Bank management must be open and forthcoming in response to the inquiries of bank examiners, and the examiners must in turn be frank in expressing their concerns about the bank. These conditions simply could not be met as well if communications between the bank and its regulators were not privileged. In re Subpoena, 967 F.2d at 633; accord In re Bankers Trust Co., 61 F.3d 465, 471 (6th Cir. 1995) (The primary purpose of the privilege is to preserve candor in communications between bankers and examiners, which those parties consider essential to the effective supervision of banking institutions. . . . [T]he privilege is designed to promote the effective functioning of an agency by allowing the agency and the regulated banks the opportunity to be forthright in all communications.). The privilege covers all manner of a banks affairs, including the classification of assets and the review of financial transactions. In re Subpoena, 967 F.2d at 633-34. The Board materials are protected by the bank examination privilege, as they contain agency opinions and recommendations that reflect regulators communications with United Western about concerns arising from the examination of the bank. Likewise, the liquidity reports from the FDIC to OTS relay the regulators conclusions about the banks liquidity position and summarize discussions between United Western and the regulators, and therefore contain privileged information. The OCC should not be directed

12

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to produce these materials. CONCLUSION For the foregoing reasons, the FDIC-C respectfully requests that the Court permit this limited intervention, and that it amend its February 7, 2012 and February 9, 2012 orders to deny Plaintiffs Motion to Compel as to the FDIC materials in the OCCs custody. Respectfully submitted, COLLEEN J. BOLES Assistant General Counsel BARBARA SARSHIK Senior Counsel _____/s/__________________________ DUNCAN N. STEVENS D.C. Bar No. 473550 Counsel Federal Deposit Insurance Corporation 3501 N. Fairfax Drive, D-7028 Arlington, VA 22226 dstevens@fdic.gov (703) 562-2402 (phone) (703) 562-2477 (fax) dstevens@fdic.gov Attorney for Federal Deposit Insurance Corporation in its corporate capacity February 10, 2012

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FDIC
Federal Deposit Insurance Corporation
550 17th Street, NW, Washington, DC 20429 Legal Division

October 7, 2011 By Electronic Delivery Christopher A. Sterbenz Office of the Comptroller of the Currency 250 E. Street, S.W. Washington, DC 20219 Re: United Western Bank v. 0CC, No. 11-408 (ABJ) Dear Chris: We are familiar with the above-referenced matter, as the FDIC was formerly a defendant (dismissed by court order on June 24, 2011). We understand that the court has permitted United Western to conduct limited discovery of the 0CC, and we have reviewed the discovery requests, filed with the court on September 1, 2011. Those requests generally seek communications between the OTS and the FDIC pertaining to the OTSs assessment of United Westerns solvency and viability. On September 22, 2011, you notified us that the 0CC had received discovery requests in the above-referenced action and had identified numerous FDIC documents in the OCCs custody, not previously produced as part of the administrative record, as responsive to one or more of United Westerns requests. The documents in question pertain to a meeting of the FDIC Board of Directors on November 9, 2010, and certain reports from FDIC examiners regarding United Westerns condition. We write to inform you of the FDICs position regarding the production of those documents, namely that the documents are within the scope of the deliberative process and/or bank examination privileges and should not be produced by the 0CC. Bank Examination Privilege The bank examination privilege is a qualified litigation privilege that has been created under common law to protect the confidentiality of bank supervisory information. In re Subpoena, 967 F.2d 630, 633 (D.C. Cir. 1992) (citing Bank ofAmerica Nat! Trust & Say. Ass n v. Douglas, 105 F.2d 100, 104-06 (D.C. Cir. 1939) ("[B]y unbroken custom[,] reports of bank examiners have been regarded as privileged."); In re Franklin Nat? Bank Securities Litig., 478 F.Supp. 577, 582 (E.D.N.Y. 1979). The court has deemed this privilege "within the penumbra of the deliberative process privilege," and recognized that the two privileges often apply to similar material. In reMidlantic Corp. ShareholderLitig., 1994 WL 750664, *2 (D.D.C. Oct. 24, 1994). Among other things, the bank examination privilege protects bank regulators internal documents, such as examination workpapers, to the extent that disclosure would reveal examiners conclusions and recommendations. Id. at *5; see also Principe v. Crossland Say., FSB, 149 F.R.D. 444, (E.D.N.Y. 1993) (bank examination privilege "protects from disclosure analyses, opinions and recommendations contained in internal agency documents relating to bank examinations"). FDIC materials that are within the bank examination privilege are exempt

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from release in response to Freedom of Information Act requests, under FOJA Exemption 5. 5 U.S.C. 552(b)(5); 12 C.F.R. 309.5(g)(5) (protecting "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"); Petroleum Information Corp. v. U.S. Dept. of Interior, 976 F.2d 1429, 1435 (D.C. Cir. 1992). Furthermore, the FDICs regulations restrict the disclosure of bank supervisory information: FOIA Exemption 8, as codified at 12 C.F.R. 309.5(g)(8), protects "[r]ecords that are contained in or related to examination, operating, or condition reports prepared by, on behalf of, or for the use of the FDIC or any agency responsible for the regulation or supervision of financial institutions." FDIC materials exempt from release under FOIA may not be released by third parties, including other government agencies, that hold those materials, absent written authorization from the FDIC. 12 U.S.C. 1828b(c)(1); 12 C.F.R. 309.6(a). When such third parties receive subpoenas or discovery requests that encompass the FDICs FOIA-exempt materials, they are required to decline to produce the materials. 12 C.F.R. 309.7(c). Hence, even if the commonlaw deliberative process privilege did not apply, bank examination materials would be exempt from release, and disclosure of FDIC examination materials would be prohibited. The appropriate process for seeking waiver of the privilege is for United Western to request release directly from the FDIC under 12 C.F.R. 309.6(b)(8). The FDIC has limited discretion to release exempt records, but it may do so where such information is relevant to the litigation, but only upon a demonstration of good cause justifying disclosure, and where a protective order has been entered that adequately protects the interests of the FDIC, the depository institution and third parties. See 12 C.F.R. 309.6(b)(8)(i). Deliberative Process Privilege The deliberative process privilege applies to documents reflecting deliberations that are part of an internal agency decision-making process. NLRB v. Sears, Roebuck & Co., 421 U.S. 132, 150 (1975) (privilege protects "documents reflecting advisory opinions, recommendations and deliberations comprising part of a process by which governmental decisions and policies are formulated"). The Supreme Court has recognized that the privilege "rests on the obvious realization that officials will not communicate candidly among themselves if each remark is a potential item of discovery and front page news." Department of the Interior v. Klamath Water Users Protective Ass n, 532 U.S. 1, 8-9 (2001). The intent of the privilege is to "enhance the quality of agency decisions by protecting open and frank discussion among those who make them within the Government." Id. at 9 (citations omitted); see also Coastal States Gas Corp. v. Department of Energy, 617 F.2d 854, 866 (D.C. Cir. 1980) (privilege intended to protect the free give-and-take that occurs as a decision is being made, such as expressions of opinion and analysis). As with the bank examination privilege, FDIC materials that are within the deliberative process privilege are exempt from release in response to FOIA requests under FOIA Exemption 5. As discussed above, disclosure of FOIA-exempt FDIC materials by third parties is prohibited under 12 C.F.R. 309.6(a) and 12 C.F.R. 309.7(c), and the proper process for seeking release of such documents is a request for waiver under 12 C.F.R. 309.6(b)(8)(1).

Case 1:11-cv-00408-ABJ Document 75-1 Christopher A. Sterbenz October 7, 2011

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In the FDICs view, the materials you have identified fall within the bounds of the bank examination privilege, the deliberative process privilege, or both. We therefore request that you withhold those materials from production in this matter and inform United Western that the appropriate procedure for seeking waiver of the privilege is a request directed to the FDIC under 12 C.F.R. 309.6(b)(8)(i). If you have any questions about the contents of the letter, please contact Duncan Stevens (703-562-2402) of my staff. In addition, the FDIC would be pleased to respond to any questions or concerns of the Court.

Sincerely,

Barbara Sarshik Senior Counsel

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C)
Comptroller of the Currency Administrator of National banks Washington, DC 20219

October 11, 2011 Mr. Andrew Sandier Mr. Samuel Buffone Ms. Liana Prieto Buckley Sandier LLP 1250 24th s, N.W. Suite 700 Washington, D.C. 20037 Subject: United Western Bank v. 0CC, C.A. 11-408 (ABJ)(D.D.C.) Dear Counsel: Enclosed with this letter you will please find Defendants executed responses to the Plaintiffs discovery requests. Also attached is acompact disc with responsive documents. Finally, a copy of a letter dated October 7, 2011 addressed to me from Barbara Sarshik, Senior Counsel for the Federal Deposit Insurance Corporation ("FDIC"), is also attached. Ms. Sarshiks letter asserts privilege on behalf of the FDIC with respect to certain information, as outlined in her letter and in the enclosed production. You should address any questions regarding the FDICs assertion of its privileges to that agency. Since I

Christopher A. Sterbenz Counsel Litigation Division cc: Ms. Barbara Sarshik, FDIC

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UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA __________________________________________ ) UNITED WESTERN BANK, et al., ) ) Plaintiffs, ) ) v. ) ) OFFICE OF THE COMPTROLLER ) OF THE CURRENCY, et al., ) ) Defendants. ) __________________________________________) ORDER The Federal Deposit Insurance Corporation, in its corporate capacity (FDIC-C), has moved for leave to intervene on a limited basis in order to address the privilege attached to certain documents in Defendants custody, and requests that the Court reconsider the portion of its February 7, 2012 order granting Plaintiffs Motion to Compel. Plaintiff opposes the motion. After careful consideration, the motion is GRANTED. The FDIC-C is granted leave to intervene for the limited purpose of asserting its privilege as to the above-referenced documents. The Court hereby amends its February 7, 2012 and February 9, 2012 orders to DENY Plaintiffs motion to compel as to the above-referenced documents. BY THE COURT:

CIVIL ACTION

Case No. 11-408 (ABJ)

____________________________________ HON. AMY BERMAN JACKSON UNITED STATES DISTRICT JUDGE

Case 1:11-cv-00408-ABJ Document 75-3

Filed 02/10/12 Page 2 of 2

Copies to: Andrew L. Sandler Samuel John Buffone Liana R. Prieto BUCKLEYSANDLER LLP 1250 24th Street, NW Suite 700 Washington, DC 20037 Kirby D. Behre PAUL, HASTINGS, JANOFSKY & WALKER, LLP 875 15th Street, NW 10th Floor Washington, DC 20005-2221 Theodore J. Abariotes UNITED WESTERN BANCORP, INC. 700 17th Street Suite 750 Denver, CO 80202 Julie L. Williams Christopher A. Sterbenz OFFICE OF THE COMPTROLLER OF THE CURRENCY 250 E Street, SW Washington, DC 20219 Duncan Norman Stevens FEDERAL DEPOSIT INSURANCE CORPORATION 3501 Fairfax Drive Arlington, VA 22226 Merritt A. Pardini FEDERAL DEPOSIT INSURANCE CORPORATION 3501 Fairfax Drive Arlington, VA 22226