Fannie Mae, Freddie Mac, and FOIA: Information Access Policy for the Government-Sponsored Enterprises
Released: 2011-11-10T00:00:00

Summary:
The Freedom of Information Act (FOIA; 5 U.S.C. §552) grants the public presumptive access—without explanation or justification—to certain existing, identifiable, unpublished, executive branch agency records. FOIA includes nine categories of exemption from disclosure, including information that could prompt national security concerns, invade privacy, or damage financial markets, among other concerns. Disputes over the accessibility of requested records can be appealed administratively or ultimately settled in court.
Fannie Mae and Freddie Mac are congressionally chartered, stockholder-owned companies known as government-sponsored enterprises (GSEs). Their charters grant them special favorable treatment in return for supporting the nation's housing by limiting their businesses to purchasing existing mortgages and either holding them as investments or pooling them into mortgage-backed securities, which are sold to institutional investors. In addition, Fannie and Freddie are charged with meeting certain affordable housing goals.
In September 2008, as a result of losses and inadequate capital reserves, Fannie Mae and Freddie Mac agreed with the federal government to go into conservatorship. In conservatorship, the government takes control of a failing financial institution with the goal of returning it to financial health and stockholder control. Since Fannie Mae and Freddie Mac went into conservatorship, the government has purchased more than $150 billion in special stock issued by the two organizations. Since the financial crisis in 2008, the two GSEs have helped to finance more than half of all new mortgages in the country.
As stockholder-owned and -controlled companies, Fannie Mae and Freddie Mac would not normally be considered government agencies and would not appear to be covered by FOIA. On January 26, 2011, Representative Jason Chaffetz introduced the Fannie Mae and Freddie Mac Transparency Act of 2011 (H.R. 463) that would make Fannie Mae and Freddie Mac subject to FOIA by requiring them to be considered federal "agencies" for the purposes of FOIA. H.R. 463 was referred to the House Committee on Financial Services on March 23, 2011.
On May 25, 2011, Edward J. DeMarco, acting director of the Federal Housing Finance Agency, testified that making Fannie and Freddie subject to FOIA could generate operational, compliance, and legal costs.
On July 12, 2011, the House Committee on Financial Services' Subcommittee on Capital Markets and Government Sponsored Enterprises voted to approve the bill at markup, and it was then forwarded to the full committee. No further action has been taken on the bill.
This report examines some possible effects of applying FOIA to Fannie Mae and Freddie Mac and identifies some open questions that Congress may address in this context. The report analyzes how certain FOIA requirements and guidelines may pose concerns if they are applied to private institutions. The report explores cases in which members of the public sought information from an entity in federal conservatorship, as well as how Amtrak, a shareholder-owned company that is financially dependent on the federal government through grants and entitlements, administers FOIA.

subsections: section_title: Introduction
paragraphs: The Freedom of Information Act (FOIA; 5 U.S.C. §552) is often referred to as the embodiment of "the people's right to know" about the activities and operations of government. The act statutorily established a presumption of public access to information held by federal executive branch departments and agencies. Enacted in 1966, FOIA was designed to provide individuals the right to know how their government was operating. In addition to processing records requests and appropriately releasing requested records, FOIA requires additional agency actions, including the following:
Promulgation of regulations on fees that may be charged to process FOIA requests; Appointment of a FOIA liaison to help requesters with questions about their requests; Appointment of a chief FOIA officer to oversee the entity's FOIA administration; Design and implementation of a FOIA request tracking system to allow requesters to check on the status of their request; Creation of an annual report that includes a variety of statutorily required data on the entity's FOIA processing, including the number of requests received, processed, and pending for each fiscal year, and the number of exemptions applied each fiscal year; and Creation of a website or other telecommunications mechanism by which the public can access the annual report.
Fannie Mae and Freddie Mac are congressionally chartered, stockholder-owned companies known as government-sponsored enterprises (GSEs or the enterprises ) that receive special favorable treatment in return for limiting their businesses to purchasing existing mortgages and either holding them as investments or pooling them into mortgage-backed securities, which are sold to institutional investors. Some of the mortgages that Fannie and Freddie purchase must meet certain affordable housing goals. Despite the explicit denial in their charters of any federal backing, for many years, it has widely been believed that there is an implicit federal guarantee backing the GSEs. Because the guarantee is not explicit, it has been unclear exactly what actions the government might take to relieve financial stress on the GSEs and in many ways it is similar to the implicit guarantee behind financial entities that are "too big to fail." Nevertheless, the Housing and Economic Recovery Act of 2008 (HERA; P.L. 110-289 §1117) temporarily authorized the Secretary of the Treasury to purchase securities from the GSEs "in such amounts as the Secretary may determine." This implicit guarantee has allowed the two GSEs to borrow money from institutional investors at interest rates lower than other companies may pay; these rates are slightly higher than the Treasury pays.
In September 2008, as a result of losses and insufficient capital reserves, Fannie Mae and Freddie Mac agreed with their regulator, the Federal Housing Finance Agency (FHFA), to go into conservatorship with the goal of returning the GSEs to financial health. As conservator, FHFA assumes all powers of stockholders and the board of directors. At the time that the GSEs agreed to their voluntary conservatorship, each signed separate contracts with the Treasury that the government would provide financial support necessary to maintain a positive value to the GSEs.
Since the start of conservatorship, the government has purchased more than $150 billion in special preferred stock issued by the two GSEs. Since the financial crisis, the two GSEs have accounted for more than half of all new mortgages in the country.
On January 26, 2011, Representative Jason Chaffetz introduced the Fannie Mae and Freddie Mac Transparency Act of 2011 ( H.R. 463 ), which would make Fannie Mae and Freddie Mac subject to FOIA. H.R. 463 would, therefore, hold Fannie Mae and Freddie Mac accountable for all of FOIA's statutory requirements, including recordkeeping, records access, tracking requests, and promulgation of regulations in the Federal Register —"the official gazette of the United States government." For example, pursuant to FOIA, Fannie Mae and Freddie Mac would have to promulgate regulations in the Federal Register that clarify what fees a requester may be charged to process their records request. Also, Fannie Mae and Freddie Mac would have to train a FOIA-processing staff. The staff, pursuant to FOIA, would have 20 days upon receipt of a records request to notify requesters whether they will receive requested materials or whether the requested materials are protected from public release by one or more of FOIA's nine exemptions. If a requester believed the records he or she requested were improperly withheld, he or she could challenge the agency's response administratively, or, ultimately, in court. Fannie Mae and Freddie Mac would have to process administrative appeals and prepare for possible FOIA-related litigation.
On March 19, 2009, Attorney General Eric J. Holder wrote in a memorandum that the Department of Justice (DOJ) would "defend a denial of a FOIA request only if (1) the agency reasonably foresees that disclosure would harm an interest protected by one of the statutory exemptions, or (2) disclosure is prohibited by law." If H.R. 463 were enacted, it would appear that this memorandum would require modification to account for the special status of the GSEs and whether DOJ would specify different conditions for defending Fannie Mae's and Freddie Mac's decisions to withhold records requested pursuant to FOIA.
There are precedents for applying FOIA to an entity that is not a federal agency. In 1972, Congress enacted a law (P.L. 91-518) that explicitly applied FOIA's requirements to Amtrak, the National Railroad Passenger Corporation. In the congressional reports that accompanied the legislation that became P.L. 91-518, the Senate Committee on Commerce stated that the government's financial support of Amtrak warranted giving "the taxpaying public" access to "information about the conduct of Amtrak affairs." More information about Amtrak's history with FOIA is provided later in this report.
On July 12, 2011, the House Committee on Financial Services, Subcommittee on Capital Markets and Government Sponsored Enterprises forwarded H.R. 463 to the full committee by a voice vote. No further action has been taken on the bill.
Making Fannie and Freddie subject to FOIA raises a series of issues:
What kinds of records that are not now available from Fannie Mae, Freddie Mac, or other sources would be made public? When should private entities in federal conservatorship be considered federal agencies for the purposes of certain recordkeeping and records accessibility laws? Would making Fannie and Freddie subject to FOIA prompt serious concerns for private institutions that in the future are found in federal conservatorship? Would additional legislative action be required to allow Fannie Mae and Freddie Mac fully to comply with FOIA's requirements, including promulgation of regulations in the Federal Register ? Would the Department of Justice defend Fannie Mae and Freddie Mac if the denial of a records request is challenged in court? Would the application of FOIA to Fannie Mae and Freddie Mac apply to all records, or only those created during conservatorship? Would Fannie Mae's and Freddie Mac's confidential records be appropriately protected by FOIA's existing exemptions? What would be the cost for Fannie Mae and Freddie Mac to train and support FOIA staff? Could that staff be operational prior to an end to the conservatorship? Are there alternatives to FOIA to ensure appropriate oversight of Fannie Mae's and Freddie Mac's conservatorship? 
Not all of these questions can be answered in this report. This report examines the policy option of subjecting Fannie Mae and Freddie Mac to FOIA. It analyzes the costs and benefits of FOIA's administration and application. It then identifies additional policy options for Congress.
section_title: FOIA's Purpose
paragraphs: When Congress enacted FOIA in 1966, its primary purpose was to give the general public presumed access to certain federal records, as well as to provide citizens who are denied such access a formal procedure for legally challenging agencies that denied records requests. FOIA was amended in 1974, 1976, 1986, 1996, 2007, and 2010.
Making Fannie Mae and Freddie Mac subject to FOIA would give the public presumed access to the companies' records, and the companies would have to demonstrate why certain records should be withheld from release. As noted earlier in this report, Attorney General Eric J. Holder stated that DOJ would "defend a denial of a FOIA request only if (1) the agency reasonably foresees that disclosure would harm an interest protected by one of the statutory exemptions, or (2) disclosure is prohibited by law." As noted earlier, it is unclear whether DOJ would specify different conditions for defending Fannie Mae's and Freddie Mac's decisions to withhold records requested pursuant to FOIA.
Some Fannie Mae and Freddie Mac records may be available through other channels, including the Federal Elections Commission, FHFA, or by their own release. The next section considers some of the types of records that the public may request from Fannie Mae and Freddie Mac if H.R. 463 were adopted.
section_title: Possible FOIA Requests
paragraphs: As stockholder-owned and -controlled companies, Fannie Mae and Freddie Mac are not usually considered government agencies and would not appear to be covered by FOIA. However, while under conservatorship, the enterprises are controlled by FHFA. This conservatorship and the federal government's financial support have led to attempts to use FOIA to obtain information about the enterprises. This section analyzes these attempts and other instances where FOIA might be used.
FOIA requests for records related to Fannie Mae and Freddie Mac that are submitted to FHFA may raise questions over ownership and control of the records. It is unclear whether conservatorship affects whether certain records are considered federal government property or remain the property of Fannie Mae and Freddie Mac. A requested record must be "used, distributed, or incorporated" by the agency responding to the FOIA request in order for the agency to release it.
FOIA does not limit what records a requester can seek. FOIA requests, however, have certain limitations. As noted earlier, FOIA limits requests to existing records and delineates nine categories of exemption from public release that agencies may apply when processing requests. Thus while almost any record could be requested under FOIA, not all requested records might exist, and not all existing records are subject to release pursuant to FOIA. It is not possible to anticipate the universe of FOIA requests that could be made of Fannie Mae or Freddie Mac if they were to be subject to the act's requirements. Key areas of public interest, however, could include contract information, financial agreements, or detailed financial product information.
subsections: section_title: Amtrak and FOIA
paragraphs: Although FOIA was enacted to give the public access to information about the operations of federal government, Congress has, in at least one case, applied FOIA to a nongovernmental entity. In 1970, Congress enacted the Rail Passenger Service Act of 1970, which called for the creation of the National Railroad Passenger Corporation (now called Amtrak). The law required the corporation to operate as a "for profit corporation," and added that "the Corporation will not be an agency or establishment of the U.S. government." The law, however, explicitly granted any person access to "inspection and copying" of the corporation's records of shareholders and assets, regardless of how much or whether he or she owned its stock. The Corporation began operations in 1971.
In April 1972, the Senate Committee on Commerce reported H.R. 11417, a bill to amend the Rail Passenger Service Act. Included in the bill was a provision that would explicitly place Amtrak under FOIA's provisions. In the report, the committee wrote that it "believes that in view of the substantial Federal funds which are going to Amtrak, the taxpaying public is entitled to access the information about the conduct of Amtrak affairs." On June 22, 1972, Congress enacted P.L. 92-316, which included the Senate's FOIA provision.
In 1997, the Senate considered Amtrak's FOIA administration. Section 110(a) of the Amtrak Reform and Accountability Act of 1997 amended FOIA's application to Amtrak by limiting it to "any fiscal year in which Amtrak receives a subsidy." Amtrak has received a federal subsidy every year since its inception.
subsections: section_title: Promulgation of Regulations
paragraphs: As noted earlier in this report, FOIA includes requirements that aim to make FOIA administration more transparent and effective. Among those requirements is the promulgation of regulations to clarify how an agency plans to apply and administer FOIA. For example, 5 U.S.C. §552(4)(A)(i) requires agencies to promulgate regulations specifying the fees requesters may anticipate if they request records from the agency. Amtrak promulgated its FOIA regulations in the Federal Register . The regulations are now included in the Code of Federal Regulations at 49 C.F.R. §§701.1-701.12. 
Included in Amtrak's regulations was a clarification of the corporation's policy related to "business information." The regulation permits a submitter of business information to "use good faith efforts to designate" any portion of the information it provides as subject to protection from release pursuant to exemption b(4) of FOIA, which protects trade secrets and other business information. If a FOIA requester seeks the business information, Amtrak is required to notify the entity that provided the record and designated it as potentially eligible for protection under b(4). If the submitter objects to the release of the provided record, he or she is to be afforded the opportunity to submit a written statement to Amtrak detailing why he or she believes the record should be withheld. The record requester is also to be notified that Amtrak has contacted the submitter. Amtrak may consider the submitter's statement when it makes a final determination on the record's release. Amtrak must then notify the submitter if it chooses to release the record in spite of his or her objections.
section_title: Judicial Decisions26
paragraphs: As noted earlier, the expenditure of substantial taxpayer funds in connection with a private company has prompted Congress to subject this private company to FOIA. To date, however, Congress has not explicitly made the FOIA applicable to Fannie Mae or Freddie Mac, as private companies, nor has there been a judicial decision applying FOIA to either of these publicly traded, shareholder-owned companies. FOIA applies only to agencies in the executive branch of the federal government. FOIA defines "agency" to include "any executive department, military department, Government corporation, Government controlled corporation, or other establishment in the executive branch of the Government (including the Executive Office of the President), or any independent regulatory agency."
Determining whether an entity is an "agency" for purposes of FOIA has involved the courts in "comparing the powers and characteristics of the disputed entity with the statute and other agencies in lieu of adopting a standard test." Under the case law applicable in the District of Columbia federal circuit, an array of factors are considered including "[t]he performance of governmental functions by the entity, the presence of substantial government control over the entity's day-to-day operations, [the] authority of the entity to make and implement decisions, the nature of the government's financial involvement with the entity, the existence of a federal charter, and the status of the entity's employees." As an "independent regulatory agency," FHFA must comply with FOIA. Although Fannie Mae and Freddie Mac are regulated by FHFA and, since September 2008, have been under an FHFA conservatorship, it appears that they are not directly subject to FOIA. 
Since the two housing GSEs were placed in conservatorship in 2008, there has been one federal court case involving a FOIA request for their records. In it, the plaintiff, Judicial Watch, Inc., sought access to campaign contribution records which Fannie Mae and Freddie Mac had created prior to the conservatorship. On May 29, 2009, Judicial Watch filed the FOIA request with FHFA, which, on July 1, 2009, declined to provide the requested documents on the grounds that the two housing GSEs were private companies and that their records were not FHFA records because the FHFA had never looked at them. The court upheld the FHFA's argument, viewing the case to involve "the central issue ... [of] whether the requested documents are 'agency records' within the meaning of the FOIA." It found that they were not "agency records" by relying on a test derived from a Supreme Court case as interpreted by the U.S. Court of Appeals for the District of Columbia. 
Under the Supreme Court test, two factors are relevant: whether the agency has obtained the records in question and whether that agency has control of the records. The district court found that although the FHFA had obtained the records of Fannie Mae and Freddie Mae as their conservator and, thus, succeeding to title to the records, it did not have control of the records as required by FOIA. The appellate court upheld the district court on this issue. To determine whether FHFA had control of the documents, both courts applied a four-part test derived from an earlier case in which the U.S. Court of Appeals for the District of Columbia found that records held by researchers commissioned by the National Cancer Institute (NCI) to do research were "agency" records because the "NCI ordered creation of the materials, ... [planned] to take physical possession of [them] ..., indicated it will disclose the information ...[,] prohibited ... independent disclosures, and ... read and relied significantly on the information in writing articles and developing agency policies." The crucial requirement was that "[a]gencies must use or rely on the document[s] to perform agency business, and integrate it into their files, before it may be deemed an 'agency record.'" Applying this test to the Fannie Mae and Freddie Mac campaign contribution records, the district court found that although Fannie Mae and Freddie Mac voluntarily agreed to the conservatorship and, thus, to FHFA's taking control of their records, and although FHFA has "virtually unrestricted ... use of the records," "the records ... are not relevant to the supervisory mission of the FHFA and ..., for that reason, no agency employees have read or relied on the requested records" and "the FHFA ... plans to return the records to the Enterprises once the conservatorship ends...." For the appellate court, because the FHFA did not use the records, access to them would in no way further the objectives of the FOIA: 
[t]he public cannot learn anything about an agency decisionmaking from a document the agency neither created nor consulted, and requiring disclosure under these circumstances would do nothing to further the FOIA's purpose of 'open[ing] agency action to the light of public scrutiny.... Satisfying curiosity about the internal decisions of private companies is not the aim of FOIA, and there is no question that disclosure of the requested records would reveal nothing about decisionmaking at the FHFA."
There appears to be an analogy between the facts of this case and cases involving FOIA requests for documents held by failed banks under Federal Deposit Insurance Corporation (FDIC) receivership. The language concerning the FHFA's acquisition of rights to Fannie Mae and Freddie Mac by virtue of being appointed conservator parallels that respecting FDIC's appointment as receiver or conservator of a failed insured depository institution. Just as the FHFA, as conservator, succeeded to the title of the records of the two housing GSEs, the FDIC, as conservator or receiver of a failed bank, succeeds to the title of its records. Examination of FOIA cases with respect to a FDIC receivership or conservatorship, however, reveals no case in which the FDIC claimed that the requested records were not "agency" records. Because the FDIC generally uses conservatorship infrequently and then only on a temporary basis before determining how to resolve a failed institution, no FOIA case involving a FDIC conservatorship was discovered. Most of the receivership cases, moreover, involved records prepared by the failed institution for the FDIC or records which the FDIC, itself, had created in its handling of claims against the failed institution. The one case that was slightly different involved a request for information relating to a real estate development project of a subsidiary of a bank being operated by the FDIC as its receiver. Rather than claiming that the documents did not qualify as "agency records," the FDIC chose to defend its refusal to release the documents by claiming that the FDIC was under no obligation to disclose them because they were exempt from disclosure as "trade secrets and commercial or financial information obtained from a person and privileged or confidential" under FOIA's Exemption 4. 
section_title: Policy Options and Other Considerations
paragraphs: FHFA's conservatorship of Fannie Mae and Freddie Mac prompts questions about the recordkeeping and records access requirements that are or should be placed on these entities. This section will introduce some of these concerns and controversies and analyze potential resolutions and policy options for Congress.
One basic consideration is that FOIA currently applies only to executive branch government agencies and certain other government entities, including the U.S. Postal Service. Only one private company, Amtrak, has been required to implement FOIA. As part of the government, agencies are subject to many other laws, regulations, policies, and executive orders that require formalized methods of recordkeeping and public access. These requirements—which include the rulemaking process, open meetings requirements, and records maintenance—would add time and costs to GSE operations and have not historically been required of Fannie Mae and Freddie Mac. It is not clear how an entity that is an agency for FOIA purposes, but not an agency for other purposes, would balance these constraints or incorporate new requirements.
subsections: section_title: FOIA Costs
paragraphs: If H.R. 463 were enacted, Fannie Mae and Freddie Mac would incur start-up costs such as staff training and indexing existing records, and continuing operational costs such as staff, recordkeeping, record processing and litigation. 
One method of estimating what FOIA-related costs Fannie Mae and Freddie Mac could face is to examine the FOIA costs incurred by FHFA, the agency currently serving as the GSEs' conservator. For FY2010, FHFA reported receiving 116 FOIA requests, and reported processing 109 requests. FHFA reported that it employed the equivalent of 1.6 "full-time FOIA staff," and incurred $200,000 in FOIA processing costs and $20,000 in litigation costs in FY2010. For FY2009, FHFA reported receiving 118 requests, and processing 116. For FY2009, FHFA reported that it had one full-time FOIA staff, and that FOIA processing cost $150,000 and there were no litigation-related costs.
section_title: FOIA Exemptions
paragraphs: It is not clear what information would be affected if this bill were to become law. While FOIA, other laws, and executive branch policies like the Open Government Initiative require the federal government to operate in an open manner, companies usually consider certain business information to be information whose disclosure must be controlled for competitive advantage. Some FOIA exemptions, notably Exemption 4 for "trade secrets and commercial or financial information," likely would apply to possible records requests to Fannie Mae or Freddie Mac. As in the case of costs, examining FHFA's annual FOIA reports may provide some insight into what exemptions may apply to FOIA requests filed with Fannie Mae or Freddie Mac if H.R. 463 were enacted. In FY2010, for example, out of the 109 total requests processed by FHFA, the agency applied 36 exemptions to withhold certain information or records from release. The 36 exemptions fell within four of FOIA's exemption categories:
Nine claims under exemption four, which protects trade secrets and other business information; Fourteen claims under exemption five, which protects inter- or intra-agency memoranda or letters that would not be available by law except to an agency in litigation communications; Five claims under exemption six, which protects information that would infringe upon personal privacy; and Eight claims under exemption eight, which protects certain information relating to the regulation of financial institutions.
In FY2009, FHFA processed 116 requests and applied 80 exemptions, including three exemption two claims, which protect from disclosure records that are solely internal personnel rules and practices.
section_title: Considerations in Complying with FOIA
paragraphs: Under FOIA, an agency is required to establish procedures and policies for receiving and processing FOIA requests. This includes hiring staff to review FOIA requests, locate the appropriate records, and make copies. In other federal agencies, staff are hired under civil service laws and regulations, giving employees certain protections and benefits. It is not clear whether Fannie Mae's and Freddie Mac's new FOIA staff would be hired using civil service procedures, such as posting jobs through the Office of Personnel Management (OPM). Additionally, it is unclear whether these FOIA staff would be considered federal employees for purposes of pay, benefits, annuities, and protections. 
FOIA requires an agency to post information about FOIA request procedures on the agency's website, and to make annual reports to DOJ that include statistics on FOIA request receipts, processing, and costs. As noted earlier in this report, in FY2010 FHFA reported it employed 1.6 full-time FOIA staff to comply with the act's requirements. If H.R. 463 were enacted, it appears likely that Fannie Mae and Freddie Mac would require similar staff resources to meet FOIA's processing and reporting requirements. This staff would need to receive training in how to implement FOIA, which may add to startup time and costs. It is unclear how long Fannie Mae and Freddie Mac will remain in conservatorship. If the GSEs conservatorship were to end shortly after enactment, the preparation to administer FOIA could take longer than the conservatorship will last.
Another consideration is whether records created prior to FHFA's conservatorship would be covered by FOIA. Language in H.R. 463 provides that FOIA would apply to Fannie Mae and Freddie Mac "during any period that the Corporation is under conservatorship or receivership," but the legislation is silent on what records would be eligible for release pursuant to FOIA. Depending on how narrowly FOIA Exemption 4 (for trade secrets) is construed, information that was created in the expectation of confidentiality could be disclosed. In the context of conservatorship, release of such records could amount to taking valuable, confidential information (such as special arrangements with business partners) and releasing it to any requestor for a nominal processing fee. This disclosure could make return to stockholder control more difficult.
A related issue would be the applicability of FOIA after the GSEs leave conservatorship. It is unclear whether the GSEs would have to maintain certain recordkeeping or transparency requirements once conservatorship had ended. It is not clear if these records would be sent to the National Archives.
section_title: Legislative History
paragraphs: The Fannie Mae and Freddie Mac Transparency Act of 2011 ( H.R. 463 ), as introduced, would require Fannie Mae and Freddie Mac to adhere to FOIA's requirements. 
In a May 13, 2011, press release, Representative Chaffetz said the following regarding the GSEs:
Fannie and Freddie were chartered by the federal government. They're currently managed by board members chosen by the federal government. And the federal government has sunk at least $145 billion into Fannie and Freddie, with hundreds of billions more in potential liability. FOIA makes possible a level of transparency and accountability in federal agencies that is desperately needed here.
On May 23, 2011, H.R. 463 was referred to the House Committee on Financial Services, Subcommittee on Capital Markets and Government Sponsored Enterprises. On May 25, 2011, the subcommittee held a hearing entitled "Transparency, Transition and Taxpayer Protection: More Steps to End the GSE Bailout," which, in part, examined H.R. 463 . 
At the hearing, Edward J. DeMarco, acting director of the FHFA, testified that FOIA was not designed to apply to private companies like Fannie Mae and Freddie Mac. He continued:
FOIA's "core purpose" is to enhance "public understanding of the operations or activities of the government;" FOIA is "often explained as a means for citizens to know what their Government is up to." This core purpose is not served by applying FOIA to Fannie Mae and Freddie Mac, which are still private companies operating in conservatorship. They did not cease to be private legal entities when they were placed into conservatorship, nor did they become part of FHFA. 
The mandates that FHFA as conservator preserve and conserve the property and assets of the Enterprises, and minimize losses to the taxpayers, may be undermined by subjecting the Enterprises to FOIA, as they will incur significant operational and compliance costs in establishing and administering a function to respond to such information requests. FOIA requests made to the Enterprises would also lead directly to added legal administrative burdens on FHFA, as conservator.
Given that FOIA was not written to apply to private companies, there could also be significant litigation expense, as parties and courts grapple with unique interpretive questions. The draft raises significant collateral issues: if other private companies for which a government agency could be appointed as conservator or receiver—banks, thrifts, and even bank holding companies and nonbank financial companies—believe that they too could become subject to FOIA, then the boards of such companies, in an appropriate exercise of their fiduciary duty, may act to resist that appointment. Finally, there are many other avenues for stakeholders to obtain information from or about the Enterprises that have well-tested and appropriate safeguards. I urge you to consider carefully the harm that could be done by subjecting the Enterprises to FOIA.
David C. John, a senior research fellow at the Heritage Foundation, however, testified that subjecting Fannie Mae and Freddie Mac to FOIA could help other financial institutions from repeating their mistakes. He said:
Rep[resentative] Chaffetz's bill would enable citizens to better understand how these two entities failed at such a massive cost. It would also make it easier for private sector replacements to avoid the same errors, and to find and prosecute those officials who may have committed criminal acts that helped to weaken them. 
section_title: Related Legislation
paragraphs: A number of bills concerned with political campaign contributions by publicly traded companies have been introduced in the 112 th Congress. Like H.R. 463 , these bills could make the actions of publicly traded companies more transparent, but may prompt concerns related to private-sector autonomy or appropriate levels of information protection:
H.R. 2517 and S. 1360 , both titled the Shareholder Protection Act of 2011, would require publicly traded companies to obtain shareholder approval before making corporate campaign contributions. H.R. 2728 , the Corporate Politics Transparency Act, would require quarterly reports to stockholders of campaign contributions of more than $10,000 for any single candidate in any single election.
subsections: section_title: Appendix. FOIA Exemptions
paragraphs: FOIA exempts nine categories of records from the statute's rule of disclosure. These exceptions detail certain restrictions. The exemptions are as follows:
1. Information properly classified for national defense or foreign policy purposes as secret under criteria established by an executive order. 2. Information relating solely to agency internal personnel rules and practices. 3. Data specifically excepted from disclosure by a statute which either requires that matters be withheld in a non-discretionary manner or which establishes particular criteria for withholding or refers to particular types of matters to be withheld. 4. Trade secrets and commercial or financial information obtained from a person that is privileged or confidential. 5. Inter- or intra-agency memoranda or letters that would not be available by law except to an agency in litigation. 6. Personnel, medical, or similar files the disclosure of which would constitute an unwarranted invasion of personal privacy. 7. Certain kinds of investigatory records compiled for law enforcement purposes. 8. Certain information relating to the regulation of financial institutions. 9. Geological and geophysical information and data. (5 U.S.C. §552(b)).
For further information on the nine FOIA exemptions, see CRS Report R40766, Freedom of Information Act (FOIA): Issues for the 111 th Congress , by [author name scrubbed].