Court Opinion

ID: 4079197
Source: CourtListenerOpinion
Date Created: 2016-10-04 12:02:17.634124+00
Date Added: 2024-06-11T14:33:16.547817
License: Public Domain

In the United States Court of Federal Claims
                                                No. 13-465C
                                   (Filed Under Seal: September 20, 2016)
                                 (Reissued for Publication: October 3, 2016) 1

*************************************
FAIRHOLME FUNDS, INC. et al.,       *
                                    *
                  Plaintiffs,       *                                Motion to Compel Discovery; RCFC 26(b);
                                    *                                Presidential Communications Privilege;
v.                                  *                                Deliberative Process Privilege; Bank
                                    *                                Examination Privilege; In Camera Review;
THE UNITED STATES,                  *                                Vaughn Index
                                    *
                  Defendant.        *
*************************************

Charles J. Cooper, Washington, DC, for plaintiffs.

Kenneth M. Dintzer, United States Department of Justice, Washington, DC, for defendant.

                                              OPINION AND ORDER

SWEENEY, Judge

        Before the court is plaintiffs’ motion to compel the production of documents currently
being withheld by defendant on the grounds of (1) the presidential communications privilege, (2)
the deliberative process privilege, (3) the bank examination privilege, or (4) a combination
thereof. Following an in camera review of a sample of the disputed documents, and for the
reasons set forth below, the court grants plaintiffs’ motion.

       Due to the length of this opinion, the court provides the following table of contents:

I.     BACKGROUND .................................................................................................................2
       A.   Nature of Plaintiffs’ Case.........................................................................................2
       B.   Procedural History ...................................................................................................3
       C.   Instant Discovery Dispute .......................................................................................5
II.    LEGAL STANDARDS .......................................................................................................6
       A.   RCFC 26(b)..............................................................................................................6
       B.   Privileges at Issue ....................................................................................................7
            1.      Presidential Communications Privilege .......................................................8
            2.      Deliberative Process Privilege ...................................................................11

       1
          This reissued Opinion and Order incorporates the agreed-to redactions proposed by the
parties on September 30, 2016. The redactions are indicated with bracketed ellipses (“[. . .]”).
            3.     Bank Examination Privilege ......................................................................16
III.   DISCUSSION ....................................................................................................................20
       A.   Defendant’s Declarants ..........................................................................................20
            1.     Mr. Dickerson ............................................................................................20
            2.     Mr. Pearl ....................................................................................................20
            3.     Mr. McQuaid..............................................................................................21
       B.   BlackRock Documents...........................................................................................22
            1.     Deliberative Process Privilege ...................................................................23
            2.     Bank Examination Privilege ......................................................................28
       C.   FHFA Presentation on DTA ..................................................................................28
            1.     Deliberative Process Privilege ...................................................................29
            2.     Bank Examination Privilege ......................................................................31
       D.   Forecasts ................................................................................................................31
            1.     Deliberative Process Privilege ...................................................................33
            2.     Bank Examination Privilege ......................................................................35
       E.   Risk Assessment Memoranda ................................................................................36
       F.   DeLeo E-mail .........................................................................................................37
       G.   Housing Finance Reform .......................................................................................40
            1.     Deliberative Process Privilege ...................................................................44
            2.     Presidential Communications Privilege .....................................................48
       H.   Housing Policies ....................................................................................................50
       I.   PSPA Modifications...............................................................................................55
       J.   GSE Projections .....................................................................................................63
       K.   Valuation Reports ..................................................................................................68
       L.   Estimates for the President’s Budget .....................................................................72
       M.   Potential Implications of the Terms of the PSPAs.................................................76
       N.   Other Documents Listed on the Privilege Log ......................................................79
IV.    CONCLUSION ..................................................................................................................80

                                                  I. BACKGROUND

                                            A. Nature of Plaintiffs’ Case

        In 2008, in response to the financial crisis, Congress enacted the Housing and Economic
Recovery Act of 2008 (“HERA”). Thereafter, acting pursuant to its authority under the HERA,
the Federal Housing Finance Agency (“FHFA”) placed the Federal National Mortgage
Association (“Fannie Mae”) and the Federal Home Loan Mortgage Corporation (“Freddie Mac”)
(collectively, the “Enterprises”) into conservatorship. In addition, the United States Department
of the Treasury (“Treasury Department”), also acting pursuant to the HERA, entered into
agreements to purchase securities (“government stock”) from the Enterprises. On August 17,
2012, the FHFA and the Treasury Department announced the “Net Worth Sweep,” implemented
by a “Third Amendment” to the government stock documents. As a result of the Net Worth
Sweep, the dividend due on the government stock rose from 10% to 100% of all current and
future profits. According to plaintiffs, holders of noncumulative preferred stock issued by the
Enterprises, this decision effected a total usurpation of their dividends and eliminated their right
to receive a liquidation preference upon the dissolution, liquidation, or winding up of the

                                                                -2-
Enterprises. Plaintiffs therefore claim that their property was taken without just compensation in
violation of the Fifth Amendment to the United States Constitution.

                                      B. Procedural History

        Plaintiffs filed their complaint on July 9, 2013. One month later, on August 9, 2013,
defendant filed a motion to stay all proceedings pending the resolution of various other cases—to
include another case before this court, a case pending before the United States Court of Appeals
for the Federal Circuit (“Federal Circuit”), and related cases pending in the United States District
Court for the District of Columbia (“district court”). Alternatively, defendant sought an
extension of time within which to file its answer. The court denied defendant’s motion for a stay
and ordered defendant to file its answer by December 9, 2013.

        On October 29, 2013, the court entered an order of consolidation, coordination, and
appointment. First, the court consolidated Cacciapelle v. United States, No. 13-466C, American
European Insurance Co. v. United States, No. 13-496C, and Dennis v. United States, No. 13-
542C, under the Cacciapelle caption and docket number (the “Cacciapelle Consolidated
Action”), and ordered that any class action hereafter filed in or transferred to this court on behalf
of common or preferred shareholders of the Enterprises relating to the August 2012 Third
Amendment or related government actions be consolidated with the Cacciapelle Consolidated
Action. Second, the court ordered that any class action hereafter filed in or transferred to this
court on behalf of common or preferred shareholders of the Enterprises relating to the September
2008 conservatorship or related government actions be consolidated with Washington Federal v.
United States, No. 13-385C. Third, the court ordered the parties to coordinate discovery, motion
practice, case management and scheduling, and other pretrial proceedings, as appropriate, in the
Cacciapelle Consolidated Action, Fisher v. United States, No. 13-608C, Shipmon v. United
States, No. 13-672C, and Washington Federal (collectively, the “Representative Actions”).
Fourth, the court ordered the parties to coordinate discovery, motion practice, case management
and scheduling, and other pretrial proceedings, as appropriate, in Fairholme Funds, Inc. v. United
States, No. 13-465C, and Arrowood Indemnity Co. v. United States, No. 13-698C (collectively,
the “Individual Actions”). Together, the Representative Actions and the Individual Actions were
to be referred to as “the Coordinated Actions.” Finally, the court appointed interim co-lead class
counsel for both the Cacciapelle Consolidated Action and Washington Federal.

        On December 9, 2013, in lieu of an answer, defendant filed a motion to dismiss pursuant
to Rules 12(b)(1) and (6) of the Rules of the United States Court of Federal Claims (“RCFC”).
Shortly thereafter, on December 20, 2013, plaintiffs filed a motion for a continuance to permit
jurisdictional discovery under RCFC 56(d). According to plaintiffs, defendant, in its motion to
dismiss, challenged various jurisdictional facts asserted by plaintiffs in their complaint, thereby
necessitating jurisdictional discovery. Alternatively, plaintiffs argued that if the court were to
consider matters outside the pleadings, defendant’s motion to dismiss would be converted into
one for summary judgment, thus necessitating discovery on factual issues beyond those related to
the court’s jurisdiction.

        Specifically, plaintiffs sought discovery to refute defendant’s assertions that (1)
plaintiffs’ claims were not yet ripe because whether the Enterprises will be solvent in the future

                                                 -3-
and whether the Enterprises will emerge from their conservatorships are both unknown, (2) the
court lacks jurisdiction over the FHFA because the FHFA is not the United States for purposes of
this court’s exercise of jurisdiction under the Tucker Act, and (3) plaintiffs have failed to state a
claim upon which relief can be granted for a Fifth Amendment taking. With regard to the third
assertion, plaintiffs sought discovery relating to the elements of their takings claim, see Penn
Cent. Transp. Co. v. City of N.Y., 438 U.S. 104, 124 (1978), to include information concerning
two of the three Penn Central factors: (1) the extent to which the regulation interfered with the
reasonableness of plaintiffs’ expectations regarding the Enterprises’ future profitability—the
financial health of the Enterprises in 2008 and expectations for their future viability, and (2) the
character of the governmental action—why the government entered into the Third Amendment. 2

        On February 3, 2014, the court issued orders in Washington Federal and Fisher, directing
plaintiffs to indicate, by February 19, 2014, whether they, like the Fairholme plaintiffs, intended
to seek jurisdictional discovery. On February 26, 2014, following receipt of the parties’
responses, 3 the court granted plaintiffs’ motion for discovery. Specifically, the court concluded
that discovery regarding (1) the Enterprises’ future profitability, (2) the lifespan of the
conservatorships, and (3) the relationship between the FHFA and the Treasury Department
would enable the parties to resolve factual issues regarding the court’s jurisdiction. The court
further concluded that additional discovery regarding (1) the Enterprises’ future solvency; (2) the
reasonableness of plaintiffs’ expectations regarding the Enterprises’ future profitability; and (3)
the reasons why the government allowed the preexisting capital structure and stockholders to
remain in place, including whether this decision was based on the partial expectation that the
Enterprises would be profitable again in the future, would enable the parties to resolve factual
issues regarding plaintiffs’ ability to state a claim upon which relief could be granted for a Penn
Central regulatory taking.

       Several months later, on July 16, 2014, the court granted in part and denied in part
defendant’s motion for a protective order. In that order, the court indicated that jurisdictional
discovery in this case would proceed in phases, beginning with the production of responsive
documents dating from April 1, 2008, through December 31, 2008, and from June 1, 2011,
through August 17, 2012. The court further directed defendant to respond to discovery requests
for nonprivileged information dating from August 18, 2012, through September 30, 2012,
regarding topics other than the future profitability of the Enterprises or whether and when the
conservatorships might end.

       While discovery was ongoing, defendant filed, on June 8, 2015, a supplemental motion to
dismiss. Briefing on the motion was subsequently stayed. On July 29, 2015, the court issued an
amended protective order. A second amended protective order was issued on November 9, 2015.

       2
           The third Penn Central factor is the economic impact of the regulation.
       3
          Both the Washington Federal plaintiffs and the Fisher plaintiffs indicated that they did
not intend to seek jurisdictional discovery beyond that sought by the Fairholme plaintiffs.
                                                -4-
                                  C. Instant Discovery Dispute

        The instant motion to compel discovery became fully ripe on June 10, 2016. First,
plaintiffs complain that defendant’s production in this case has been “haphazard, inconsistent,
and overbroad.” Pls.’ Mot. 4-10. Plaintiffs then cite instances where, for example, (1)
documents have been produced, only to be clawed back; (2) documents have been flagged as
withheld for privilege but then not listed on the privilege log; (3) defendant, after being asked by
plaintiffs to reconsider certain privilege claims, subsequently produced numerous documents—
suggesting to plaintiffs that the original privilege claims were overly broad; and (4) documents
were produced only after plaintiffs indicated that they would be filing a motion to compel. Id.

        Plaintiffs also claim that many of defendant’s specific privilege assertions “suffer from
serious deficiencies.” Id. at 2. With respect to the deliberative process privilege, plaintiffs argue
that (1) defendant failed to submit the requisite declaration from the appropriate agency head or
delegate in support of its assertion of the privilege, (2) defendant’s assertion of the privilege with
respect to FHFA documents is inconsistent with its litigation position that the FHFA is not the
United States, (3) there is reason to doubt that all of the withheld documents are in fact
deliberative and predecisional, and (4) the privilege is not absolute and in this case, plaintiffs’
need for the documents outweighs any interest defendant may have in keeping the documents
secret. Id. at 2-3. With respect to the bank examination privilege, plaintiffs argue that the
privilege was improperly asserted as to certain FHFA documents because the Enterprises are not
banks. Id. at 3. Finally, with respect to the presidential communications privilege, plaintiffs
claim that their need for the documents is substantial and that it outweighs defendant’s interest in
keeping the documents secret. Id.

         Defendant advances several arguments in its response to plaintiffs’ motion. First,
defendant counters that plaintiffs are unfairly “‘picking the lint’ off the Government’s massive
document production,” and “criticizing actions that demonstrate the Government’s good faith
efforts to work with Fairholme to resolve privilege disputes.” Def.’s Resp. 1-2. Defendant also
contends that it has properly invoked the three claimed privileges and that plaintiffs’ asserted
need for the withheld documents “demonstrates a deep misunderstanding of the law governing
Fairholme’s takings claims.” Id. at 2-3. Defendant argues:

               Properly pled takings claims are predicated on authorized actions
               of the Government that eliminate or diminish a cognizable
               property interest to an extent that requires the Government to pay
               just compensation. Thus, takings law does not concern itself with
               the subjective motivation issues that Fairholme insists are central
               to this case; certainly, those issues are not relevant to the specific
               topics of jurisdictional discovery authorized by the Court.
               Accordingly, Fairholme cannot lay the foundation necessary to
               overcome the deliberative process privilege, the bank examination
               privilege, or the presidential communications privilege, and the
               Court therefore should deny Fairholme’s motion.

Id. at 3.

                                                 -5-
        Pursuant to the court’s May 20 and May 25, 2016 orders, defendant submitted to the
court for in camera review hard copies of the documents identified in the Vaughn index attached
as Exhibit 1 to plaintiffs’ motion to compel. See Vaughn v. Rosen, 484 F.2d 820, 827-28 (D.C.
Cir. 1973). In addition, defendant submitted sworn declarations from agency head delegates
with respect to the three privileges claimed—the presidential communications privilege, the
deliberative process privilege, and the bank examination privilege. In their submissions, the
declarants asserted the privileges over nine categories of documents: (1) BlackRock documents,
(2) forecasts, (3) risk assessment memoranda, (4) housing finance reform, (5) housing policies,
(6) preferred stock purchase agreement (“PSPA”) modifications, (7) government sponsored
enterprise (“GSE”) projections, (8) valuation reports, and (9) potential implications of the terms
of the PSPAs; and three individual documents: (1) an FHFA presentation on deferred tax assets
(“DTA”), (2) the DeLeo e-mail, and (3) estimates for the President’s budget.

                                   II. LEGAL STANDARDS

                                         A. RCFC 26(b)

       “RCFC 26(b)(1) is the general provision governing the scope of discovery.” Sparton
Corp. v. United States, 77 Fed. Cl. 10, 21 n.14 (2007). It provides:

               Unless otherwise limited by court order, the scope of discovery is
               as follows: Parties may obtain discovery regarding any
               nonprivileged matter that is relevant to any party’s claim or
               defense and proportional to the needs of the case, considering the
               importance of the issues at stake in the action, the amount in
               controversy, the parties’ relative access to relevant information, the
               parties’ resources, the importance of the discovery in resolving the
               issues, and whether the burden or expense of the proposed
               discovery outweighs its likely benefit. Information within this
               scope of discovery need not be admissible in evidence to be
               discoverable.

RCFC 26(b)(1). RCFC 26(b) mirrors Rule 26(b) of the Federal Rules of Civil Procedure
(“FRCP”). 4 Sys. Fuels, Inc. v. United States, 73 Fed. Cl. 206, 215 (2006). The 1946 amendment
to FRCP 26(b) “ma[de] clear the broad scope of examination,” which included:

               not only evidence for use at the trial but also inquiry into matters in
               themselves inadmissible as evidence but which will lead to the
               discovery of such evidence. The purpose of discovery is to allow a
               broad search for facts, . . . or any other matters which may aid a
               party in the preparation or presentation of his case.

       4
          “[T]o the extent permitted by this court’s jurisdiction,” the RCFC “must be consistent
with the Federal Rules of Civil Procedure . . . .” RCFC 83(a); see also Zoltek Corp. v. United
States, 71 Fed. Cl. 160, 167 (2006) (noting that interpretation of a rule of the FRCP “informs the
Court’s analysis” of the corresponding rule of the RCFC).
                                                -6-
FRCP 26 advisory committee’s note to 1946 amendment; see also Int’l Paper Co. v. United
States, 36 Fed. Cl. 313, 317 (1996) (citing RCFC 26 and stating that “we are similarly mindful of
the generally broad scope of discovery in this court”).

        When FRCP 26(b)(1) was amended in 2000, the advisory committee “introduced a . . .
note of caution about the provision.” 8 Charles Alan Wright, Arthur R. Miller & Richard L.
Marcus, Federal Practice and Procedure § 2007 (3d ed. 2010). The amendments were “intend[ed
for] the parties and the court [to] focus on the actual claims and defenses involved in the action,”
FRCP 26(b)(1) advisory committee note to 2000 amendment, whereas previously parties “were
entitled to discovery of any information that was not privileged so long as it was relevant to the
‘subject matter involved in the pending action,’” 6 James Wm. Moore et al., Moore’s Federal
Practice ¶ 26.41 (3d ed. 2008) (quoting the 1983 version of FRCP 26(b)(1)). Accordingly, the
2000 amendments “narrowed the scope of party-controlled discovery to matters ‘relevant to any
party’s claim or defense.’” Id. (quoting FRCP 26(b)(1)). While courts would “retain[ ] authority
to order discovery of any matter relevant to the subject matter involved in the action for good
cause,” the amended rule was “designed to involve the court more actively in regulating the
breadth of sweeping or contentious discovery.” FRCP 26(b)(1) advisory committee’s note to
2000 amendment. Under the current standard, courts are advised to focus upon the parties’
specific claims or defenses when determining the scope of discovery. See id. Of course, “[t]his
does not mean that a fact must be alleged in a pleading for a party to be entitled to discovery of
information concerning that fact.” 6 Moore et al., supra, ¶ 26.41. Rather, “the fact must be
germane to a specific claim or defense asserted in the pleadings for information concerning it to
be a proper subject of discovery.” Id.

        Finally, a party’s ability to obtain pretrial discovery has additional constraints. RCFC
26(b)(2)(C) authorizes a court to limit “[t]he frequency or extent of discovery otherwise allowed
by these rules” if: (1) the discovery sought is “unreasonably cumulative or duplicative, or can be
obtained from some other source that is more convenient, less burdensome, or less expensive”;
(2) “the party seeking discovery has had ample opportunity to obtain the information by
discovery in the action”; or (3) the proposed discovery is outside the scope permitted by RCFC
26(b)(1).” RCFC 26(b)(2)(C)(i)–(iii). Alternatively, the court may limit discovery in response
to a motion filed pursuant to RCFC 26(c).

                                      B. Privileges at Issue

        The “public’s right to know” is a basic tenant of our democracy: “[T]he public . . . has a
right to every man’s evidence.” United States v. Nixon, 418 U.S. 683, 709 (1974). It serves to
protect liberty by holding government officials accountable for their actions and denying them
the ability to exercise power in the absence of accountability. Nevertheless, the public does not
possess an absolute right to access all government information. As a result, various executive
privileges have been recognized. These “exceptions to the demand for every man’s evidence are
not lightly created nor expansively construed, for they are in derogation of the search for truth.”
Id. at 710. Rather, these executive privileges attempt to balance the government’s need to
function smoothly by protecting the free and open exchange of ideas among government officials

                                                -7-
and their subordinates, as well as the government’s need to protect national security, with the
public’s right to monitor governmental actions taken on its behalf.

      The motion now before the court implicates two executive privileges: the presidential
communications privilege and the deliberative process privilege. A third privilege, the bank
examination privilege, is also at issue.

                           1. Presidential Communications Privilege

         “The strongest branch of executive privilege consists of what may be termed the
‘Presidential privilege,’ which rests in large part on the constitutional separation of powers,
affords the President of the United States considerable autonomy and confidentiality, and gives
‘recognition to the paramount necessity of protecting the Executive Branch from vexatious
litigation that might distract it from the energetic performance of its constitutional duties.’”
Sikorsky Aircraft Corp. v. United States, 106 Fed. Cl. 571, 575 (2012) (quoting Cheney v. U.S.
Dist. Court for D.C., 542 U.S. 367, 382 (2004)). The privilege is “rooted in the need for
confidentiality to ensure that presidential decisionmaking is of the highest caliber, informed by
honest advice and full knowledge.” In re Sealed Case, 121 F.3d 729, 750 (D.C. Cir. 1997). It is,
of course, this confidentiality that “ensures the expression of candid, objective, and even blunt or
harsh opinions and the comprehensive exploration of all policy alternatives before a presidential
course of action is selected.” Id. (internal quotation marks omitted).

        In Dairyland Power Co-op v. United States, 79 Fed. Cl. 659, 662-67 (2007) (“Dairyland
Power II”), the Honorable Edward J. Damich provides a detailed and thorough review of the
cases that discuss the presidential communications privilege. In Dairyland Power II, the
plaintiff, a nuclear utility, sued the United States Department of Energy for the partial breach of a
contract for the disposal of spent nuclear fuel and/or high-level radioactive waste. Id. at 660.
Before the court was the plaintiff’s motion to compel the production of five documents, in
unredacted form, over which the government had claimed the presidential communications
privilege. Id. In its analysis, the court considered three decisions: (1) the United States
Supreme Court’s (“Supreme Court”) decision in Cheney, 542 U.S. at 367, (2) the United States
Court of Claims’ (“Court of Claims”) decision in Sun Oil Co. v. United States, 514 F.2d 1020
(1975), and (3) the United States Court of Appeals for the District of Columbia Circuit’s (“D.C.
Circuit”) decision in In re Sealed Case, 121 F.3d at 729. 5 Dairyland Power II, 79 Fed. Cl. at
663-67.

       In Cheney, the plaintiffs—two public interest organizations—filed suit against the
National Energy Policy Development Group (“NEPDG”)—a group comprised of high-level
government officials and nonfederal government employees established by President George W.
Bush to develop a national energy policy—claiming that it failed to comply with the Federal

       5
          Aside from Sun Oil Co., the only reference to the presidential communications
privilege by the Federal Circuit or its predecessor, the Court of Claims, appears in Marriott Int’l
Resorts, L.P. v. United States, 437 F.3d 1302, 1305 n.3 (Fed. Cir. 2006), wherein the court, in a
footnote, quotes a passage from In re Sealed Case that compares the presidential communications
privilege to the deliberative process privilege and notes that both are executive privileges.
                                                -8-
Advisory Committee Act’s procedural and disclosure requirements. 542 U.S. at 372-73. The
district court, recognizing an inherent separation-of-powers issue, nevertheless allowed the
plaintiffs to conduct limited discovery to ascertain whether the nonfederal government
employees were regular participants at NEPDG meetings, reasoning that if they did not regularly
participate, the court could resolve the issue on statutory grounds. Id. at 375. The D.C. Circuit
denied the government’s subsequent motion for a writ of mandamus to vacate the discovery
order, holding that the government could instead seek relief through invocation of the
presidential communications privilege. Id. at 376-77. In doing so, the D.C. Circuit relied upon
the Supreme Court’s decision in Nixon, wherein the Court held:

               We conclude that when the ground for asserting privilege as to
               subpoenaed materials sought for use in a criminal trial is based
               only on the generalized interest in confidentiality, it cannot prevail
               over the fundamental demands of due process of law in the fair
               administration of criminal justice. The generalized assertion of
               privilege must yield to the demonstrated, specific need for
               evidence in a pending criminal trial.
418 U.S. at 713.

        On appeal, the Cheney Supreme Court vacated the decision of the D.C. Circuit, finding—
for a host of reasons—that the D.C. Circuit’s reliance on Nixon, a criminal case, was misplaced.
542 U.S. at 383-90. First, the Court stated that a request for information in a civil suit requires a
balancing of the “President’s generalized interest in confidentiality and the need for relevant
evidence in civil litigation,” whereas a request for information in a criminal case requires a
balancing of the President’s generalized interest in confidentiality and “the constitutional need
for relevant evidence in criminal trials.” Id. at 383. Second, the Court noted that the distinction
drawn by the Nixon Court between civil and criminal proceedings was not merely “a matter of
formalism,” and that, as the Court in Nixon recognized, “the need for information in the criminal
context is much weightier because our historic[al] commitment to the rule of law . . . is nowhere
more profoundly manifest than in our view that the twofold aim [of criminal justice] is that guilt
shall not escape or innocence suffer.” Id. at 384 (internal quotation marks omitted). Third, the
Court observed that withholding information from a court presiding over a criminal case would
effectively “hamper another branch’s ability to perform its essential functions,” where
withholding information in the context of civil discovery would not. Id. at 384-85. Fourth, the
Court noted that courts resolving such discovery disputes must consider the burden imposed on
the producing party:

               This Court has held, on more than one occasion, that the high
               respect that is owed to the office of the Chief Executive . . . is a
               matter that should inform the conduct of the entire proceeding,
               including the timing and scope of discovery, and that the
               Executive’s constitutional responsibilities and status [are] factors
               counseling judicial deference and restraint in the conduct of
               litigation against it.

                                                 -9-
Id. at 385 (citation and internal quotation marks omitted). Fifth, the Court noted that whereas
there was an inherent check on the scope of a criminal subpoena because, pursuant to the Federal
Rules of Criminal Procedure, it must meet standards of relevancy, admissibility, and specificity,
there is no such requirement in the context of a civil discovery request. Id. at 386-87.
Ultimately, the Cheney Supreme Court concluded that while the D.C. Circuit did not abuse its
discretion by failing to issue the writ, it “prematurely terminated its inquiry after the Government
refused to assert privilege and did so without even reaching the weighty separation-of-powers
objections raised in the case, much less exercised its discretion to determine whether the writ is
appropriate under the circumstances.” Id. at 391.

        In Sun Oil, the plaintiffs—two oil companies—sought discovery regarding the
government’s decision to deny their application for permission to erect an oil drilling platform
off of the coast of California, pursuant to the terms of their lease. 206 Ct. Cl. at 744-45. In
response to the plaintiffs’ request, former President Nixon, a private citizen, asserted the
presidential communications privilege over four documents created during his tenure as
President. Id. at 745. According to President Nixon:

               [A] distinction may be drawn between traditional ‘executive
               privilege,’ which could not be asserted by a private person because
               it relates to military, State, and national security matters, on the
               one hand, and on the other, absolute ‘presidential privilege’ which
               may be asserted by a former President as to other documents
               generated during his Administration.

Id. at 746. The United States withdrew its initial claim of privilege but supported President
Nixon’s claim of “a presumptive privilege for the confidentiality of presidential communications,
that is fundamental to the operation of Government and inextricably rooted in logic and the
separation of powers under the Constitution, and cannot simply disappear overnight because a
President leaves office.” Id. at 747-48. However, the United States did not claim that the
privilege is “inviolate.” Id. at 748. Instead, the United States noted that the privilege could be
overcome by a showing of need and relevance. Id. After reviewing the documents in camera,
the Court of Claims held that the privilege asserted by former President Nixon, whether termed
an executive or presidential privilege, was not absolute and—without needing to decide whether
the privilege follows a President after he has left the office—that “where a demonstrated need for
documents sought is clearly sufficient, on balance, to override a claim of privilege, the
documents must be produced.” Id. at 750.

        Finally, in In re Sealed Case, the issue presented was whether the presidential
communications privilege protected the release of documents pertaining to the White House
Counsel’s investigation into whether Agriculture Secretary Mike Espy had unlawfully accepted
gifts. 121 F.3d at 734-35. Id. Reviewing the district court’s decision to uphold the
government’s assertion of the privilege, the D.C. Circuit ultimately vacated the district court’s
decision and remanded it with an expanded definition of the privilege:

               Based on our review of the Nixon cases and the purpose of the
               presidential communications privilege, we conclude that this

                                               -10-
                 privilege extends to cover communications which do not
                 themselves directly engage the President, provided the
                 communications are either authored or received in response to a
                 solicitation by presidential advisers in the course of gathering
                 information and preparing recommendations on official matters for
                 presentation to the President. The privilege also extends to
                 communications authored or solicited and received by those
                 members of an immediate White House advisor’s staff who have
                 broad and significant responsibility for investigating and
                 formulating the advice to be given to the President on a particular
                 matter. We also hold that in order to overcome a claim of
                 presidential privilege raised against a grand jury subpoena, it is
                 necessary to specifically demonstrate why it is likely that evidence
                 contained in presidential communications is important . . . and why
                 this evidence is not available from another source.

Id. at 757.

       After reviewing and analyzing these three decisions, the court in Dairyland Power II,
concluded that the standard articulated in In re Sealed Case for evaluating the presidential
communications privilege was nevertheless the most appropriate one. See 79 Fed. Cl. at 667
(“[T]his Court concludes that the Sealed Case test comes closest to what the Supreme Court was
concerned about in Cheney.”). This court is persuaded by that conclusion. Thus, it adopts the
presidential communications privilege standard articulated by the D.C. Circuit in In re Sealed
Case, which provides for a shifting burden: if the government establishes that the
communications at issue qualify for the privilege, then the plaintiff must demonstrate why the
evidence is important to its case and unavailable from another source. See 121 F.3d at 757.

                                 2. Deliberative Process Privilege

        The deliberative process privilege protects the “decision making processes of government
agencies” and therefore applies to “documents reflecting advisory opinions, recommendations
and deliberations comprising part of a process by which governmental decisions and policies are
formulated.” NLRB v. Sears, Roebuck & Co., 421 U.S. 132, 150 (1975) (citations and internal
quotation marks omitted); accord Dep’t of the Interior v. Klamath Water Users Protective Ass’n,
532 U.S. 1, 8 (2001) (“Klamath”). In addition to protecting these internal communications from
disclosure, the privilege “protect[s] against premature disclosure of proposed policies before they
have been finally formulated or adopted; and . . . protect[s] against confusing the issues and
misleading the public by dissemination of documents suggesting reasons and rationales for a
course of action which were not in fact the ultimate reasons for the agency’s action.” Coastal
States Gas Corp. v. Dep’t of Energy, 617 F.2d 854, 866 (D.C. Cir. 1980), quoted in Dairyland
Power Co-op v. United States, 77 Fed. Cl. 330, 336 (2007) (“Dairyland Power I”). Finally, it “is
a creation of federal common law and thus is recognized under [Federal Rule of Evidence]
501.” 6 Sikorsky Aircraft Corp., 106 Fed. Cl. at 576; accord Texaco P.R., Inc. v. Dep’t of

        6
            Rule 501 of the Federal Rules of Evidence (“FRE”) provides:
                                                -11-
Consumer Affairs, 60 F.3d 867, 883 (1st Cir. 1995) (“Since local law does not supply the rule of
decision [as to the appellant’s claim], federal common law governs our analysis of the wrangling
over privileges.”); Scott v. Bd. of Educ. of E. Orange, 219 F.R.D. 333, 336 (D.N.J. 2004)
(“When a claim is based on federal law, . . . issues relating to privilege are governed by federal
common law.”).

        The privilege is not, however, blind to the “countervailing public interest in the
production of evidence needed to establish truth through litigation.” Dairyland Power I, 77 Fed.
Cl. at 336. “In the adversary system of establishing truth by litigation, this [interest] is very
important, for such a system requires development of all relevant facts to produce real justice
through due process.” Cetron Elec. Corp. v. United States, 207 Ct. Cl. 985, 989 (1975).
Nevertheless, the privilege is ultimately based 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, and its object is to enhance the quality of agency decisions[ ] by protecting open
and frank discussion among those who make them within the Government.” Klamath, 532 U.S.
at 8-9 (citations and internal quotation marks omitted). This is not to say, however, that the
privilege can be used by the government to preclude the disclosure of relevant evidence when the
government’s intent and subjective motivation are the subject of the litigation—in those
instances, the privilege does not apply. See In re Subpoena Duces Tecum Served on Office of
Comptroller of Currency, 156 F.3d 1279, 1279 (D.C. Cir. 1998) (“[T]he government’s
deliberative process privilege does not apply when a cause of action is directed at the
government’s intent. . . . [T]he privilege . . . applies to circumstances where the government
decisionmaking process is ‘collateral’ to a plaintiff’s claim.”); Starr Int’l Co. v. United States,
No. 11-779C, slip op. at 6 (Fed. Cl. Nov. 6, 2013) (“[T]he deliberative process privilege is
unavailable to the Government when a plaintiff’s cause of action is directed at an agency’s
subjective motivation.”); Dunnet Bay Constr. Co. v. Hannig, No. 10-3051, 2012 WL 1599893, at
*3 (C.D. Ill. May 7, 2012) (“The deliberative process privilege, however, does not apply when
the lawsuit puts at issue the intent of the officials making the governmental policy decision. . . .
In such circumstances, the deliberative process privilege must yield to the interests of
determining the governmental agents’ intent.”). But see First Heights Bank, FSB v. United
States, 46 Fed. Cl. 312, 321 (2000) (“Although the court agrees with the D.C. Circuit’s
observation in In re Subpoenas [sic] that assertions of the deliberative process privilege present
unique problems when the Government’s intent is at issue, the court also believes that Federal
Circuit precedent on this question favors continued use of a case-by-case analysis to determine

               The common law—as interpreted by United States courts in the
               light of reason and experience—governs a claim of privilege
               unless any of the following provides otherwise:

                • the United States Constitution;
                • a federal statute; or
                • rules prescribed by the Supreme Court.

               But in a civil case, state law governs privilege regarding a claim or
               defense for which state law supplies the rule of decision.
                                               -12-
whether or not a plaintiff’s need for particular evidence can overcome the Government’s interest
in maintaining the confidentiality of internal deliberations.”).

        In order to assert the deliberative process privilege, the government must first satisfy
three procedural requirements. Dairyland Power I, 77 Fed. Cl. at 336-37. First, the government
must invoke the privilege. Id. While that authority lies with the head of the relevant federal
agency, such authority may also be delegated. Marriott Int’l Resorts, L.P., 437 F.3d at 1308;
accord Sikorsky Aircraft Corp., 106 Fed. Cl. at 577. “The government official to whom
authority is delegated may assert the privilege only after ‘personal consideration’ and review of
the documents at issue.” Sikorsky Aircraft Corp., 106 Fed. Cl. at 577 (quoting Pac. Gas & Elec.
Co. v. United States, 70 Fed. Cl. 128, 134 (2006)). Moreover, the delegation should only be
“made to a subordinate whose expertise makes him or her well suited to the task of determining
whether the privilege is applicable.” Id. Second, the government “must state with particularity
what information is subject to the privilege.” Walsky Constr. Co. v. United States, 20 Cl. Ct.
317, 320 (1990). Finally, the government must justify its invocation of the privilege, Deseret
Mgmt. Corp. v. United States, 76 Fed. Cl. 88, 95 (2007), by providing “precise and certain
reasons for maintaining the confidentiality of the requested document,” Walsky Constr. Co., 20
Cl. Ct. at 320 (internal quotation marks omitted). See also Greenpeace v. Nat’l Marine Fisheries
Serv., 198 F.R.D. 540, 543 (W.D. Wash. 2000) (“Like all evidentiary privileges that derogate a
court’s inherent power to compel the production of relevant evidence, the deliberative process
privilege is narrowly construed.”) quoted in Deseret Mgmt. Corp., 76 Fed. Cl. at 95.

        The government must also satisfy two substantive requirements to assert the deliberative
process privilege. Dairyland Power I, 77 Fed. Cl. at 337. Specifically, it must show that each
document is both predecisional and deliberative. Walsky Constr. Co., 20 Cl. Ct. at 320. A
predecisional document is one that “address[es] activities ‘[a]ntecedent to the adoption of an
agency policy.’” Id. (quoting Jordan v. U.S. Dep’t of Justice, 591 F.2d 753, 774 (D.C. Cir.
1978)). In other words, “[a] document is predecisional if it precedes, in temporal sequence, the
decision to which it relates. Accordingly, to approve exemption of a document as predecisional,
a court must be able to pinpoint an agency decision or policy to which the document
contributed.” Senate of the Commonwealth of P.R. v. U.S. Dep’t of Justice, 823 F.2d 574, 582
(D.C. Cir. 1987) (internal quotation marks omitted), quoted in Walsky Constr. Co., 20 Cl. Ct. at
320; accord Abramson v. United States, 39 Fed. Cl. 290, 294-95 (1997); see also NLRB, 421
U.S. at 151 (“Manifestly, the ultimate purpose of [the deliberative process privilege] is to prevent
injury to the quality of agency decisions. The quality of a particular agency decision will clearly
be affected by the communications received by the decisionmaker on the subject of the decision
prior to the time the decision is made. However, it is difficult to see how the quality of a
decision will be affected by communications with respect to the decision occurring after the
decision is finally reached; and therefore equally difficult to see how the quality of the decision
will be affected by forced disclosure of such communications, as long as prior communications
and the ingredients of the decisionmaking process are not disclosed.”); Texaco P.R., Inc., 60
F.3d at 884-85 (“Because the deliberative process privilege is restricted to the intra-
governmental exchange of thoughts that actively contribute to the agency’s decisionmaking
process, factual statements or post-decisional documents explaining or justifying a decision
already made are not shielded.”); cf. Mead Data Cent., Inc. v. U.S. Dep’t of the Air Force, 566
F.2d 242, 257 (D.C. Cir. 1977) (“It would exalt form over substance to exempt documents in

                                               -13-
which staff recommend certain action or offer their opinions on given issues but require
disclosure of documents which only ‘report’ what those recommendations and opinions are.”);
Ford Motor Co. v. United States, 94 Fed. Cl. 211, 223 (2010) (applying the deliberative process
privilege to documents created after the date of the decision because the documents recount
predecisional deliberations). Thus, “[s]ubjective documents which reflect the personal opinion
of the writer, rather than the policy of the agency[,] are considered privileged information
because they are predecisional.” Deseret Mgmt. Corp., 76 Fed. Cl. at 95 (internal quotation
marks omitted).

         A deliberative document is one that “address[es] ‘a direct part of the deliberative process
in that it makes recommendations or expresses opinions on legal or policy matters.’” Walsky
Constr. Co., 20 Cl. Ct. at 320 (quoting Vaughn v. Rosen, 523 F.2d 1136, 1143-44 (D.C. Cir.
1975) (“Vaughn II”)); accord Confidential Informant 59-05071 v. United States, 108 Fed. Cl.
121, 132 (2012). In other words, deliberative documents are those that are “a part of the agency
give-and-take of the deliberative process by which the decision itself is made.” Vaughn II, 523
F.2d at 1144, quoted in Walsky Constr. Co., 20 Cl. Ct. at 320. Thus, while confidential intra-
agency advisory opinions may be protected as deliberative documents, Kaiser Aluminum &
Chem. Corp. v. United States, 157 F. Supp. 939, 946 (Ct. Cl. 1958), “factual or investigative
material” is not, “except as necessary to avoid indirect revelation of the decision-making
process,” Scott Paper Co. v. United States, 943 F. Supp. 489, 496 (E.D. Pa. 1996). Accord Lead
Indus. Ass’n v. Occupational Safety & Health Admin., 610 F.2d 70, 85 (2d Cir. 1979) (“If the
factual materials are ‘inextricably intertwined’ with policy making recommendations so that their
disclosure would ‘compromise the confidentiality of deliberative information that is entitled to
protection under [Freedom of Information Act (“FOIA”)] Exemption 5[, which protects from
disclosure inter or intra-agency memoranda or letters that would not be available by law to a
party other than a party in litigation with the agency],’ the factual materials themselves fall
within the exemption.” (quoting EPA v. Mink, 410 U.S. 73, 92 (1973)). Ultimately, when
evaluating a claim of deliberative process privilege, “[t]he test is whether the material is ‘so
candid or personal in nature that public disclosure is likely in the future to stifle honest and frank
communication within the agency.’” Exxon Corp. v. Dep’t of Energy, 91 F.R.D. 26, 43 (N.D.
Tex. 1981) (quoting Coastal States Gas Corp., 617 F.2d at 866).

       Finally, the court must balance the parties’ competing interests:

               The privilege is a qualified privilege. After the government makes
               a sufficient showing of entitlement to the privilege, the court
               should balance the competing interests of the parties. Thus, a
               claim of executive privilege requires a two-step review by the
               court. First, the court must decide whether the communications are
               in fact privileged. The government has the burden of showing
               privilege at this first step. Second, the court must balance the
               parties’ interests. At this second step, the party seeking discovery

                                                -14-
               bears the burden of showing that its need for the documents
               outweighs the government’s interests. 7

Scott Paper Co., 943 F. Supp. at 496 (footnote added) (citation omitted). This requisite
balancing of competing interests is, in turn, accomplished by the court’s consideration of five
factors: 8

               “(i) the relevance of the evidence sought to be protected; (ii) the
               availability of other evidence; (iii) the ‘seriousness’ of the
               litigation and the issues involved; (iv) the role of the government
               in the litigation; and (v) the possibility of future timidity by
               government employees who will be forced to recognize that their
               secrets are violable.”

In re Subpoena Served Upon the Comptroller of the Currency, 967 F.2d 630, 634 (D.C. Cir.
1992) (“In Re Subpoena”) (quoting In re Franklin Nat’l Bank Sec. Litig., 478 F. Supp. 577, 583
(E.D.N.Y. 1979), quoted in Dairyland Power I, 77 Fed. Cl. at 338. “[T]he deliberative process
privilege is a discretionary one. In deciding how to exercise its discretion, an inquiring court
should consider, among other things, the interests of the litigants, society’s interest in the
accuracy and integrity of factfinding, and the public’s interest in honest, effective government.”
Texaco P.R., Inc., 60 F.3d at 884 (internal quotation marks omitted); accord In re Franklin Nat’l
Bank Sec. Litig., 478 F. Supp. at 582 (noting that “the government’s interest in nondisclosure”
must be weighed against “the interest of the litigants, and ultimately of society, in accurate
judicial fact finding”). Notably, where the disclosure of information is subject to a protective
order, the risk that such disclosure will have a chilling effect on future deliberations by
government employees is diminished. See Dairyland Power I, 77 Fed. Cl. at 339 (“[I]n a
litigation context, where the rules of discovery allow a court ‘to protect a party or person from
annoyance [or] embarrassment’ through a protective order, RCFC 26(c), limited disclosure of
deliberative process documents should be less likely to result in significant harm to policy
debates within an agency.”); accord Pac. Gas & Elec. Co., 70 Fed. Cl. at 142 n.12 (noting that
“any need the government might have for confidentiality . . . is diminished by the fact that the
court has issued a Protective Order in this case stating that ‘[c]onfidential [m]aterial shall be used
by the receiving party solely for the purpose of conducting litigation in the . . . cases pending in

       7
           In Marriott Int’l Resorts, L.P., the Federal Circuit stated that “a showing of compelling
need can overcome the qualified deliberative process privilege.” 437 F.3d at 1307. One year
later, in Dairyland Power I, the Court of Federal Claims held that “the use of the phrase
‘compelling need’ by the Federal Circuit in Marriott did not elevate the standard for overcoming
the deliberative process privilege.” 77 Fed. Cl. at 338. This court agrees with the holding in
Dairyland Power I and notes further that in Marriott Int’l Resorts, L.P., the Federal Circuit stated
that “a showing of compelling need can overcome the qualified deliberative process privilege,”
437 F.3d at 1307, but did not state that such a showing was required to overcome the privilege.
       8
          No balancing of competing interests is required where the government has waived the
deliberative process privilege by either previously producing the requested documents or by
previously providing testimony as to the same subject matter covered by the documents. See
Alpha I, L.P. v. United States, 83 Fed. Cl. 279, 290 (2008).
                                                -15-
the United States Court of Federal Claims and not for any business or other purpose
whatsoever.’”).

                                3. Bank Examination Privilege

         The bank examination privilege is a common-law privilege derived “out of the practical
need for openness and honesty between bank examiners and the banks they regulate, and is
intended to protect the integrity of the regulatory process by privileging such communications.”
Wultz v. Bank of China Ltd., 61 F. Supp. 3d 272, 282 (S.D.N.Y. 2013) (internal quotation marks
omitted). Its purpose is to protect “communications between banks and their examiners in order
to preserve absolute candor essential to the effective supervision of banks.” Id. (internal
quotation marks omitted); accord In re Subpoena Served Upon the Comptroller of the Currency,
967 F.2d at 634 (“Bank safety and soundness supervision is an iterative process of comment by
the regulators and response by the bank. The success of the supervision therefore depends vitally
upon the quality of communication between the regulated banking firm and the bank regulatory
agency.”). As with all common-law privileges governed by FRE 501, the bank examination
privilege should be “narrowly construed—extended only as far as needed to effectuate [its]
utilitarian purpose[].” Evergreen Trading, LLC v. United States, 80 Fed. Cl. 122, 127 (2007).
Finally, the bank examination privilege is qualified and may be overcome:

              If the documents fall within the privilege, a court can override the
              privilege if the requesting party demonstrates good cause. [T]he
              privilege may be defeated where necessary to promote the
              paramount interest of the Government in having justice done
              between litigants, . . . or to shed light on alleged government
              malfeasance, . . . or in other circumstances when the public’s
              interest in effective government would be furthered by disclosure.
              In order to evaluate claims of good cause, courts balance the
              competing interests of the party seeking the documents and those
              of the government, taking into account factors such as the
              following:

                1) the relevance of the evidence sought to be protected;

                2) the availability of other evidence;

                3) the “seriousness” of the litigation and the issues involved;

                4) the role of the government in the litigation; and

                5) the possibility of future timidity by government employees
                who will be forced to recognize that their secrets are violable.

Wultz, 61 F. Supp. 3d at 282 (footnotes and internal quotation marks omitted).

                                               -16-
         The Federal Circuit has not had the occasion to address the viability of the bank
examination privilege. 9 However, the privilege—and its application to the FHFA—has been
thoroughly considered by the United States District Court for the Southern District of New York.
In FHFA v. JPMorgan Chase & Co., 978 F. Supp. 2d 267, 273 (S.D.N.Y. 2013), the court
examined “whether the distinctive necessity for candid and informal regulation of the banking
sector—stemming from both practical necessity of day-to-day bank regulation, as well as from
necessity to maintain public confidence in the financial system—which undergirds the bank
examination privilege, applies also to FHFA’s regulation of the [Enterprises],” and concluded
that it did. First, the court noted that both bank regulators and the FHFA are concerned with
“ensuring adequate capitalization and liquid and efficient markets,” and ensuring the stability of
“the U.S. economy and financial system.” Id. at 274. Emphasizing the significance of the
second factor, the court stated: “Given that ‘in 2008 the [Enterprises] financed about 40% of all
American mortgages and owed debt in excess of $5.3 trillion, their failure would [be]
catastrophic for the American economy in a way that, with few exceptions, the failure of a single
bank or credit union would not be.’” Id. (quoting FHFA v. UBS Ams., Inc., 858 F. Supp. 2d
306, 340 (S.D.N.Y. 2012)). Second, the court noted that Congress awarded “FHFA the exact
same powers that bank examiners have[,] . . . codified the common law bank examination
privilege in the [FOIA], and expressly provided that the privilege would apply to FHFA in the
FOIA context.” JPMorgan Chase & Co., 978 F. Supp. 2d at 275 (citation omitted). Third, the
court noted that FRE 501 “requires a court to consider the question of privileges not
mechanically but in the light of reason and experience, with the recognition that the common law
is not immutable but flexible, and by its own principles adapts itself to varying conditions.” Id.
(internal quotation marks omitted). The court added:

               To decide this motion on the sole ground that a judge at some point
               in the past named this privilege the “bank” examination privilege,
               without looking to the principles underlying the privilege and their
               application to the facts at hand, would run counter to the standard
               enunciated in Rule 501 and in the caselaw.

Id. Finally, the court noted the significance of Congress’s decision to codify the privilege in the
FOIA:

               Congress’s explicit extension of the FOIA codified banking
               examination privilege to FHFA weighs heavily here. Although a
               FOIA exemption does not, on its own, create a civil discovery
               privilege, see Chamber of Commerce of U.S. v. Legal Aid Soc’y
               of Alameda Cnty., 423 U.S. 1309, 1310 (1975), Congress’s
               express inclusion of FHFA within FOIA’s exemption eight
               demonstrates that it viewed the considerations animating the

       9
         To date, the bank examination privilege has been recognized by the D.C. Circuit, see In
re Subpoena Served Upon the Comptroller of the Currency, 967 F.2d at 630, the United States
Court of Appeals for the Sixth Circuit, see In re Bankers Trust Co., 61 F.3d 465 (6th Cir. 1995),
and the United States Court of Appeals for the Tenth Circuit, see Martinez v. Rocky Mountain
Bank, 540 F. App’x 846 (10th Cir. 2013).
                                                -17-
                  extension of that privilege to bank regulators as applying also to
                  FHFA in the FOIA context. Notably, the defendants have
                  proffered no justification to distinguish between the rationales for
                  granting FHFA the bank examination privilege in the FOIA
                  context versus the civil discovery context.

Id. at 276.

        Not surprisingly, and contrary to defendant’s position, 10 plaintiffs in this case argue that
the bank examination privilege should not apply to the FHFA. First, plaintiffs contend that
“there is good reason to doubt that bank examination truly involves the frank and informal
exchange of views that proponents of the privilege assume.” Pls.’ Mot. 27-28. Second, plaintiffs
contend that it is unlikely “that the availability of such a privilege will succeed in promoting
open and honest communications by bank officers to their regulators if the threat of federal
criminal prosecution has failed to do so.” Id. at 28. Third, plaintiffs contend that
communications between the FHFA and the Enterprises are not covered by the privilege because
the Enterprises are not banks: “They hold no bank charter of any kind, they do not retain
customer deposits, and they do not otherwise conduct banking activities.” Id. at 28-29. Fourth,
plaintiffs contend that other nonbank entities are not protected by the privilege:
“Communications involving insurance companies, broker-dealers, mutual funds, and other
regulated non-bank participants in the financial markets are not covered by the bank examination
privilege, and there is no reason to treat Fannie [Mae] and Freddie [Mac] differently than other
such non-bank entities.” Id. at 29. Fifth, plaintiffs contend that, unlike bank regulators, the
FHFA is required by law to submit to Congress both a general report and a report on
enforcement actions, 11 thereby obviating the need to extend the privilege because “the results of

        10
           For purposes of claiming the bank examination privilege, defendant argues that the
FHFA is a government entity. See, e.g., Def.’s Reply 16-20 (arguing that the bank examination
privilege protects FHFA documents from disclosure). Simultaneously, for purposes of evading
this court’s jurisdiction, defendant argues that the FHFA is not a government entity. See, e.g.,
Def.’s Mot. to Dismiss 12-16 (arguing that the FHFA, when acting as the Enterprises’
conservator, is not the United States for purposes of the Tucker Act).
        11
              The general report must include:

                  (1) a description of the actions taken, and being undertaken, by the
                  Director to carry out this chapter;

                  (2) a description of the financial safety and soundness of each
                  regulated entity, including the results and conclusions of the
                  annual examinations of the regulated entities conducted under
                  section 4517(a) of this title;

                  (3) any recommendations for legislation to enhance the financial
                  safety and soundness of the regulated entities;

                                                  -18-
FHFA’s examinations [are] already in the public domain.” Id. at 30. Finally, plaintiffs contend
that since the Enterprises were placed in conservatorship, the purpose behind the privilege no
longer exists: “With the companies subject to FHFA’s complete control and operating under
management chosen by and avowedly beholden as fiduciaries only to FHFA, the concern that

              (4) a description of—

                      (A) whether the procedures established by each regulated
                      entity pursuant to section 4012a(b)(3) of Title 42 are
                      adequate and being complied with, and

                      (B) the results and conclusions of any examination, as
                      determined necessary by the Director, to determine the
                      compliance of the regulated entities with the requirements
                      of section 4012a(b)(3) of Title 42, which shall include a
                      description of the methods used to determine compliance
                      and the types and sources of deficiencies (if any), and
                      identify any corrective measures that have been taken to
                      remedy any such deficiencies, except that the information
                      described in this paragraph shall be included only in each
                      of the first, third, and fifth annual reports under this
                      subsection required to be submitted after the expiration of
                      the 1-year period beginning on September 23, 1994; and

              (5) the assessment of the Board or any of its members with respect
              to—

                      (A) the safety and soundness of the regulated entities;

                      (B) any material deficiencies in the conduct of the
                      operations of the regulated entities;

                      (C) the overall operational status of the regulated entities;
                      and

                      (D) an evaluation of the performance of the regulated
                      entities in carrying out their respective missions;

              (6) operations, resources, and performance of the Agency; and

              (7) such other matters relating to the Agency and the fulfillment of
              its mission.

12 U.S.C. § 4521(a) (2012). The report on enforcement actions must include a description of all
the requests, from the previous year, “by the Director to the Attorney General for enforcement
actions,” as well as a description of each request’s disposition. Id. § 4521(b).
                                               -19-
underlies the bank examination privilege—that privately run banks might not be forthcoming
with their regulators—plainly does not apply here.” Id. at 31.

        Ultimately, in recognition of the significance of Congress’s explicit decision to codify the
bank examination privilege in the FOIA, the court is persuaded by the reasoning of the United
States District Court for the Southern District of New York in JPMorgan Chase & Co..
Therefore, the court will extend the privilege’s coverage to include communications between the
FHFA and the Enterprises.

      Having identified the privileges claimed by defendant, the court must now determine
whether those privileges apply to the documents at issue and, if so, whether plaintiffs have
demonstrated sufficient need to overcome those privileges.

                                       III. DISCUSSION

                                   A. Defendant’s Declarants

       In support of its assertion of the presidential communications, deliberative process, and
bank examination privileges, defendant submits sworn declarations from Christopher H.
Dickerson, David R. Pearl, and Nicholas L. McQuaid.

                                        1. Mr. Dickerson

         On December 15, 2015, Mr. Dickerson executed a declaration in support of defendant’s
claim of privileges. Def.’s Resp. A58-67. He is Senior Associate Director of the Division of
Enterprise Regulation (“DER”) at the FHFA. Id. at A58. He has worked at the FHFA since its
inception in 2008 and was previously employed by the Office of Federal Housing Enterprise
Oversight, the FHFA’s predecessor, from July 1997 until 2008. Id.

        Mr. Dickerson’s authority to assert privileges in this litigation was delegated to him by
FHFA Director Melvin L. Watt. Id. As a result of his position as Senior Associate Director of
the DER, Mr. Dickerson is “generally familiar with this litigation.” Id. He asserts the
deliberative process and bank examination privileges over three categories of documents: (1)
BlackRock documents, (2) forecasts, and (3) risk assessment memoranda; and two individual
documents: (1) the FHFA presentation on DTA and (2) the DeLeo e-mail. Id. at A59-60.

                                           2. Mr. Pearl

        On January 20, 2016, Mr. Pearl executed a declaration in support of defendant’s claim of
privileges. Def.’s Resp. A77. He is the Executive Secretary of the Treasury Department. Id. at
A68. In that capacity, he is “responsible for directing the activities and operations of the
Executive Secretariat,” which includes:

               ensuring that decisions made by the Secretary and the Deputy
               Secretary, among others, are properly implemented and that their
               requests receive appropriate responses; ensuring the quality and

                                               -20-
               appropriate coordination of materials prepared for these principal
               officials in connection with formulating and implementing policy,
               including overseeing collecting, maintaining, controlling,
               retrieving, and disseminating policy decisions and papers, staff
               records, and reports, as well as a wide variety of other
               correspondence and documents relevant to the information and
               operational needs of principal officials; assisting in identifying
               policy problems that require coordination, and coordinating policy
               issues across different components of the Department; and
               advising principal officials on the best uses of the Department’s
               resources.

Id. Additionally, he is responsible for “approving responses to [FOIA] requests directed at
Secretarial documents, a task which requires [him] to evaluate whether responsive records are
covered by various exemptions to FOIA’s disclosure requirements, including the deliberative
process privilege.” Id.

         Mr. Pearl’s authority to assert privileges in this litigation was delegated to him by
Treasury Secretary Jacob Lew. Id. In his capacity as Executive Secretary, Mr. Pearl is “aware
of this lawsuit” and has personally reviewed the challenged documents. Id. at 1-2. He asserts
the deliberative process privilege over six categories of documents: (1) housing finance reform,
(2) housing policies, (3) PSPA modifications, (4) GSE projections, (5) valuation reports, and (6)
potential implications of the terms of the PSPAs; and one individual document: estimates for the
President’s budget.

                                         3. Mr. McQuaid

        On June 10, 2016, Mr. McQuaid executed a declaration in support of defendant’s claim
of privileges. McQuaid Decl. 4. He is Deputy White House Counsel. Id. at 1. In that capacity,
he is “responsible for, inter alia, providing legal advice to White House staff, including advice on
matters involving the invocation of the presidential communications privilege.” Id.

       Mr. McQuaid’s authority to assert privileges in this litigation was delegated to him by the
President. 12 Id. In his capacity as Deputy White House Counsel, Mr. McQuaid is “aware of this
lawsuit” and has personally reviewed the challenged documents. Id. at 1-2. He asserts the
presidential communications privilege over four housing finance reform documents. Id. at 2-3.

        The nine categories of documents and three individual documents submitted by defendant
for the court’s in camera review will now be considered in turn. Discussion of each begins with

       12
            For purposes of the court’s analysis, the court will assume that Mr. McQuaid’s
authority to assert the presidential communications privilege was expressly delegated to him by
the President, although his declaration simply states that he asserts the privilege “[o]n behalf of
the Office of the President.” McQuaid Decl. 4.
                                                -21-
a chart, which reproduces the information contained in defendant’s privilege log. 13 Following
the chart is the court’s analysis of the claimed privileges.

                                  B. BlackRock Documents

 Doc. Bates No.       From / To /      Description of Document / Privilege(s) Asserted
 No.                  Date / CC
 1    FHFA            C. Dickerson     “Document prepared by BlackRock to support
      00031960        to D. Pearl on   predecisional deliberations and provided to FHFA in
                      9/7/2008         relation to its regulatory supervision regarding analysis
                                       of Fannie Mae’s loss and capital projections”

                                       Deliberative Process Privilege (“DPP”), Bank
                                       Examination Privilege (“BEP”)
 2      FHFA          C. Dickerson     “Document prepared by BlackRock to support
        00031962      to D. Pearl on   predecisional deliberations and provided to FHFA in
                      9/7/2008         relation to its regulatory supervision regarding analysis
                                       of Freddie Mac’s loss and capital projections”

                                       DPP, BEP
 3      FHFA          C. Dickerson     “Presentation by BlackRock to support predecisional
        00031964      to D. Pearl on   deliberations and provided to FHFA in relation to its
                      9/7/2008         regulatory supervision regarding analysis of GSE loss
                                       and capital projections”

                                       DPP, BEP
 4      FHFA          C. Eldarrat to   “Presentation prepared by consultant BlackRock
        00056237      C. Dickerson,    containing predecisional deliberations regarding
                      N.A. Tagoe, S.   analysis of Freddie Mac projected losses and
                      Smith, J.        implications for capital”
                      Spohn, W.
                      DeLeo, T.        DPP
                      Clark, and S.
                      Crisp on
                      8/27/2008

                      CC: C.
                      Eldarrat

        According to Mr. Dickerson, the BlackRock documents “contain loss and capital
projections prepared by consultant BlackRock Solutions before the establishment of
conservatorship for purposes of agency decision-making.” Def.’s Resp. A63. He further claims
that the documents “were generated in the course of FHFA’s continuous supervision of the

       13
          The descriptions of the documents are reproduced verbatim from defendant’s privilege
log and therefore appear in quotation marks.
                                              -22-
Enterprises . . . [and] are inherently predecisional and reflect real-time analyses of the
Enterprises[’] operations.” Id. Finally, he claims that the documents should not be disclosed:

                 The production of these documents would reduce candor and
                 inhibit communications by consultants, and thus would adversely
                 affect the quality of supervision of the GSEs. If employees and
                 consultants believe that their communications regarding
                 supervision of the GSEs could become public in the event of
                 litigation, they are unlikely to feel at liberty to express their candid
                 opinions.

                         In particular, the issues addressed in the BlackRock
                 Documents—projections in September 2008 of Enterprise credit
                 and capital losses—are the subject of significant public interest and
                 would likely be the subject of intense publicity and public scrutiny.
                 Disclosure of that information likely would inhibit the willingness
                 of consultants to provide advice in the future as part [of] the
                 agency’s decision making processes. Consultants could reasonably
                 believe that in a case under intense public scrutiny they could be
                 held up for ridicule if their recommendations and/or advice was
                 rejected, especially where the rejection may be in unflattering
                 terms. Disclosure of such information also could confuse the
                 public by revealing statements about the financial condition of the
                 Enterprises that might be misleading when stripped of context.
                 Further, because the BlackRock Documents reflect the internal
                 deliberations of FHFA prior to the agency’s adoption of an official
                 position, disclosure of the views or opinions of consultants could
                 confuse the public by suggesting rationales for FHFA’s actions
                 that may or may not have been relied upon as the basis for those
                 actions.

Id. at A63-64.

       Mr. Dickerson asserts the deliberative process privilege as to Documents 1-4 and the
bank examination privilege as to Documents 1-3.

                                  1. Deliberative Process Privilege

                                    a. Procedural Requirements

    i. The Authority to Invoke the Privilege Was Properly Delegated to Mr. Dickerson

        With respect to Mr. Dickerson’s authority to invoke the deliberative process privilege, the
chain of delegation from FHFA Director Watt to Mr. Dickerson is clear. See supra Section
III.A.1. In addition, Mr. Dickerson’s position as Senior Associate Director of DER and
familiarity with this litigation make him well-suited to the task of determining whether or not the

                                                   -23-
deliberative process privilege is applicable to the documents at issue. Id. Thus, the authority to
invoke the deliberative process privilege was properly delegated to Mr. Dickerson.

 ii. Defendant Has Identified With Particularity the Documents It Claims Are Privileged

        Mr. Dickerson’s declaration, which provides a general description of the BlackRock
documents, coupled with defendant’s privilege log, which (1) identifies the documents by their
Bates numbers, (2) provides the documents’ authors and recipients, (3) provides a description of
the documents, and (4) identifies the specific privileges claimed, allows the court to identify with
particularity the documents at issue.

       iii. Defendant Has Provided Precise and Certain Reasons for Maintaining the
                             Confidentiality of the Documents

       Based on Mr. Dickerson’s declaration, which provides precise and certain reasons for
maintaining the confidentiality of the documents at issue, see id. at A63-64, the court can balance
the government’s interest in maintaining that confidentiality with plaintiffs’ evidentiary need for
the documents’ disclosure.

                                  b. Substantive Requirements

               i. Defendant Has Shown That the Documents Are Predecisional

        Although the Net Worth Sweep was jointly announced by the FHFA and the Treasury
Department on August 17, 2012, the decision to approve the action was made by Treasury
Secretary Timothy F. Geithner on August 16, 2012. See Pls.’ Mot. A178. Thus, documents are
predecisional if they bear a date prior to August 16, 2012. According to the privilege log,
Documents 1-3 were sent by C. Dickerson to D. Pearl on September 7, 2008. Although the
privilege log does not explicitly state that the documents were created on that date, upon its own
examination, the court finds that Documents 1-3 are dated September 7, 2008, and thus are
predecisional.

       The privilege log also indicates that Document 4 was sent by C. Eldarrat to C. Dickerson,
N.A. Tagoe, S. Smith, J. Spohn, W. DeLeo, T. Clark, and S. Crisp, with a copy to C. Eldarrat, on
August 27, 2008. Although the privilege log does not explicitly state that the document was
created on that date, upon its own examination, the court finds that Document No. 4 is dated
August 27, 2008, and thus is predecisional.

ii. Defendant Has Not Shown That the Documents Are Deliberative but, for the Purpose of
Providing an Alternative Analysis, the Court Will Proceed as if Defendant Has Made Such
                                        a Showing

        In order to determine whether a document is subject to the deliberative process privilege,
the court must be able to discern whether the document reflects the “intra-governmental
exchange of thoughts that actively contribute to the agency’s decisionmaking process,” Texaco
P.R., Inc., 60 F.3d at 884-85. Thus, as to each document, the court must be able to identify the

                                               -24-
affiliations of the individuals on defendant’s privilege log and also discern the document’s
deliberative nature.

        In this case, defendant has not met its burden of showing that the documents are
deliberative. 14 First, upon examination of the privilege log and all of the documents submitted

       14
            Plaintiffs argue that defendant inappropriately claims the deliberative process privilege
as to “a significant number of documents that contain non-deliberative, factual material,” such as
“financial models and other assessments of the [Enterprises’] financial performance.” Pls.’ Mot.
20. Plaintiffs then contend that “numerous cases hold that technical models, data, and
projections of this sort are not deliberative and therefore may not be withheld under the
deliberative process privilege.” Id. at 21 (citing Lahr v. Nat’l Transp. Safety Bd., 453 F. Supp.
2d 1153, 1189 (C.D. Cal. 2006); Reilly v. EPA, 429 F. Supp. 2d 335 (D. Mass. 2006); Carter v.
U.S. Dep’t of Commerce, 186 F. Supp. 2d 1147 (D. Or. 2001)). The three FOIA cases plaintiffs
cite, however, do not stand for that proposition; their reasoning is more nuanced. In Lahr, the
court held that the disclosure of various graphs of simulation data, which may or may not have
been the outcomes of various simulations run by a government agency, would not reveal the
decision-makers’ mental processes under FOIA Exemption 5, which covers the deliberative
process privilege. 453 F. Supp. 2d at 1176, 1189. The court stated that the mere fact that the
graphs might be inconsistent with the agency’s final conclusion does not provide information
about the agency’s decision-making process. Id. Significantly, however, the court did not
conclude that such data could never reveal the deliberative process.

         In Reilly, the court held that computer runs—“investigative tools that generate raw data
or empirical evidence used by the [agency] in its rulemaking”—over which a government agency
asserted the deliberative process privilege under FOIA Exemption 5, were neither deliberative
nor part of the deliberative process. 429 F. Supp. 2d at 352-53. It stated that the information
input into the computer run “results from [interagency] research and discussion” and that,
therefore, “[r]elease of the requested [computer] runs would, a fortiori, reveal the inputs and,
consequently, to some extent the agency’s thought process.” Id. at 352. The court added,
however, that “this is true of any investigation by which an agency seeks facts—knowing what
questions are asked or which witnesses are interviewed reveals aspects of what the investigator
deemed important or worthy of consideration,” and that “[i]n a larger sense everything could be
considered deliberative.” Id. Furthermore, the court noted that (1) the agency’s version of the
model, “with its intrinsic assumptions and information,” was already “available for use by the
public”; (2) “the internal workings of [the model were] not in any way deliberative”; and (3) “the
initial modeling runs were” already made public. Id. at 353. Significantly, with respect to the
deliberative nature of the computer inputs, the court concluded that, when the requested runs
were “viewed on the deliberative/fact continuum, . . . the requested [computer] runs fell ‘closer
to fact and would not reveal the agency’s protectable thought processes.’” Id. at 352 (quoting
Assembly of Cal. v. U.S. Dep’t of Commerce, 968 F.2d 916, 922 (9th Cir. 1992) (“Assembly
II”)). Thus, not only did the court describe the measure of a document’s deliberative nature as
residing on a continuum, but the court also did not foreclose the possibility that a document
could be deemed purely or primarily deliberative as opposed to factual.

                                                -25-
for in camera review, which include some individuals’ e-mail domains, the court has identified
N.A. Tagoe as an FHFA employee. However—apart from inferring from the declarations of
Messrs. Dickerson and Pearl, that C. Dickerson is Christopher Dickerson and D. Pearl is David
Pearl, two of defendant’s three declarants—the court cannot identify the affiliations of the
remaining individuals. 15 Second, the documents’ deliberative nature is not apparent on their
face. This is so despite the fact that Mr. Dickerson’s descriptions of each of the documents,
provided above, proclaim their deliberative nature.

       In any event, the court notes that even if the documents were clearly deliberative, it
would not affect the court’s ultimate conclusion that, under the balancing test for the deliberative
process privilege, plaintiffs’ evidentiary need for the documents outweighs defendant’s interest
in preventing the documents’ disclosure. Thus, for the purpose of providing an alternative
analysis, the court deems the documents to be deliberative.

        Finally, in Carter, the court held that statistically adjusted data from the 2000 census was
not protected deliberative material under FOIA Exemption 5:

               The adjusted data was prepared in anticipation of possible public
               dissemination, did not contribute to the deliberations which
               culminated in the Department’s decision to use unadjusted data,
               and contain[ed] factual information which reveals nothing about
               the subjective thought processes involved in deciding whether to
               release unadjusted or adjusted data. The data sought are numbers.
               It may be that a deliberative process led to the methodology which
               generated the numbers, but the numbers are the result of the
               deliberative process. They are not the process.
186 F. Supp. 2d at 1157. The court did not, however, conclude that numbers could never be
deliberative: “[In Assembly II, t]he Court of Appeals . . . agreed that numbers could sometimes
derive from a complex set of judgments and demonstrate the elasticity of opinions. . . . The
Department takes the position that Assembly II was wrongly decided or distinguishable on the
facts. I find Assembly II both controlling and compelling, and that it is not distinguishable.” Id.
at 1155, 1157. Thus, in the case at bar, rather than accept plaintiffs’ premise that a bright line
distinction should be drawn between documents comprised of graphs and charts as opposed to
documents comprised of prose, this court will focus on the guiding principles set forth in the case
law, which require reviewing courts to examine each document individually in order to segregate
and release factual material when possible, yet protect factual material when necessary to avoid
revealing an agency’s deliberations or deliberative processes. See supra Section II.B.2.
       15
          Even if the documents were disclosed to third parties—individuals outside those
decision-makers and advisors protected by the privilege—it would not affect the court’s ultimate
conclusion, set forth below, that plaintiffs’ evidentiary need for the documents outweighs
defendant’s interest in preventing the documents’ disclosure.
                                                -26-
                                         c. Balancing Test

        Although defendant has not met its burden to demonstrate that the BlackRock documents
are protected by the deliberative process privilege, the court will perform an alternative analysis.
Recognizing that the privilege is qualified, the court will balance plaintiffs’ evidentiary need for
the documents against defendant’s interest in preserving their confidentiality. In order to do so,
the court weighs the five factors described in In re Subpoena.

         First, with respect to the relevance of the evidence sought to be protected, the documents
relate to the Enterprises’ future profitability. See supra Section I.B. Document 1, FHFA
00031960, is a two-page document with two captions: “FNM Loss and Capital Projections
Overview” and “FNM Estimated Capital Injection Needed.” It contains loss and capital
projections for Fannie Mae, produced for both base and stress cases. Document 2, FHFA
00031962, is another two-page document with two captions: “FRE Loss and Capital Projections
Overview” and “FRE Estimated Capital Injection Needed.” It contains loss and capital
projections for Freddie Mac, again produced for both base and stress cases. Document 3, FHFA
00031964, is a six-page document captioned “Approach for Agency Loss and Capital
Projections.” It describes the approach taken by BlackRock in calculating the figures contained
in Documents 1-2. Finally, Document 4, FHFA 00056237, is a seven-page document captioned
“Freddie Mac Confidential Capital Review[:] Preliminary Results.” It appears to be a precursor
to the report appearing in Document 2.

       Second, with respect to the availability of other evidence, there is no other source of
evidence available to plaintiffs that would similarly inform their understanding of the
Enterprises’ future profitability.

        Third, with respect to the seriousness of the litigation and the issues involved, neither
party disputes the importance of the case, both in terms of the damages and equitable relief
sought, as well as in terms of the case’s implication for litigation and “executive and legislative
branch policy repercussions.” Dairyland Power I, 77 Fed. Cl. at 342.

        Fourth, with respect to the government’s role in the litigation, because “the Government
is a party to this litigation and is the party that seeks to benefit from the invocation of the
deliberative process privilege,” its assertion of the “privilege must be carefully scrutinized to
ensure that the privilege retains its proper narrow scope.” Id.

        Fifth, with respect to the possibility of future timidity by government employees who will
be forced to recognize that their secrets are violable, it is highly unlikely, given the protective
order that is already in place in this case, that any type of disclosure would result in a chilling of
frank policy discussions between government employees.

        Thus, with respect to Documents 1-4, plaintiffs’ evidentiary need for the documents
outweighs defendant’s interest in preventing the documents’ disclosure. In other words, the
deliberative process privilege cannot shield the disclosure of the documents in this instance
because evidence relating to the Enterprises’ future profitability implicates both the court’s

                                                -27-
jurisdiction and the merits of the case and therefore is discoverable. The documents must be
disclosed.

                                 2. Bank Examination Privilege

        Having determined that the BlackRock documents are subject to the bank examination
privilege, see supra Section II.B.3, but recognizing that the privilege is qualified, the court must
now balance plaintiffs’ evidentiary need for the documents against defendant’s interest in
preserving their confidentiality. To do so, the court weighs the five factors described in Wultz.
Because those factors are identical to the factors used to analyze whether the deliberative process
privilege has been overcome, the court concludes, as it did with respect to the deliberative
process privilege, that plaintiffs’ evidentiary need for the information outweighs defendant’s
interest in maintaining the confidentiality of the documents at issue. Thus, the bank examination
privilege cannot shield the documents’ disclosure.

                                C. FHFA Presentation on DTA

 Doc. Bates No.       From / To /       Description of Document / Privilege(s) Asserted
 No.                  Date / CC
 5    FHFA            P. Bjarnason      “FHFA presentation containing predecisional
      00092209        to N. Satriano    deliberations in relation to its regulatory supervision
                      on 12/16/2008     regarding accounting for deferred tax assets”

                                        DPP, BEP

        According to Mr. Dickerson, the next document at issue, the FHFA presentation on DTA,
“contains predecisional and deliberative statements about FHFA’s regulatory supervision of how
to account for the GSEs[’] deferred tax assets.” Def.’s Resp. A64. He further claims that
“[r]eview of GSE accounting policies is part of the supervision process.” Id. Finally, he claims:

               Among other things, the redacted portion of the document includes
               deliberations over the measurement and treatment of the GSEs[’]
               deferred tax assets and evaluates arguments for and against the
               realization of these assets, based on information that FHFA
               requested and obtained from the GSEs. The redacted portion of
               the document reflects opinions of FHFA personnel, including the
               Office of the Chief Accountant and Risk Analysis, at a time when
               FHFA’s views and opinions were not fully developed and the
               issues were still being debated. The preliminary opinions,
               recommendations, and deliberations in the document may or may
               not have been considered in developing any of the policy positions
               that FHFA adopted. The redacted material neither represents a
               complete and accurate record of all of the information considered
               nor reflects any statement of agency policy or a final decision.

Id.

                                               -28-
     Mr. Dickerson asserts the deliberative process and bank examination privileges as to
Document 5.

                                1. Deliberative Process Privilege

                                  a. Procedural Requirements

    i. The Authority to Invoke the Privilege Was Properly Delegated to Mr. Dickerson

       As noted above, the authority to invoke the deliberative process privilege was properly
delegated to Mr. Dickerson. See supra Section III.B.1.a.i.

   ii. Defendant Has Identified With Particularity the Document It Claims Is Privileged

        Mr. Dickerson’s declaration, which provides a description of the FHFA presentation on
DTA, coupled with defendant’s privilege log, which (1) identifies the document by its Bates
number, (2) provides the document’s author and recipient, (3) provides a description of the
document, and (4) identifies the specific privileges claimed, allows the court to identify with
particularity the document at issue.

   iii. Defendant Has Not Provided Precise and Certain Reasons for Maintaining the
Confidentiality of the Document but, for the Purpose of Providing an Alternative Analysis,
                  the Court Will Proceed as if Defendant Has so Provided

        In this instance, Mr. Dickerson did not provide precise and certain reasons for
maintaining the confidentiality of the document at issue. Compare supra Section III.C, with
supra Section III.D. However, the court notes that even if Mr. Dickerson had made the requisite
statements, it would not affect the court’s ultimate conclusion that, under the balancing test for
the deliberative process privilege, plaintiffs’ evidentiary need for the document outweighs
defendant’s interest in preventing the document’s disclosure. Thus, the court will, at this stage of
its analysis, proceed as if defendant has met this procedural requirement.

                                 b. Substantive Requirements

                i. Defendant Has Shown That the Document Is Predecisional

        The decision to approve the Net Worth Sweep was made by Secretary Geithner on
August 16, 2012. See Pls.’ Mot. A178. According to the privilege log, Document 5 was sent by
P. Bjarnason to N. Satriano on December 16, 2008. Although the privilege log does not
explicitly state that the document was created on that date, upon its own examination, the court
finds that Document 5 is dated October 29, 2008, and thus is predecisional.

                                               -29-
 ii. Defendant Has Not Shown That the Document Is Deliberative but, for the Purpose of
Providing an Alternative Analysis, the Court Will Proceed as if Defendant Has Made Such
                                        a Showing

         In order to determine whether a document is subject to the deliberative process privilege,
the court must be able to discern whether the document reflects the “intra-governmental
exchange of thoughts that actively contribute to the agency’s decisionmaking process,” Texaco
P.R., Inc., 60 F.3d at 884-85. Thus, as to each document, the court must be able to identify the
affiliations of the individuals on defendant’s privilege log and also discern the document’s
deliberative nature.

       In this case, defendant has not met its burden of showing that the document is
deliberative. First, upon examination of the privilege log and all of the documents submitted for
in camera review, the court has been unable to identify the affiliation of P. Bjarnason or N.
Satriano. 16 Second, the document’s deliberative nature is not apparent on its face. This is so
despite the fact that Mr. Dickerson’s description of the document, provided above, proclaims its
deliberative nature.

        In any event, the court notes that even if the document was clearly deliberative, it would
not affect the court’s ultimate conclusion that, under the balancing test for the deliberative
process privilege, plaintiffs’ evidentiary need for the document outweighs defendant’s interest in
preventing the document’s disclosure. Thus, for the purpose of providing an alternative analysis,
the court deems the document to be deliberative.

                                        c. Balancing Test

        Although defendant has not met its burden to demonstrate that the FHFA presentation on
DTA is protected by the deliberative process privilege, the court will perform an alternative
analysis. Recognizing that the privilege is qualified, the court will balance plaintiffs’ evidentiary
need for the document against defendant’s interest in preserving its confidentiality. In order to
do so, the court weighs the five factors described in In re Subpoena.

        First, with respect to the relevance of the evidence sought to be protected, Document 5,
FHFA 00092209, relates to the Enterprises’ future profitability. See supra Section I.B. The
partially redacted sixteen-page document was prepared by the FHFA’s Office of the Chief
Accountant and is captioned “Accounting for Income Taxes[:] Deferred Tax Assets.” It is a
series of presentation slides prepared for the purpose of explaining “the accounting concepts
behind deferred tax assets,” describing how the DTA “arise at financial institutions and the
Enterprises in particular,” and assisting in “addressing supervisory questions about deferred tax
assets.”

       16
          Even if the document was disclosed to third parties—individuals outside those
decision-makers and advisors protected by the privilege—it would not affect the court’s ultimate
conclusion, set forth below, that plaintiffs’ evidentiary need for the document outweighs
defendant’s interest in preventing the document’s disclosure.
                                                -30-
       Second, with respect to the availability of other evidence, there is no other source of
evidence available to plaintiffs that would similarly inform their understanding of the
Enterprises’ future profitability.

        Third, with respect to the seriousness of the litigation and the issues involved, neither
party disputes the importance of the case, both in terms of the damages and equitable relief
sought, as well as in terms of the case’s implication for litigation and “executive and legislative
branch policy repercussions.” Dairyland Power I, 77 Fed. Cl. at 342.

        Fourth, with respect to the government’s role in the litigation, because “the Government
is a party to this litigation and is the party that seeks to benefit from the invocation of the
deliberative process privilege,” its assertion of the “privilege must be carefully scrutinized to
ensure that the privilege retains its proper narrow scope.” Id.

        Fifth, with respect to the possibility of future timidity by government employees who will
be forced to recognize that their secrets are violable, it is highly unlikely, given the protective
order that is already in place in this case, that any type of disclosure would result in a chilling of
frank policy discussions between government employees.

        Thus, with respect to Document 5, plaintiffs’ evidentiary need for the information
outweighs defendant’s interest in preventing the document’s disclosure. In other words, the
deliberative process privilege cannot shield the disclosure of the document in this instance
because evidence relating to the Enterprises’ future profitability implicates both the court’s
jurisdiction and the merits of the case and therefore is discoverable. The document must be
disclosed.

                                 2. Bank Examination Privilege

        Having determined that the FHFA presentation on DTA is subject to the bank
examination privilege, see supra Section II.B.3, but recognizing that the privilege is qualified, the
court must now balance plaintiffs’ evidentiary need for the document against defendant’s interest
in preserving its confidentiality. To do so, the court weighs the five factors described in Wultz.
Because those factors are identical to the factors used to analyze whether the deliberative process
privilege has been overcome, the court concludes, as it did with respect to the deliberative
process privilege, that plaintiffs’ evidentiary need for the information outweighs defendant’s
interest in maintaining the confidentiality of the document at issue. Thus, the bank examination
privilege cannot shield the document’s disclosure.

                                           D. Forecasts

 Doc. Bates No.        From / To /       Description of Document / Privilege(s) Asserted
 No.                   Date / CC
 6    FHFA             J. Williams to    “Presentation of FHFA Forecast Scenarios prepared by
      00093706         A. Eberhardt      Fannie Mae at FHFA’s request”
                       on 9/14/2011
                                         DPP, BEP

                                                -31-
                       CC: N.A.
                       Tagoe
 7      FHFA           N.A. Tagoe to     “FHFA projection of remaining GSE Treasury
        00100594       J. Williams on    funding commitment under FHFA stress scenarios
                       9/16/2011         containing predecisional deliberations”

                                         DPP, BEP

        According to Mr. Dickerson, the next group of documents at issue, the forecasts,
“provide analysis of various scenarios using assumptions provided by FHFA.” Def.’s Resp.
A64. He further claims that “[p]eriodically, as part of the examination process, regulators ask
regulated entities to prepare stress tests, which are analyses or simulations designed to determine
the ability of the regulated entity to deal with an economic crisis.” Id. at A64-65. Finally, he
claims that the documents at issue should not be disclosed:

                The Forecasts contain predecisional and deliberative statements
                about FHFA’s supervision of the Enterprises. The preliminary
                opinions, recommendations, and deliberations in these documents
                may or may not have been considered in developing any of the
                policy positions that FHFA adopted in its capacity as regulator of
                the Enterprises. The withheld material neither represents a
                complete and accurate record of all of the information considered
                nor reflects any statement of agency policy or a final decision.

Id. at A65.

        Mr. Dickerson asserts the deliberative process and bank examination privileges as to
Documents 6-7 and provides individual descriptions of the documents. He describes Document
6, FHFA 00093706, as: “[P]rojections run on Fannie Mae’s models at FHFA’s request, using
assumptions or scenarios provided by FHFA. It examines three scenarios provided by FHFA—
Base, Optimistic, and Stress—and analyzes Fannie Mae’s projected income, solvency, and credit
losses under these scenarios.” 17 Id. He then describes Document 7, FHFA 00100594, as “a

       17
            The cover page to this document provides the following disclaimer:

                These projections do not represent expected outcomes. They were
                prepared based on key assumptions provided by FHFA, and are
                based on numerous assumptions, including assumptions about
                Fannie Mae’s operations, loan performance, macroeconomic
                conditions, financial market conditions, house prices and
                government policy. These projections do not reflect (1) the
                judgment of management as to how the specific assumptions
                employed might produce other changes in model assumptions or
                (2) actions that Fannie Mae might undertake in response to the
                economic conditions specified in the scenarios. Actual results
                could vary significantly from these projections as a result of actual
                                                -32-
document prepared by FHFA that analyzes both Enterprises’ projected remaining Treasury
funding commitment under scenarios determined by FHFA.” Id.

                                1. Deliberative Process Privilege

                                  a. Procedural Requirements

    i. The Authority to Invoke the Privilege Was Properly Delegated to Mr. Dickerson

       As noted above, the authority to invoke the deliberative process privilege was properly
delegated to Mr. Dickerson. See supra Section III.B.1.a.i.

 ii. Defendant Has Identified With Particularity the Documents It Claims Are Privileged

        Mr. Dickerson’s declaration, which provides a description of the forecasts, coupled with
defendant’s privilege log, which (1) identifies the documents by their Bates numbers, (2)
provides the documents’ authors and recipients, (3) provides a description of the documents, and
(4) identifies the specific privileges claimed, allows the court to identify with particularity the
documents at issue.

       iii. Defendant Has Provided Precise and Certain Reasons for Maintaining the
                             Confidentiality of the Documents

       Based on Mr. Dickerson’s declaration, which provides precise and certain reasons for
maintaining the confidentiality of the documents at issue, see id. at A63-64, the court can balance
the government’s interest in maintaining that confidentiality with plaintiffs’ evidentiary need for
the documents’ disclosure.

                                 b. Substantive Requirements

 i. Defendant Has Not Shown That All of the Documents Are Predecisional but, for the
Purpose of Providing an Alternative Analysis, the Court Will Proceed as if Defendant Has
                                 Made Such a Showing

        The decision to approve the Net Worth Sweep was made by Secretary Geithner on
August 16, 2012. See Pls.’ Mot. A178. According to the privilege log, Document 6 was sent by
J. Williams to A. Eberhardt, with a copy to N.A. Tagoe, on September 14, 2011. Although the
privilege log does not explicitly state that the document was created on that date, upon its own
examination, the court finds that Document 6 is dated September 2011 and thus is predecisional.

               outcomes differing from the assumptions used or other factors.
               These projections were not subject to the review and controls
               typically associated with the preparation of corporate forecasts as
               the projections were intended for a different purpose.

Doc. 6, FHFA 00093706 at 1.
                                               -33-
        The privilege log also indicates that Document 7 was sent by N.A. Tagoe to J. Williams
on September 16, 2011. The privilege log does not explicitly state that the document was created
on that date, and upon its own examination, the court finds that Document 7 is undated.
Therefore, defendant has not established that Document 7 is predecisional. However, the court
notes that even if the document was clearly predecisional, it would not affect the court’s ultimate
conclusion that, under the balancing test for the deliberative process privilege, plaintiffs’
evidentiary need for the document outweighs defendant’s interest in preventing the document’s
disclosure. Thus, for the purpose of providing an alternative analysis, the court deems all of the
documents to be predecisional.

ii. Defendant Has Not Shown That the Documents Are Deliberative but, for the Purpose of
Providing an Alternative Analysis, the Court Will Proceed as if Defendant Has Made Such
                                        a Showing

         In order to determine whether a document is subject to the deliberative process privilege,
the court must be able to discern whether the document reflects the “intra-governmental
exchange of thoughts that actively contribute to the agency’s decisionmaking process,” Texaco
P.R., Inc., 60 F.3d at 884-85. Thus, as to each document, the court must be able to identify the
affiliations of the individuals on defendant’s privilege log and also discern the document’s
deliberative nature.

        In this case, defendant has not met its burden of showing that the documents are
deliberative. Upon examination of the privilege log and all of the documents submitted for in
camera review, which include some individuals’ e-mail domains, the court has identified J.
Williams and N.A. Tagoe as FHFA employees, and A. Eberhardt as a Grant Thornton employee.
However, the documents’ deliberative nature is not apparent on their face. This is so despite the
fact that Mr. Dickerson’s descriptions of each of the documents, provided above, proclaim their
deliberative nature.

       In any event, the court notes that even if the documents were clearly deliberative, it
would not affect the court’s ultimate conclusion that, under the balancing test for the deliberative
process privilege, plaintiffs’ evidentiary need for the documents outweighs defendant’s interest
in preventing the documents’ disclosure. Thus, for the purpose of providing an alternative
analysis, the court deems the documents to be deliberative.

                                        c. Balancing Test

        Although defendant has not met its burden to demonstrate that the forecasts are protected
by the deliberative process privilege, the court will perform an alternative analysis. Recognizing
that the privilege is qualified, the court will balance plaintiffs’ evidentiary need for the
documents against defendant’s interest in preserving their confidentiality. In order to do so, the
court weighs the five factors described in In re Subpoena.

         First, with respect to the relevance of the evidence sought to be protected, the documents
relate to the Enterprises’ future profitability and future solvency. See supra Section I.B.

                                                -34-
Document 6, FHFA 00093706, is an unnumbered thirty-page document prepared by Fannie Mae,
at FHFA’s request, captioned “FHFA Forecast Scenarios.” It analyzes Fannie Mae’s projected
income, solvency, and credit losses under base, optimistic, and stress scenarios. Document 7,
FHFA 00100594, is a one-page document captioned “Remaining Treasury Funding
Commitment.” It analyzes both Fannie Mae’s and Freddie Mac’s projected remaining Treasury
Department funding commitment under various scenarios.

       Second, with respect to the availability of other evidence, there is no other source of
evidence available to plaintiffs that would similarly inform their understanding of the
Enterprises’ future profitability and future solvency.

        Third, with respect to the seriousness of the litigation and the issues involved, neither
party disputes the importance of the case, both in terms of the damages and equitable relief
sought, as well as in terms of the case’s implication for litigation and “executive and legislative
branch policy repercussions.” Dairyland Power I, 77 Fed. Cl. at 342.

        Fourth, with respect to the government’s role in the litigation, because “the Government
is a party to this litigation and is the party that seeks to benefit from the invocation of the
deliberative process privilege,” its assertion of the “privilege must be carefully scrutinized to
ensure that the privilege retains its proper narrow scope.” Id.

        Fifth, with respect to the possibility of future timidity by government employees who will
be forced to recognize that their secrets are violable, it is highly unlikely, given the protective
order that is already in place in this case, that any type of disclosure would result in a chilling of
frank policy discussions between government employees.

        Thus, with respect to Document 6-7, plaintiffs’ evidentiary need for the information
outweighs defendant’s interest in preventing the documents’ disclosure. In other words, the
deliberative process privilege cannot shield the disclosure of the documents in this instance
because evidence relating to the Enterprises’ future profitability and solvency implicates both the
court’s jurisdiction and the merits of the case and therefore is discoverable. The documents must
be disclosed.

                                 2. Bank Examination Privilege

        Having determined that the forecasts are subject to the bank examination privilege, see
supra Section II.B.3, but recognizing that the privilege is qualified, the court must now balance
plaintiffs’ evidentiary need for the documents against defendant’s interest in preserving their
confidentiality. To do so, the court weighs the five factors described in Wultz. Because those
factors are identical to the factors used to analyze whether the deliberative process privilege has
been overcome, the court concludes, as it did with respect to the deliberative process privilege,
that plaintiffs’ evidentiary need for the information outweighs defendant’s interest in maintaining
the confidentiality of the documents at issue. Thus, the bank examination privilege cannot shield
the documents’ disclosure.

                                                -35-
                                E. Risk Assessment Memoranda

 Doc. Bates No.       From / To /        Description of Document / Privilege(s) Asserted
 No.                  Date / CC
 8    FHFA            J. Williams to     “FHFA Risk Assessment Memorandum prepared in
      00096631        N.A. Tagoe on      connection with FHFA’s regulatory supervision
                      6/28/2012          regarding Fannie Mae’s 4Q earnings”

                      CC: P.             BEP
                      Calhoun
 9      FHFA          J. Williams to     “FHFA Risk Assessment Memorandum prepared in
        00096634      N.A. Tagoe on      connection with FHFA’s regulatory supervision
                      6/28/2012          regarding the solvency of Fannie Mae”

                      CC: P.             BEP
                      Calhoun
 10     FHFA          J. Williams to     “FHFA Risk Assessment Memorandum prepared in
        00096636      N.A. Tagoe on      connection with FHFA’s regulatory supervision
                      6/28/2012          regarding Freddie Mac’s 4Q earnings”

                      CC: P.             BEP
                      Calhoun
 11     FHFA          J. Williams to     “FHFA Risk Assessment Memorandum prepared in
        00096638      N.A. Tagoe on      connection with FHFA’s regulatory supervision
                      6/28/2012          regarding the solvency of Freddie Mac”

                      CC: P.             BEP
                      Calhoun

        According to Mr. Dickerson, the next group of documents at issue, the risk assessment
memoranda, “were prepared by the Office of Financial Analysis, Modeling, and Simulations” as
“part of the supervisory process to determine the safety and soundness of the GSEs.” Def.’s
Resp. A65. He further claims that the memoranda “contain analyses and opinions regarding the
Enterprises’ outlook for earnings and solvency as of March 31, 2012.” Id.

       Mr. Dickerson asserts the bank examination privilege as to Documents 8-11 and provides
individual descriptions of the documents. Specifically, he states that Document 8, FHFA
00096631, “discusses Fannie Mae’s earnings,” id.; Document 9, FHFA 00096634 “discusses
Fannie Mae’s solvency,” id. at A65-66; Document 10, FHFA 00096636, “discusses Freddie
Mac’s earnings,” id. at A66; and Document 11, FHFA 00096638, “discusses Freddie Mac’s
solvency,” id.

       Having determined that the risk assessment memoranda are protected by the bank
examination privilege, see supra Section II.B.3, but recognizing that the privilege is qualified, the
court must balance plaintiffs’ evidentiary need for the documents against defendant’s interest in

                                                -36-
preserving their confidentiality. In order to do so, the court weighs the five factors described in
Wultz.

         First, with respect to the relevance of the evidence sought to be protected, the documents
relate to the Enterprises’ future profitability and future solvency. See supra Section I.B.
Document 8, FHFA 00096631, is a three-page document prepared by FHFA employees
captioned “Risk Assessment Memorandum.” Document 9, FHFA 00096634, Document 10,
FHFA 00096636, and Document 11, FHFA 00096638, are each two-page documents prepared
by FHFA employees captioned “Risk Assessment Memorandum.” Documents 8 and 10 address
the Enterprises’ earnings and Documents 9 and 11 address the Enterprises’ solvency.

       Second, with respect to the availability of other evidence, there is no other source of
evidence available to plaintiffs that would similarly inform their understanding of the
Enterprises’ future profitability and future solvency.

        Third, with respect to the seriousness of the litigation and the issues involved, neither
party disputes the importance of the case, both in terms of the damages and equitable relief
sought, as well as in terms of the case’s implication for litigation and “executive and legislative
branch policy repercussions.” Dairyland Power I, 77 Fed. Cl. at 342.

        Fourth, with respect to the government’s role in the litigation, because “the Government
is a party to this litigation and is the party that seeks to benefit from the invocation of the
deliberative process privilege,” its assertion of the “privilege must be carefully scrutinized to
ensure that the privilege retains its proper narrow scope.” Id.

        Fifth, with respect to the possibility of future timidity by government employees who will
be forced to recognize that their secrets are violable, it is highly unlikely, given the protective
order that is already in place in this case, that any type of disclosure would result in a chilling of
frank policy discussions between government employees.

        Thus, with respect to Documents 8-11, plaintiffs’ evidentiary need for the information
outweighs defendant’s interest in preventing the documents’ disclosure. In other words, the bank
examination privilege cannot shield the disclosure of the documents in this instance because
evidence relating to the Enterprises’ future profitability and future solvency implicates both the
court’s jurisdiction and the merits of the case and therefore is discoverable. The documents must
be disclosed.

                                         F. DeLeo E-mail

 Doc. Bates No.        From / To /       Description of Document / Privilege(s) Asserted
 No.                   Date / CC
 12   FHFA             W. DeLeo to J.    “RM: Internal communication among senior FHFA staff
      00031520         Lockhart on       containing predecisional deliberations regarding
                       10/29/2008        response to a media story on deferred tax assets of the
                                         GSEs and management delegations by the conservator”

                                                -37-
                       CC: E.            DPP
                       DeMarco

                       Also: S.
                       Mullin, C.
                       Dickerson, P.
                       Brereton, C.
                       Russell, A.
                       Pollard, and A.
                       Lakroune

        According to Mr. Dickerson, the DeLeo e-mail “contains predecisional and deliberative
statements about how FHFA should respond to a press inquiry about the treatment of deferred
tax assets in October 2008.” Def.’s Resp. A66. He claims that the document at issue should not
be disclosed:

                Based on my review of the e-mail, I have determined that the
                production of the redacted portions of the Email would inhibit the
                frank and honest discussion of policy matters, and thus would
                adversely affect the quality of FHFA’s decisions and policies. The
                reluctance of FHFA personnel to share their candid opinions, and
                the bases for them, would restrict FHFA’s ability to formulate
                sound policy and diminish the benefits of future efforts to help
                restore confidence in the Enterprises and avoid the systemic risk
                that can directly destabilize the national housing finance market.
                This concern is particularly acute as redacted portions of the Email
                relate to sensitive discussions regarding FHFA’s policies with
                respect to the ongoing and future operations of the Enterprises.

Id.

         Mr. Dickerson asserts the deliberative process privilege as to Document 12.

                                  1. Procedural Requirements

      a. The Authority to Invoke the Privilege Was Properly Delegated to Mr. Dickerson

       As noted above, the authority to invoke the deliberative process privilege was properly
delegated to Mr. Dickerson. See supra Section III.B.1.a.i.
      b. Defendant Has Identified With Particularity the Document It Claims Is Privileged

        Mr. Dickerson’s declaration, which provides a description of the DeLeo e-mail, coupled
with defendant’s privilege log, which (1) identifies the document by its Bates number, (2)
provides the document’s authors and recipients, (3) provides a description of the document, and
(4) identifies the specific privilege claimed, allows the court to identify with particularity the
document at issue.

                                                -38-
       c. Defendant Has Provided Precise and Certain Reasons for Maintaining the
                           Confidentiality of the Document

       Based on Mr. Dickerson’s declaration, which provides precise and certain reasons for
maintaining the confidentiality of the document at issue, see Def.’s Resp. A66, the court can
balance the government’s interest in maintaining that confidentiality with plaintiffs’ evidentiary
need for the document’s disclosure.

                                 2. Substantive Requirements

                a. Defendant Has Shown That the Document Is Predecisional

        The decision to approve the Net Worth Sweep was made by Secretary Geithner on
August 16, 2012. See Pls.’ Mot. A178. According to the privilege log, Document 12 was sent
by W. DeLeo to J. Lockhart, with copies to E. DeMarco, S. Mullin, C. Dickerson, P. Brereton, C.
Russell, A. Pollard, and A. Lakroune, on October 29, 2008. Although the privilege log does not
explicitly state that the document was created on that date, upon its own examination, the court
finds that Document 12 is dated October 29, 2008, and thus is predecisional.

 b. Defendant Has Not Shown That the Document Is Deliberative but, for the Purpose of
Providing an Alternative Analysis, the Court Will Proceed as if Defendant Has Made Such
                                        a Showing

         In order to determine whether a document is subject to the deliberative process privilege,
the court must be able to discern whether the document reflects the “intra-governmental
exchange of thoughts that actively contribute to the agency’s decisionmaking process,” Texaco
P.R., Inc., 60 F.3d at 884-85. Thus, as to each document, the court must be able to identify the
affiliations of the individuals on defendant’s privilege log and also discern the document’s
deliberative nature.

       In this case, defendant has not met its burden of showing that the documents are
deliberative. Upon examination of the privilege log and all of the documents submitted for in
camera review, which include some individuals’ e-mail domains, the court has identified J.
Lockhart and E. DeMarco as FHFA employees. However, the document’s deliberative nature is
not apparent on its face. This is so despite the fact that Mr. Dickerson’s description of the
document, provided above, proclaims its deliberative nature.

        In any event, the court notes that even if the document was clearly deliberative, it would
not affect the court’s ultimate conclusion that, under the balancing test for the deliberative
process privilege, plaintiffs’ evidentiary need for the document outweighs defendant’s interest in
preventing the document’s disclosure. Thus, for the purpose of providing an alternative analysis,
the court deems the document to be deliberative.

                                               -39-
                                         3. Balancing Test

        Although defendant has not met its burden to demonstrate that the De-Leo e-mail
document is protected by the deliberative process privilege, the court will perform an alternative
analysis. Recognizing that the privilege is qualified, the court will balance plaintiffs’ evidentiary
need for the document against defendant’s interest in preserving its confidentiality. In order to
do so, the court weighs the five factors described in In re Subpoena.

         First, with respect to the relevance of the evidence sought to be protected, the document
relates to the Enterprises’ future profitability. See supra Section I.B. Document 12, FHFA
00031520, is a partially redacted unnumbered three-page e-mail chain among FHFA employees
that discusses agency policy with regard to the Enterprises’ accounting practices.

       Second, with respect to the availability of other evidence, there is no other source of
evidence available to plaintiffs that would similarly inform their understanding of the
Enterprises’ future profitability.

        Third, with respect to the seriousness of the litigation and the issues involved, neither
party disputes the importance of the case, both in terms of the damages and equitable relief
sought, as well as in terms of the case’s implication for litigation and “executive and legislative
branch policy repercussions.” Dairyland Power I, 77 Fed. Cl. at 342.

        Fourth, with respect to the government’s role in the litigation, because “the Government
is a party to this litigation and is the party that seeks to benefit from the invocation of the
deliberative process privilege,” its assertion of the “privilege must be carefully scrutinized to
ensure that the privilege retains its proper narrow scope.” Id.

        Fifth, with respect to the possibility of future timidity by government employees who will
be forced to recognize that their secrets are violable, it is highly unlikely, given the protective
order that is already in place in this case, that any type of disclosure would result in a chilling of
frank policy discussions between government employees.

        Thus, with respect to Document 12, plaintiffs’ evidentiary need for the information
outweighs defendant’s interest in preventing the document’s disclosure. In other words, the
deliberative process privilege cannot shield the disclosure of the document in this instance
because evidence relating to the Enterprises’ future profitability implicates both the court’s
jurisdiction and the merits of the case and therefore is discoverable. The document must be
disclosed.

                                   G. Housing Finance Reform

 Doc. Bates No.        From / To /       Description of Document / Privilege(s) Asserted
 No.                   Date / CC
 13   UST              J. Foster to S.   “Draft memorandum for Secretary containing
      00389678         Valverde and      predecisional deliberations related to mortgage finance
                                         market reform proposals”

                                                -40-
                M. Fikre on
                1/31/2012         DPP

14   UST        S. Miller to B.   “Draft policy paper prepared by Treasury staff
     00490551   Mlynarczyk        containing predecisional deliberations regarding
                and M.            housing finance reform”
                Stegman on
                7/30/2012         DPP

15   UST        M. Stegman,       “Memorandum reflecting confidential communication
     00500982   T. Bowler, J.     from senior White House advisors to the President
                Parrott, B.       regarding housing policy ideas and initiatives”
                Deese, M.
                Miller, and S.    DPP, Presidential Communications Privilege (“PCP”)
                Valverde to M.
                Stegman, T.
                Bowler, J.
                Parrott, B.
                Deese, M.
                Miller, J.
                Eberly, and
                Exec Sec Staff
                on 5/2/2012

                CC: M.
                Patterson, N.
                Wolin, J.
                LeCompte, J.
                Parrott, M.
                Miller, and M.
                Stegman
16   UST        J. Foster to J.   “Draft policy document prepared by Treasury staff
     00513480   Foster on         containing predecisional deliberations regarding
                5/21/2012         housing finance reform”

                                  DPP
17   UST        J. Parrott and    “Emails reflecting the exchange of information, views,
     00515290   J. Foster to J.   and advice between Treasury officials and White House
                Parrot and J.     staff with broad and significant responsibility for
                Foster on         investigating and formulating advice for consideration
                7/29/2011         and direction by the President regarding housing finance
                                  issues”

                                  DPP, PCP

                                        -41-
 18     UST          B. Hester to       “Draft memorandum for Secretary containing
        00518402     M. Miller on       predecisional deliberations related to policy
                     2/21/2012          implications of proposed housing finance legislation”

                     CC: S. Lee and DPP
                     A. Johnson
 19     UST          M. Stegman     “Memorandum reflecting confidential communication
        00521902     on 6/18/2012   from senior White House advisors to the President
                                    regarding housing policy ideas and initiatives”

                                        DPP, PCP
 20     UST          J. Foster to J.    “Draft policy paper containing predecisional
        00544897     Foster on          deliberations concerning housing finance reform”
                     6/5/2012
                                        DPP
 21     UST          G. Sperling, T.    “Email reflecting the exchange of information, views,
        00550441     Geithner, N.       and advice between Treasury officials and senior White
                     Wolin, and M.      House advisors for consideration and direction by the
                     Miller to T.       President regarding housing finance issues”
                     Geithner, N.
                     Wolin, M.          PCP
                     Stegman, S.
                     Gandhi, A.
                     Gerety, B.
                     Hester, M.
                     Miller, C.
                     Gibson, C.
                     Amir-Mokri,
                     and S.
                     Chisolm on
                     3/12/2012

                     CC: B. Deese

        This next group of documents concerns housing finance reform. According to Mr. Pearl,
since the financial crisis, the Treasury Department has been working with other agencies and
congressional staff to develop proposals and draft legislation targeted at reforming the housing
finance system. Def.’s Resp. A71. He further claims that the documents at issue should not be
disclosed:

              Requiring disclosure of these deliberative materials would have a
              chilling effect on Treasury’s housing finance reform work. If
              Treasury officials and staff know that their deliberations on
              housing finance reform will be disclosed to litigation adversaries,
              they are unlikely to feel at liberty to offer their candid opinions and
              fully engage in the policy development process. Disclosure of the

                                               -42-
               details of this evolving policymaking process would inhibit
               Treasury’s ability to engage in ongoing policy deliberations
               resulting in a profound negative impact on such deliberations. As
               Treasury continues its efforts to help bring about comprehensive
               reform of the housing finance system, it is critical that we preserve
               the ability to have robust discussions in which we are able to
               explore sensitive and important policy decisions from multiple
               angles.

Id. at A72.

        Mr. Pearl asserts the deliberative process privilege as to Documents 13-20 and provides
individual descriptions of the documents. He describes Document 13, UST 00389678, as:
“Draft of memorandum for Secretary of the Treasury Timothy Geithner prepared by Treasury
officials and staff regarding proposals for housing finance reform. The document articulates
principles to be pursued in working on potential reforms of the mortgage finance system. The
documents reflect predecisional deliberations regarding such reforms.” Id. Mr. Pearl then
describes Document 14, UST 00490551, Document 16, UST 00513480, and Document 20, UST
00544897, as: “Drafts of policy papers prepared by Treasury officials and staff regarding
housing finance reform. The documents contain discussions of a potential comprehensive
housing finance reform plan. The documents reflect predecisional deliberations regarding the
proposed plan.” Id. Next, he describes Document 15, UST 00500982, and Document 19, UST
00521902, as: “Drafts of memoranda for the President regarding housing finance reform.
Treasury officials and staff participated in preparing the draft memoranda. The documents
reflect potential policies to pursue and contain Treasury staff recommendations concerning the
options presented. The documents reflect predecisional deliberations regarding such policies.”
Id. Mr. Pearl then describes Document 17, UST 00515290, as: “Correspondence between
Treasury staff and a White House advisor regarding housing finance reform. The email chain
reflects discussion of potential policies to pursue. The documents reflect predecisional
deliberations regarding such policies.” Id. Finally, Mr. Pearl describes Document 18, UST
00518402, as: “Draft of memorandum for the Secretary prepared by Treasury officials and staff
regarding policy implications of proposed housing finance legislation. The document contains
Treasury staff views on proposed housing finance bills. The documents reflect predecisional
deliberations regarding the proposed legislation.” Id.

        Mr. McQuaid asserts the presidential communications privilege as to Documents 15, 17,
19, and 21. McQuaid Decl. 2. Generally, he describes the documents as “draft memoranda and
electronic mail communications that were authored or solicited and received by an immediate
presidential advisor or his staff who had broad and significant responsibility for investigating and
formulating advice to be given to the President with respect to decisionmaking on the subject of
housing reform policy.” Id. He also provides individual descriptions of the documents.
Document 15, UST 00500982, is described as:

               a draft memorandum concerning housing policy ideas and
               initiatives, which was attached to an email from Brian Deese, the
               Deputy Director of the National Economic Council, to various

                                               -43-
               senior Treasury staff requesting any final comments from
               Treasury, and which was prepared by James Parrott, a senior
               advisor to the National Economic Council, and contains input from
               Gene Sperling, the Director of the National Economic Council, and
               his staff, as well as from various senior housing policy staff at
               Treasury.

Id. at 2-3. Document 17, UST 00515290, is described as “portions of an electronic mail
conversation between James Parrott, a senior advisor to the National Economic Council, and
Treasury staff discussing advice regarding White House housing policy reform.” Id. at 3.
Document 19, UST 00521902, is described as “a draft memorandum assigned a file name
including, in part, ‘POTUS_Draft,’ bearing the heading ‘THE WHITE HOUSE,’ and
recommending various near- and long-term housing policy reform initiatives.” Id. Finally,
Document No. 21, UST 00550441, is described as “portions of an email from Gene Sperling, the
Director of the National Economic Council, to Treasury Secretary Timothy Geithner, and
copying Brian Deese, concerning the timing of upcoming housing initiatives.” 18 Id.

                                1. Deliberative Process Privilege

                                  a. Procedural Requirements

       i. The Authority to Invoke the Privilege Was Properly Delegated to Mr. Pearl

         With respect to Mr. Pearl’s authority to invoke the deliberative process privilege, the
chain of delegation from Treasury Secretary Lew to Mr. Pearl is clear. See Def.’s Resp. A86. In
addition, Mr. Pearl’s position as Executive Secretary of the Treasury and familiarity with this
litigation make him well-suited to the task of determining whether or not the deliberative process
privilege is applicable to the documents at issue. Thus, the authority to invoke the deliberative
process privilege was properly delegated to Mr. Pearl.

 ii. Defendant Has Identified With Particularity the Documents It Claims Are Privileged

        Mr. Pearl’s declaration, which provides a description of the housing finance reform
documents, coupled with defendant’s privilege log, which (1) identifies the documents by their
Bates numbers, (2) provides the documents’ authors and recipients, (3) provides a description of
the documents, and (4) identifies the specific privileges claimed, allows the court to identify with
particularity the documents at issue.

       18
          Apart from being referenced by Mr. McQuaid in his declaration in support of
defendant’s assertion of the presidential communications privilege, Document 21 is not
addressed in defendant’s response to plaintiffs’ motion to compel, save for one reference in a list
of Bates numbers appearing at the bottom of the first of two pages of an October 21, 2015 e-mail
from plaintiffs’ counsel to government counsel. See Def.’s Resp. A6. Because the document
addresses the issue of housing finance reform, the court has placed it in this category.
                                               -44-
       iii. Defendant Has Provided Precise and Certain Reasons for Maintaining the
                             Confidentiality of the Documents

       Based on Mr. Pearl’s declaration, which provides precise and certain reasons for
maintaining the confidentiality of the documents at issue, see Def.’s Resp. A72, the court can
balance the government’s interest in maintaining that confidentiality with plaintiffs’ evidentiary
need for the documents’ disclosure.

                                  b. Substantive Requirements

 i. Defendant Has Not Shown That All of the Documents Are Predecisional but, for the
Purpose of Providing an Alternative Analysis, the Court Will Proceed as if Defendant Has
                                 Made Such a Showing

        The decision to approve the Net Worth Sweep was made by Secretary Geithner on
August 16, 2012. See Pls.’ Mot. A178. According to the privilege log, Document 13 was sent
by J. Foster to S. Valverde and M. Fikre on January 31, 2012. Although the privilege log does
not explicitly state that the document was created on that date, upon its own examination, the
court finds that Document 13 is dated January 25, 2012, and thus is predecisional.

        The privilege log also indicates that Document 14 was sent by S. Miller to B. Mlynarczyk
and M. Stegman on July 30, 2012. The privilege log does not explicitly state that the document
was created on that date, and upon its own examination, the court finds that Document 14 is
undated. Therefore, defendant has not established that this document is predecisional. However,
the court notes that even if the document was clearly predecisional, it would not affect the
court’s ultimate conclusion that, under the balancing test for the deliberative process privilege,
plaintiffs’ evidentiary need for the document outweighs defendant’s interest in preventing the
document’s disclosure. Thus, for the purpose of providing an alternative analysis, the court
deems this document to be predecisional.

        The privilege log further provides that Document 15 was sent by M. Stegman, T. Bowler,
J. Parrott, B. Deese, M. Miller, and S. Valverde to M. Stegman, T. Bowler, J. Parrott, B. Deese,
M. Miller, J. Eberly, and Executive Secretary Staff, with copies to M. Patterson, N. Wolin, J.
LeCompte, J. Parrott, M. Miller, and M. Stegman, on May 2, 2012. The privilege log does not
explicitly state that the document was created on that date, and upon its own examination, the
court finds that Document 15 is undated. Therefore, defendant has not established that this
document is predecisional. However, the court notes that even if the document was clearly
predecisional, it would not affect the court’s ultimate conclusion that, under the balancing test for
the deliberative process privilege, plaintiffs’ evidentiary need for the document outweighs
defendant’s interest in preventing the document’s disclosure. Thus, for the purpose of providing
an alternative analysis, the court deems this document to be predecisional.

        The privilege log next indicates that Document 16 was sent by J. Foster to J. Foster on
May 21, 2012. The privilege log does not explicitly state that the document was created on that
date, and upon its own examination, the court finds that Document 16 is undated. Therefore,
defendant has not established that this document is predecisional. However, the court notes that

                                                -45-
even if the document was clearly predecisional, it would not affect the court’s ultimate
conclusion that, under the balancing test for the deliberative process privilege, plaintiffs’
evidentiary need for the document outweighs defendant’s interest in preventing the document’s
disclosure. Thus, for the purpose of providing an alternative analysis, the court deems this
document to be predecisional.

        The privilege log also states that Document 17 was sent by J. Parrott and J. Foster to J.
Parrot and J. Foster on July 29, 2011. Although the privilege log does not explicitly state that the
document was created on that date, upon its own examination, the court finds that Document 17
is dated July 29, 2011, and thus is predecisional.

        The privilege log then provides that Document 18 was sent by B. Hester to M. Miller,
with copies to S. Lee and A. Johnson, on February 21, 2012. Although the privilege log does not
explicitly state that the document was created on that date, upon its own examination, the court
finds that Document 18 is dated February 20, 2012, and thus is predecisional.

        The privilege log further indicates that Document 19 was sent by M. Stegman on June 18,
2012. Although the privilege log does not explicitly state that the document was created on that
date, upon its own examination, the court finds that Document 19 is dated June 2012, and thus is
predecisional.

        Finally, the privilege log states that Document 20 was sent by J. Foster to J. Foster on
June 5, 2012. The privilege log does not explicitly state that the document was created on that
date, and upon its own examination, the court finds that Document 20 is undated. Therefore,
defendant has not established that this document is predecisional. However, the court notes that
even if the document was clearly predecisional, it would not affect the court’s ultimate
conclusion that, under the balancing test for the deliberative process privilege, plaintiffs’
evidentiary need for the document outweighs defendant’s interest in preventing the document’s
disclosure. Thus, for the purpose of providing an alternative analysis, the court deems this
document to be predecisional.

ii. Defendant Has Not Shown That the Documents Are Deliberative but, for the Purpose of
Providing an Alternative Analysis, the Court Will Proceed as if Defendant Has Made Such
                                        a Showing

         In order to determine whether a document is subject to the deliberative process privilege,
the court must be able to discern whether the document reflects the “intra-governmental
exchange of thoughts that actively contribute to the agency’s decisionmaking process,” Texaco
P.R., Inc., 60 F.3d at 884-85. Thus, as to each document, the court must be able to identify the
affiliations of the individuals on defendant’s privilege log and also discern the document’s
deliberative nature.

        In this case, defendant has not met its burden of showing that the documents are
deliberative. Upon examination of the privilege log and all of the documents submitted for in
camera review, which include some individuals’ e-mail domains, the court has identified the
following individuals as Treasury Department employees: J. Foster, S. Valverde, M. Fikre, S.

                                               -46-
Miller, B. Mlynarczyk, M. Stegman, T. Bowler, M. Miller, J. Eberly, M. Patterson, N. Wolin, J.
LeCompte, and B. Hester. In addition, the court has identified J. Parrott and B. Deese as
employees of the White House Economic Council. However, the documents’ deliberative nature
is not apparent on their face. This is so despite the fact that Mr. Pearl’s descriptions of each of
the documents, provided above, proclaim their deliberative nature.

       In any event, the court notes that even if the documents were clearly deliberative, it
would not affect the court’s ultimate conclusion that, under the balancing test for the deliberative
process privilege, plaintiffs’ evidentiary need for the documents outweighs defendant’s interest
in preventing the documents’ disclosure. Thus, for the purpose of providing an alternative
analysis, the court deems the documents to be deliberative.

                                         c. Balancing Test

        Although defendant has not met its burden to demonstrate that the housing finance
reform documents are protected by the deliberative process privilege, the court will perform an
alternative analysis. Recognizing that the privilege is qualified, the court will balance plaintiffs’
evidentiary need for the documents against defendant’s interest in preserving their
confidentiality. In order to do so, the court weighs the five factors described in In re Subpoena.

         First, with respect to the relevance of the evidence sought to be protected, the documents
relate to various issues regarding which the court has permitted discovery. See supra Section
I.B. Document 13, UST 00389678, is a fifteen-page document prepared by the Treasury
Department captioned “Information Memorandum for Secretary Geithner.” The document, the [.
. .]—it relates to the Enterprises’ future profitability and the reasonableness of plaintiffs’
expectations regarding the Enterprises’ future profitability. Document 14, UST 00490551, is a
fifty-one-page document prepared by the Treasury Department, which [. . .]—it relates to the
Enterprises’ future profitability, the lifespan of the conservatorships, and the reasonableness of
plaintiffs’ expectations regarding the Enterprises’ future profitability. Document 15, UST
00500982, is a nine-page document captioned “GSE Reform.” The document was sent by senior
White House advisors to the President and consists of advice on reforming the Enterprises—it
relates to the Enterprises’ future profitability and the lifespan of the conservatorships. Document
16, UST 00513480, is an unnumbered twelve-page document [. . .] 19 The document was
prepared by a Treasury Department employee, [. . .]—it relates to the Enterprises’ future
profitability and the reasonableness of plaintiffs’ expectations regarding the Enterprises’ future
profitability. Document 17, UST 00515290, is a partially redacted two-page e-mail chain among
Treasury Department and White House employees. [. . .]—it relates to the lifespan of the
conservatorships. Document 18, UST 00518402, is a seven-page document prepared by the
Treasury Department captioned “Information Memorandum for Secretary Geithner.” [. . .]—it
relates to the Enterprises’ future profitability, the lifespan of the conservatorships, and the
reasonableness of plaintiffs’ expectations regarding the Enterprises’ future profitability.
Document 19, UST 00521902, is an unnumbered eleven-page document that is a draft of a
memorandum from the President’s senior economic advisors—it relates to the lifespan of the
conservatorships and the relationship between the FHFA and the Treasury Department.

       19
            The last page of the document is blank.
                                                -47-
Document 20, UST 00544897, is an unnumbered three-page document that was prepared by a
Treasury Department employee, [. . .]—it relates to the Enterprises’ future profitability and to the
reasonableness of plaintiffs’ expectations regarding the Enterprises’ future profitability.

       Second, with respect to the availability of other evidence, there is no other source of
evidence available to plaintiffs that would similarly inform their understanding of the
Enterprises’ future profitability, the reasonableness of plaintiffs’ expectations regarding the
Enterprises’ future profitability, the lifespan of the conservatorships, and the relationship
between the FHFA and the Treasury Department.

        Third, with respect to the seriousness of the litigation and the issues involved, neither
party disputes the importance of the case, both in terms of the damages and equitable relief
sought, as well as in terms of the case’s implication for litigation and “executive and legislative
branch policy repercussions.” Dairyland Power I, 77 Fed. Cl. at 342.

        Fourth, with respect to the government’s role in the litigation, because “the Government
is a party to this litigation and is the party that seeks to benefit from the invocation of the
deliberative process privilege,” its assertion of the “privilege must be carefully scrutinized to
ensure that the privilege retains its proper narrow scope.” Id.

        Fifth, with respect to the possibility of future timidity by government employees who will
be forced to recognize that their secrets are violable, it is highly unlikely, given the protective
order that is already in place in this case, that any type of disclosure would result in a chilling of
frank policy discussions between government employees.

        Thus, with respect to Documents 13-20, plaintiffs’ evidentiary need for the information
outweighs defendant’s interest in preventing the documents’ disclosure. In other words, the
deliberative process privilege cannot shield the disclosure of the documents in this instance
because evidence relating to the Enterprises’ future profitability, the reasonableness of plaintiffs’
expectations regarding the Enterprises’ future profitability, the lifespan of the conservatorships,
and the relationship between the FHFA and the Treasury Department implicates both the court’s
jurisdiction and the merits of the case and therefore is discoverable. The documents must be
disclosed.

                           2. Presidential Communications Privilege

        Defendant also asserts the presidential communications privilege with respect to some of
the housing finance reform documents. Document 15, UST 00500982, is a draft memorandum
regarding housing reform policy, which, according to Mr. McQuaid, was attached to an e-mail
from the Deputy Director of the National Economic Council (Brian Deese) to various senior
Treasury Department staff requesting final comments. Mr. McQuaid further states that it was
prepared by a senior advisor to the National Economic Council (James Parrott) with input from
the Director of the National Economic Council (Gene Sperling) and his staff, as well as from
various senior housing policy staff at the Treasury Department. The court cannot independently
verify either the authors or recipients of the draft document.

                                                -48-
      The redacted portion of Document 17, UST 00515290, is part of an e-mail exchange
between a senior advisor to the National Economic Council (James Parrott) and a Treasury
Department employee (Jeff Foster). The court cannot ascertain Mr. Foster’s title.

       Document 19, UST 00521902, is a draft memorandum captioned “POTUS Draft.” The
document, which discusses housing reform policy, bears the heading “THE WHITE HOUSE.”
According to Mr. McQuaid, the document was sent by the Director of the National Economic
Council (Gene Sperling). The court cannot independently verify that the document was sent, let
alone drafted by, Mr. Sperling.

         The redacted portion of Document 21, UST 00550441, is part of an e-mail from the
Director of the National Economic Council (Gene Sperling) to the Treasury Secretary (Timothy
Geithner), with a copy to the Deputy Director of the National Economic Council (Brian Deese).
It is subject to the presidential communications privilege because it consists of a deliberative
communication between three of the President’s senior staff in the course of fulfilling their roles
as advisors on the timing of housing reform.

         Defendant has not met its burden of establishing that Documents 15, 17, and 19 are
protected by the presidential communications privilege. However, even if the documents were
clearly protected by the privilege, it would not affect the court’s ultimate conclusion that
plaintiffs have established a need for them. To overcome an assertion of the presidential
communications privilege, a plaintiff must show that the evidence at issue is both important and
unavailable from another source. See In re Sealed Case, 121 F.3d at 757. In this case, that need
is overwhelming, especially with respect to this subset of withheld documents. As noted above,
the gravamen of plaintiffs’ complaint is that their property—the dividends due on their
noncumulative preferred government stock and their right to receive a liquidation upon the
Enterprises’ dissolution, liquidation, or winding up—was taken without just compensation in
violation of the Fifth Amendment to the United States Constitution. These documents are
communications among the President’s senior advisors regarding housing reform policy as it
specifically relates to the Enterprises. Collectively, the documents pertain to all of the relevant
discovery issues: (1) the Enterprises’ future profitability, (2) the lifespan of the
conservatorships, (3) the relationship between the FHFA and the Treasury Department, (4) the
Enterprises’ future solvency, (5) the reasonableness of plaintiffs’ expectations regarding the
Enterprises’ future profitability, and (6) the reasons why the government allowed the preexisting
capital structure and stockholders to remain in place, including whether this decision was based
on the partial expectation that the Enterprises would be profitable again in the future. Because
the evidence addresses both the court’s jurisdiction and the merits of the case, plaintiffs’ need for
it is paramount. In addition, with respect to the availability of other evidence, there is no other
source of evidence available to plaintiffs that would similarly inform their understanding of these
issues. Thus, Documents 15, 17, 19, and 21 must be disclosed.

                                                -49-
                                       H. Housing Policies

 Doc. Bates No.       From / To /        Description of Document / Privilege(s) Asserted
 No.                  Date / CC
 22   UST             M. Stegman to      “Draft speech containing predecisional deliberations
      00492699        B. Mlynarczyk      regarding housing policies”
                      on 5/26/2012
                                         DPP
                      CC: M.
                      Stegman
 23     UST           T. Bowler to       “Draft memorandum prepared by Treasury staff
        00504514      B. Mlynarczyk      containing predecisional deliberations related to various
                      and M.             FHFA/GSE housing finance initiatives”
                      Stegman on
                      7/27/2012          DPP
 24     UST           T. Bowler to       “Draft memorandum prepared by Treasury staff
        00536346      D. Graves, P.      containing predecisional deliberations regarding
                      Caldwell, and      housing policy reform, including the future of the
                      J. Foster on       GSEs”
                      9/6/2011
                                         DPP
 25     UST           M. Stegman to      “Draft memorandum containing predecisional
        00548270      M. Miller on       deliberations related to housing policy and housing
                      2/4/2012           finance reform”

                      CC: M.             DPP
                      Stegman

        The next group of documents at issue pertains to housing policies. According to Mr.
Pearl, since the financial crisis, the Treasury Department has been “actively engaged [with other
agencies] in broader housing policy efforts,” to include “potential housing-finance reforms, . . .
affordable-housing initiatives, foreclosure-prevention measures, loan-modification and
refinancing programs, and reforms to the mortgage markets.” Def.’s Resp. A72. He further
claims that the documents at issue should not be disclosed:

               Requiring production of these deliberative materials would have a
               chilling effect on development of housing policy going forward. If
               Treasury officials and staff know that their housing policy
               deliberations will be disclosed to litigation adversaries, they are
               unlikely to feel at liberty to offer their opinions and fully engage in
               the housing policy development process. It will immediately
               become difficult to fully develop housing policies and strategies.
               Requiring disclosure of the details of these evolving policymaking
               processes would inhibit Treasury’s ability to engage in ongoing
               housing policy deliberations.

                                                -50-
Id.

       Mr. Pearl asserts the deliberative process privilege as to Documents 22-25 and provides
individual descriptions of the documents. He describes Document 22, UST 00492699, as:

               Draft of speech to be delivered by Michael Stegman, Counselor to
               the Treasury Secretary for Housing Finance Policy, regarding
               housing policy reforms. The document reflects discussion of
               ongoing housing policy efforts and potential housing policies to
               pursue. The document reflects predecisional deliberations
               regarding such policies, including standards for short sales, the
               federal risk retention rule, and housing finance reform.

Id. Mr. Pearl further indicates that a final copy of the speech will be produced to plaintiffs. Id.
He then describes Document 23, UST 00504514, as: “Draft of memorandum regarding various
FHFA housing policy initiatives including refinancing standards and reform of representations
and warranties for consumer mortgages. The document reflects discussion of FHFA’s progress
in various housing policy areas and views and opinions of FHFA’s progress. The document
reflects predecisional deliberations regarding such policies.” Id. at A73. Mr. Pearl next
describes Document 24, UST 00536346, as:

               Draft of memorandum for Secretary Geithner regarding housing
               policy ideas. The document reflects discussion of housing policy
               efforts and potential housing policies to pursue including how to
               increase housing affordability, how to assist communities with
               high foreclosure rates, how to increase mortgage financing, and
               how to encourage banks to modify existing loans. The document
               reflects predecisional deliberations regarding such policies and
               views and opinions of the proposed policies.

Id. Finally, he describes Document 25, UST 00548270, as: “Draft outline of memorandum for
Secretary Geithner regarding housing policy efforts including loan programs, housing finance
reform, and other mortgage-related reforms. The document reflects discussion of potential
housing policies to pursue. The document reflects predecisional deliberations regarding such
policies and views and opinions of the proposed policies.” Id.

                                  1. Procedural Requirements

       a. The Authority to Invoke the Privilege Was Properly Delegated to Mr. Pearl

       As noted above, the authority to invoke the deliberative process privilege was properly
delegated to Mr. Pearl. See supra Section III.G.1.a.i.

                                                -51-
 b. Defendant Has Identified With Particularity the Documents It Claims Are Privileged

        Mr. Pearl’s declaration, which provides a description of the housing policy documents,
coupled with defendant’s privilege log, which (1) identifies the documents by their Bates
numbers, (2) provides the documents’ authors and recipients, (3) provides a description of the
documents, and (4) identifies the specific privilege claimed, allows the court to identify with
particularity the documents at issue.

        c. Defendant Has Provided Precise and Certain Reasons for Maintaining the
                            Confidentiality of the Documents

       Based on Mr. Pearl’s declaration, which provides precise and certain reasons for
maintaining the confidentiality of the documents at issue, Def.’s Resp. A72, the court can
balance the government’s interest in maintaining that confidentiality with plaintiffs’ evidentiary
need for the documents’ disclosure.

                                  2. Substantive Requirements

 a. Defendant Has Not Shown That All of the Documents Are Predecisional but, for the
Purpose of Providing an Alternative Analysis, the Court Will Proceed as if Defendant Has
                                 Made Such a Showing

        The decision to approve the Net Worth Sweep was made by Secretary Geithner on
August 16, 2012. See Pls.’ Mot. A178. According to the privilege log, Document 22 was sent
by M. Stegman to B. Mlynarczyk, with a copy to M. Stegman, on May 26, 2012. The privilege
log does not explicitly state that the document was created on that date, and upon its own
examination, the court finds that Document 22 is undated. Therefore, defendant has not
established that this document is predecisional. However, the court notes that even if the
document was clearly predecisional, it would not affect the court’s ultimate conclusion that,
under the balancing test for the deliberative process privilege, plaintiffs’ evidentiary need for the
document outweighs defendant’s interest in preventing the document’s disclosure. Thus, for the
purpose of providing an alternative analysis, the court deems this document to be predecisional.

        The privilege log also indicates that Document 23 was sent by T. Bowler to B.
Mlynarczyk and M. Stegman on July 27, 2012. Although the privilege log does not explicitly
state that the document was created on that date, upon its own examination, the court finds that
Document 23 is dated July 27, 2012, and thus is predecisional.

        The privilege log further states that Document 24 was sent by T. Bowler to D. Graves, P.
Caldwell, and J. Foster on September 6, 2011. Although the privilege log does not explicitly
state that the document was created on that date, upon its own examination, the court finds that
Document 24 is dated September 6, 2011, and thus is predecisional.

        Finally, the privilege log provides that Document 25 was sent by M. Stegman to M.
Miller, with a copy to M. Stegman, on February 4, 2012. The privilege log does not explicitly
state that the document was created on that date, and upon its own examination, the court finds

                                                -52-
that Document 25 is undated. Therefore, defendant has not established that this document is
predecisional. However, the court notes that even if the document was clearly predecisional, it
would not affect the court’s ultimate conclusion that, under the balancing test for the deliberative
process privilege, plaintiffs’ evidentiary need for the document outweighs defendant’s interest in
preventing the document’s disclosure. Thus, for the purpose of providing an alternative analysis,
the court deems this document to be predecisional.

b. Defendant Has Not Shown That the Documents Are Deliberative but, for the Purpose of
Providing an Alternative Analysis, the Court Will Proceed as if Defendant Has Made Such
                                        a Showing

         In order to determine whether a document is subject to the deliberative process privilege,
the court must be able to discern whether the document reflects the “intra-governmental
exchange of thoughts that actively contribute to the agency’s decisionmaking process,” Texaco
P.R., Inc., 60 F.3d at 884-85. Thus, as to each document, the court must be able to identify the
affiliations of the individuals on defendant’s privilege log and also discern the document’s
deliberative nature.

        In this case, defendant has not met its burden of showing that the documents are
deliberative. Upon examination of the privilege log and all of the documents submitted for in
camera review, which include some individuals’ e-mail domains, the court has identified M.
Stegman, B. Mlynarczyk, T. Bowler, D. Graves, P. Caldwell, J. Foster, and M. Miller as
Treasury Department employees. However, the documents’ deliberative nature is not apparent
on their face. This is so despite the fact that Mr. Pearl’s descriptions of each of the documents,
provided above, proclaim their deliberative nature.

       In any event, the court notes that even if the documents were clearly deliberative, it
would not affect the court’s ultimate conclusion that, under the balancing test for the deliberative
process privilege, plaintiffs’ evidentiary need for the documents outweighs defendant’s interest
in preventing the documents’ disclosure. Thus, for the purpose of providing an alternative
analysis, the court deems the documents to be deliberative.

                                         3. Balancing Test

        Although defendant has not met its burden to demonstrate that the housing policy
documents are protected by the deliberative process privilege, the court will perform an
alternative analysis. Recognizing that the privilege is qualified, the court will balance plaintiffs’
evidentiary need for the documents against defendant’s interest in preserving their
confidentiality. In order to do so, the court weighs the five factors described in In re Subpoena.

         First, with respect to the relevance of the evidence sought to be protected, the documents
relate to various issues regarding which the court has permitted discovery. See supra Section
I.B. Document 22, UST 00492699, is a seven-page document. It is a draft of a speech to be
given by Michael Stegman, Counselor to the Treasury Secretary for Housing Finance Policy, and
describes plans to reform the housing finance market—it relates to the Enterprises’ future
profitability, the relationship between the FHFA and the Treasury Department, and the

                                                -53-
reasonableness of plaintiffs’ expectations regarding the Enterprises’ future profitability.
Document 23, UST 00504514, is a two-page document captioned [. . .]—it relates to the
Enterprises’ future profitability, the lifespan of the conservatorships, the relationship between the
FHFA and the Treasury Department, and the reasonableness of plaintiffs’ expectations regarding
the Enterprises’ future profitability. Document 24, UST 00536346, is a ten-page document
prepared by the Treasury Department captioned “Note to Secretary Geithner.” [. . .]—it relates
to the Enterprises’ future profitability and the reasonableness of plaintiffs’ expectations
regarding the Enterprises’ future profitability. Document 25, UST 00548270, is a three-page
document [. . .]—it relates to the Enterprises’ future profitability and the reasonableness of
plaintiffs’ expectations regarding the Enterprises’ future profitability.

        Second, with respect to the availability of other evidence, there is no other source of
evidence available to plaintiffs that would similarly inform their understanding of the
Enterprises’ future profitability, the relationship between the FHFA and the Treasury
Department, the reasonableness of plaintiffs’ expectations regarding the Enterprises’ future
profitability, and the lifespan of the conservatorships.

        Third, with respect to the seriousness of the litigation and the issues involved, neither
party disputes the importance of the case, both in terms of the damages and equitable relief
sought, as well as in terms of the case’s implication for litigation and “executive and legislative
branch policy repercussions.” Dairyland Power I, 77 Fed. Cl. at 342.

        Fourth, with respect to the government’s role in the litigation, because “the Government
is a party to this litigation and is the party that seeks to benefit from the invocation of the
deliberative process privilege,” its assertion of the “privilege must be carefully scrutinized to
ensure that the privilege retains its proper narrow scope.” Id.

        Fifth, with respect to the possibility of future timidity by government employees who will
be forced to recognize that their secrets are violable, it is highly unlikely, given the protective
order that is already in place in this case, that any type of disclosure would result in a chilling of
frank policy discussions between government employees.

        Thus, with respect to Documents 22-25, plaintiffs’ evidentiary need for the information
outweighs defendant’s interest in preventing the documents’ disclosure. In other words, the
deliberative process privilege cannot shield the disclosure of the documents in this instance
because evidence relating to the Enterprises’ future profitability, the relationship between the
FHFA and the Treasury Department, the reasonableness of plaintiffs’ expectations regarding the
Enterprises’ future profitability, and the lifespan of the conservatorships implicates both the
court’s jurisdiction and the merits of the case and therefore is discoverable. The documents must
be disclosed.

                                                -54-
                                   I. PSPA Modifications

Doc. Bates No.   From / To /         Description of Document / Privilege(s) Asserted
No.              Date / CC
26   UST         M. Miller to S.     “Draft document prepared by Treasury staff containing
     00061421    Valverde, A.        predecisional deliberations related to potential
                 Adeyemo, T.         modification of PSPAs”
                 Massad, M.
                 Stegman, T.         DPP
                 Bowler, and B.
                 Deese on
                 7/20/2012

                 CC: A. Woolf
27   UST         A. Goldblatt to     “Draft presentation prepared by Treasury staff
     00384146    T. Bowler on        containing predecisional analysis and information
                 7/3/2012            related to financial forecasts for Fannie Mae”

                                     DPP
28   UST         J. Foster to T.     “Draft presentation prepared by Treasury staff
     00384501    Bowler and M.       containing predecisional deliberations related to PSPA
                 Stegman on          amendment considerations”
                 6/10/2012
                                     DPP
29   UST         J. Foster to S.     “Draft memorandum for Secretary containing
     00389662    Valverde and        predecisional deliberations related to GSE
                 M. Fikre on         restructuring”
                 1/31/2012
                                     DPP
30   UST         A. Goldblatt to     “Predecisional, deliberative, draft analysis of GSE
     00407182    A. Chepenik         financial projections prepared by Treasury staff”
                 and J. Foster
                 on 7/5/2012         DPP
31   UST         A. Goldblatt to     “Draft analysis reflecting predecisional deliberations
     00407342    A. Chepenik         concerning GSE financial projections”
                 and J. Foster
                 on 6/13/2012        DPP
32   UST         A. Chepenik to      “Predecisional deliberative analysis of GSE financial
     00472229    T. Bowler, J.       projections prepared by Treasury staff”
                 Foster and B.
                 Mlynarczyk on       DPP
                 2/26/2012
33   UST         A. Chepenik to      “Predecisional deliberative analysis of GSE financial
     00472232    T. Bowler, J.       projections prepared by Treasury staff”
                 Foster and B.
                                     DPP

                                            -55-
                      Mlynarczyk on
                      2/26/2012
 34     UST           J. Foster to M. “Draft document containing predecisional deliberations
        00478535      Stegman on      concerning potential modifications to PSPAs”
                      6/7/2012
                                      DPP
 35     UST           J. Foster to T. “Draft policy document prepared by Treasury staff
        00502258      Bowler, B.      containing predecisional deliberations regarding
                      Mlynarczyk,     proposed PSPA”
                      A. Chepenik,
                      N. Franchot     DPP
                      and M.
                      Stegman on
                      3/5/2012
 36     UST           Exec Sec        “Draft document containing predecisional deliberations
        00536560      Process Unit to concerning potential modification of the PSPAs”
                      TFG75 20 on
                      6/1/2012        DPP

                      CC: Exec Sec
                      Process Unit
                      and Exec Sec
                      Staff
 37     UST           A. Chepenik to    “Draft presentation for [Office of Management and
        00539251      T. Bowler, J.     Budget (“OMB”)] containing predecisional
                      Foster, and A.    deliberations concerning Treasury proposals for
                      Goldblatt on      modifying the terms of the PSPAs”
                      6/6/2012
                                        DPP

        The next group of documents identified in defendant’s privilege log pertains to PSPA
modifications. According to Mr. Pearl, “[t]he draft memoranda, draft presentations, and other
draft documents in this category relate to the development of the modifications to the PSPAs,”
and therefore “reflect predecisional deliberations central to the policy-making process and the
considerations weighed by Treasury officials and staff in connection with these deliberations.”
Def.’s Resp. A73. He further claims that the “documents are predecisional because they were
created and shared before the Third Amendment was adopted and contain deliberations
concerning rationales for entering into it.” Id. Finally, he claims that the documents at issue
should not be disclosed:

               Requiring production of these deliberative materials would have a
               chilling effect on Treasury’s ability to develop financial policies.
               The ability to distribute and receive comments and feedback on

       20
            Although none of the parties’ submissions contains a definition of “TFG75,” the court
infers that “TFG75” refers to Secretary Geithner.
                                               -56-
                 draft memoranda, draft presentations, and other draft documents is
                 an essential function of the policy-making process. If Treasury
                 officials and staff believe that such draft documents will be
                 disclosed to litigation adversaries, they are unlikely to feel at
                 liberty to offer their opinions and fully engage in the policy
                 development process. As a result, Treasury’s ability
                 to develop and make policy would be adversely affected.

Id. at A74-75.

       Mr. Pearl asserts the deliberative process privilege as to Documents 26-37 and provides
individual descriptions of the documents. He describes Document 26, UST 00061421,
Document 28, UST 00384501, Document 34, UST 00478535, Document 35, UST 00502258,
and Document 36, UST 00536560, as:

                 Draft documents discussing potential modifications to the PSPAs.
                 These documents reflect discussions of proposed modifications to
                 the PSPAs including discussions of potential rationales for the
                 changes under consideration. The documents also reflect opinions
                 and views regarding the proposed modifications. The documents
                 include discussions of proposed modifications that were ultimately
                 not made and the considerations that led to the decision not to
                 pursue such modifications. The documents reflect predecisional
                 deliberations regarding the proposed changes.

Id. at A73-74. He then describes Document 27, UST 00384146, as:

                 Draft of presentation for Secretary Geithner discussing Fannie Mae
                 financial projections. The document reflects analysis and
                 projections regarding Fannie Mae’s future financial performance,
                 including estimates of future draws and dividend payments. Such
                 analysis was part of Treasury’s decision-making process that
                 resulted in the execution of the Third Amendment. The document
                 reflects predecisional deliberations regarding the proposed
                 modifications.

Id. at A74. Mr. Pearl further indicates that a final version of Document 27, which was provided
to Secretary Geithner, was produced to plaintiffs. Id. He next describes Document 29, UST
00389662, as: “Draft of memorandum for Secretary Geithner discussing potential options for
restructuring the GSEs and transitioning to a future housing finance system. The document
reflects discussions of various policy options under consideration. The document reflects
predecisional deliberations regarding such policy options and views and opinions of the proposed
policy options.” Id. Mr. Pearl then describes Document 30, UST 00407182, Document 31, UST
00407342, Document 32, UST 00472229, and Document 33, UST 00472232, as:

                                                -57-
               Draft analyses of GSE financial projections prepared by Treasury
               officials and staff. These documents reflect draft analyses and
               projections regarding the GSEs’ future financial performance,
               including estimates of future draws and dividend payments. The
               assumptions embedded in the analyses reflect Treasury’s
               subjective judgment. Such analytical work regarding potential
               modifications to the PSPAs was part of Treasury’s deliberative
               process that culminated in the execution of the Third Amendment.

Id. Finally, he describes Document 37, UST 00539251, as:

               Draft of presentation for [OMB] discussing potential modifications
               to the PSPAs. The document reflects draft analyses and
               projections regarding the GSEs’ future financial performance,
               including estimates of future guarantee fees. Those analyses and
               projections were part of Treasury’s deliberative process that
               culminated in the execution of the Third Amendment. Counsel has
               informed me that the final version of this document, which was
               provided to OMB, is publicly available.

Id.

                                  1. Procedural Requirements

       a. The Authority to Invoke the Privilege Was Properly Delegated to Mr. Pearl

       As noted above, the authority to invoke the deliberative process privilege was properly
delegated to Mr. Pearl. See supra Section III.G.1.a.i.

  b. Defendant Has Identified With Particularity the Documents It Claims Are Privileged

        Mr. Pearl’s declaration, which provides a description of the PSPA modifications
documents, coupled with defendant’s privilege log, which (1) identifies the documents by their
Bates numbers, (2) provides the documents’ authors and recipients, (3) provides a description of
the documents, and (4) identifies the specific privilege claimed, allows the court to identify with
particularity the documents at issue.

       c. Defendant Has Provided Precise and Certain Reasons for Maintaining the
                           Confidentiality of the Documents

       Based on Mr. Pearl’s declaration, which provides precise and certain reasons for
maintaining the confidentiality of the documents at issue, see Def.’s Resp. A73-75, the court can
balance the government’s interest in maintaining that confidentiality with plaintiffs’ evidentiary
need for the documents’ disclosure.

                                               -58-
                                 2. Substantive Requirements

 a. Defendant Has Not Shown That All of the Documents Are Predecisional but, for the
Purpose of Providing an Alternative Analysis, the Court Will Proceed as if Defendant Has
                                 Made Such a Showing

        The decision to approve the Net Worth Sweep was made by Secretary Geithner on
August 16, 2012. See Pls.’ Mot. A178. According to the privilege log, Document 26 was sent
by M. Miller to S. Valverde, A. Adeyemo, T. Massad, M. Stegman, T. Bowler, and B. Deese,
with a copy to A. Woolf, on July 20, 2012. Although the privilege log does not explicitly state
that the document was created on that date, upon its own examination, the court finds that
Document 26 is dated July 20, 2012, and thus is predecisional.

       The privilege log next indicates that Document 27 was sent by A. Goldblatt to T. Bowler
on July 3, 2012. Although the privilege log does not explicitly state that the document was
created on that date, upon its own examination, the court finds that Document 27 is dated July
2012, and thus is predecisional.

        The privilege log then reflects that Document 28 was sent by J. Foster to T. Bowler and
M. Stegman on June 10, 2012. The privilege log does not explicitly state that the document was
created on that date, and upon its own examination, the court finds that Document 28 is undated.
Therefore, defendant has not established that this document is predecisional. However, the court
notes that even if the document was clearly predecisional, it would not affect the court’s ultimate
conclusion that, under the balancing test for the deliberative process privilege, plaintiffs’
evidentiary need for the document outweighs defendant’s interest in preventing the document’s
disclosure. Thus, for the purpose of providing an alternative analysis, the court deems this
document to be predecisional.

        The privilege log further states that Document 29 was sent by J. Foster to S. Valverde and
M. Fikre on January 31, 2012. Although the privilege log does not explicitly state that the
document was created on that date, upon its own examination, the court finds that Document 29
is dated December 14, 2011, and thus is predecisional.

        The privilege log also indicates that Document 30 was sent by A. Goldblatt to A.
Chepenik and J. Foster on July 5, 2012. The privilege log does not explicitly state that the
document was created on that date, and upon its own examination, the court finds that Document
30 is undated. Therefore, defendant has not established that this document is predecisional.
However, the court notes that even if the document was clearly predecisional, it would not affect
the court’s ultimate conclusion that, under the balancing test for the deliberative process
privilege, plaintiffs’ evidentiary need for the document outweighs defendant’s interest in
preventing the document’s disclosure. Thus, for the purpose of providing an alternative analysis,
the court deems this document to be predecisional.

      The privilege log then provides that Document 31 was sent by A. Goldblatt to A.
Chepenik and J. Foster on June 13, 2012. The privilege log does not explicitly state that the
document was created on that date, and upon its own examination, the court finds that Document

                                               -59-
31 is undated. Therefore, defendant has not established that this document is predecisional.
However, the court notes that even if the document was clearly predecisional, it would not affect
the court’s ultimate conclusion that, under the balancing test for the deliberative process
privilege, plaintiffs’ evidentiary need for the document outweighs defendant’s interest in
preventing the document’s disclosure. Thus, for the purpose of providing an alternative analysis,
the court deems this document to be predecisional.

        The privilege log next states that Document 32 was sent by A. Chepenik to T. Bowler, J.
Foster, and B. Mlynarczyk on February 26, 2012. The privilege log does not explicitly state that
the document was created on that date, and upon its own examination, the court finds that
Document 30 is undated. Therefore, defendant has not established that this document is
predecisional. However, the court notes that even if the document was clearly predecisional, it
would not affect the court’s ultimate conclusion that, under the balancing test for the deliberative
process privilege, plaintiffs’ evidentiary need for the document outweighs defendant’s interest in
preventing the document’s disclosure. Thus, for the purpose of providing an alternative analysis,
the court deems this document to be predecisional.

        The privilege log further reflects that Document 33 was sent by A. Chepenik to T.
Bowler, J. Foster, and B. Mlynarczyk on February 26, 2012. The privilege log does not
explicitly state that the document was created on that date, and upon its own examination, the
court finds that Document 33 is undated. Therefore, defendant has not established that this
document is predecisional. However, the court notes that even if the document was clearly
predecisional, it would not affect the court’s ultimate conclusion that, under the balancing test for
the deliberative process privilege, plaintiffs’ evidentiary need for the document outweighs
defendant’s interest in preventing the document’s disclosure. Thus, for the purpose of providing
an alternative analysis, the court deems this document to be predecisional.

        The privilege log also indicates that Document 34 was sent by J. Foster to M. Stegman on
June 7, 2012. The privilege log does not explicitly state that the document was created on that
date, and upon its own examination, the court finds that Document 34 is undated. Therefore,
defendant has not established that this document is predecisional. However, the court notes that
even if the document was clearly predecisional, it would not affect the court’s ultimate
conclusion that, under the balancing test for the deliberative process privilege, plaintiffs’
evidentiary need for the document outweighs defendant’s interest in preventing the document’s
disclosure. Thus, for the purpose of providing an alternative analysis, the court deems this
document to be predecisional.

        The privilege log then provides that Document 35 was sent by J. Foster to T. Bowler, B.
Mlynarczyk, A. Chepenik, N. Franchot, and M. Stegman on March 5, 2012. The privilege log
does not explicitly state that the document was created on that date, and upon its own
examination, the court finds that Document 35 is undated. Therefore, defendant has not
established that this document is predecisional. However, the court notes that even if the
document was clearly predecisional, it would not affect the court’s ultimate conclusion that,
under the balancing test for the deliberative process privilege, plaintiffs’ evidentiary need for the
document outweighs defendant’s interest in preventing the document’s disclosure. Thus, for the
purpose of providing an alternative analysis, the court deems this document to be predecisional.

                                                -60-
        The privilege log next states that Document 36 was sent by the Executive Secretary
Processing Unit to TFG75 on June 1, 2012. The privilege log does not explicitly state that the
document was created on that date, and upon its own examination, the court finds that Document
36 is undated. Therefore, defendant has not established that this document is predecisional.
However, the court notes that even if the document was clearly predecisional, it would not affect
the court’s ultimate conclusion that, under the balancing test for the deliberative process
privilege, plaintiffs’ evidentiary need for the document outweighs defendant’s interest in
preventing the document’s disclosure. Thus, for the purpose of providing an alternative analysis,
the court deems this document to be predecisional.

        Finally, the privilege log reflects that Document 37 was sent by A. Chepenik to T.
Bowler, J. Foster, and A. Goldblatt on June 6, 2012. Although the privilege log does not
explicitly state that the document was created on that date, upon its own examination, the court
finds that Document 37 is dated June 6, 2012, and thus is predecisional.

b. Defendant Has Not Shown That the Documents Are Deliberative but, for the Purpose of
Providing an Alternative Analysis, the Court Will Proceed as if Defendant Has Made Such
                                        a Showing

         In order to determine whether a document is subject to the deliberative process privilege,
the court must be able to discern whether the document reflects the “intra-governmental
exchange of thoughts that actively contribute to the agency’s decisionmaking process,” Texaco
P.R., Inc., 60 F.3d at 884-85. Thus, as to each document, the court must be able to identify the
affiliations of the individuals on defendant’s privilege log and also discern the document’s
deliberative nature.

        In this case, defendant has not met its burden of showing that the documents are
deliberative. Upon examination of the privilege log and all of the documents submitted for in
camera review, which include some individuals’ e-mail domains, the court has identified the
following individuals as Treasury Department employees: M. Miller, S. Valverde, A. Adeyemo,
T. Massad, M. Stegman, T. Bowler, A. Woolf, A. Goldblatt, J. Foster, M. Fikre, A. Chepenik, B.
Mlynarczyk, N. Franchot, and T. Geithner. In addition, the court has identified B. Deese as an
employee of the White House Economic Council. However, the documents’ deliberative nature
is not apparent on their face. This is so despite the fact that Mr. Pearl’s descriptions of each of
the documents, provided above, proclaim their deliberative nature.

       In any event, the court notes that even if the documents were clearly deliberative, it
would not affect the court’s ultimate conclusion that, under the balancing test for the deliberative
process privilege, plaintiffs’ evidentiary need for the documents outweighs defendant’s interest
in preventing the documents’ disclosure. Thus, for the purpose of providing an alternative
analysis, the court deems the documents to be deliberative.

                                                -61-
                                         3. Balancing Test

        Although defendant has not met its burden to demonstrate that the PSPA modification
documents are protected by the deliberative process privilege, the court will perform an
alternative analysis. Recognizing that the privilege is qualified, the court will balance plaintiffs’
evidentiary need for the documents against defendant’s interest in preserving their
confidentiality. In order to do so, the court weighs the five factors described in In re Subpoena.

         First, with respect to the relevance of the evidence sought to be protected, the documents
relate to various issues regarding which the court has permitted discovery. See supra Section
I.B. Document 26, UST 00061421, is a two-page document prepared by the Treasury
Department [. . .]—it relates to the Enterprises’ future profitability, the lifespan of the
conservatorships, the relationship between the FHFA and the Treasury Department, the
reasonableness of plaintiffs’ expectations regarding the Enterprises’ future profitability, and the
reasons behind the government’s actions. Document 27, UST 00384146, is a ten-page document
prepared by the Treasury Department [. . .]—it relates to Fannie Mae’s future profitability and
the reasonableness of plaintiffs’ expectations regarding the Enterprises’ future profitability.
Document 28, UST 00384501, is a three-page document prepared by the Treasury Department [.
. .]—it relates to the Enterprises’ future profitability. Document 29, UST 00389662, is a sixteen-
page document prepared by the Treasury Department [. . .]—it relates to the Enterprises’ future
profitability and the reasonableness of plaintiffs’ expectations regarding the Enterprises’ future
profitability.

         Document 30, UST 00407182, is an unnumbered fifty-three-page document. 21 Although
it is not clearly labeled a Treasury Department document, Document 30 contains financial
projections for the Enterprises—it relates to the Enterprises’ future profitability and the
reasonableness of plaintiffs’ expectations regarding the Enterprises’ future profitability.
Document 31, UST 00407342, is an unnumbered forty-four-page document. [. . .]—it relates to
the Enterprises’ future profitability. Document 32, UST 00472229, is an unnumbered three-page
document. Although it is not clearly labeled a Treasury Department document, Document 32
contains financial projections for the Enterprises—it relates to the Enterprises’ future
profitability, and the reasonableness of plaintiffs’ expectations regarding the Enterprises’ future
profitability. Document 33, UST 00472232, is a partially numbered three-page document.
Although it is not clearly labeled a Treasury Department document, Document 33 contains
financial projections for the Enterprises—it relates to the Enterprises’ future profitability and the
reasonableness of plaintiffs’ expectations regarding the Enterprises’ future profitability.

       Document 34, UST 00478535, is an unnumbered two-page document captioned “Case
for PSPA Action.” [. . .]—it relates to the Enterprises’ future profitability, the lifespan of the
conservatorships, the relationship between the FHFA and the Treasury Department, the
reasonableness of plaintiffs’ expectations regarding the Enterprises’ future profitability, and the
reasons behind the government’s actions. Document 35, UST 00502258, is a two-page
document. The document, the subject of which is [. . .] was prepared by Treasury Department
staff—it relates to the Enterprises’ future profitability, the lifespan of the conservatorships, the

       21
            Pages 28 and 29 of this document are blank.
                                                -62-
relationship between the FHFA and the Treasury Department, the reasonableness of plaintiffs’
expectations regarding the Enterprises’ future profitability, and the reasons behind the
government’s actions. Document 36, UST 00536560, is an unnumbered four-page document [. .
.]—it relates to the Enterprises’ future profitability, the lifespan of the conservatorships, the
relationship between the FHFA and the Treasury Department, the reasonableness of plaintiffs’
expectations regarding the Enterprises’ future profitability, and the reasons behind the
government’s actions. Finally, Document 37, UST 00539251, is a nine-page document [. . .]—it
relates to the Enterprises’ future profitability.

       Second, with respect to the availability of other evidence, there is no other source of
evidence available to plaintiffs that would similarly inform their understanding of the
Enterprises’ future profitability, the lifespan of the conservatorships, the relationship between the
FHFA and the Treasury Department, the reasonableness of plaintiffs’ expectations regarding the
Enterprises’ future profitability, and the reasons behind the government’s actions.

        Third, with respect to the seriousness of the litigation and the issues involved, neither
party disputes the importance of the case, both in terms of the damages and equitable relief
sought, as well as in terms of the case’s implication for litigation and “executive and legislative
branch policy repercussions.” Dairyland Power I, 77 Fed. Cl. at 342.

        Fourth, with respect to the government’s role in the litigation, because “the Government
is a party to this litigation and is the party that seeks to benefit from the invocation of the
deliberative process privilege,” its assertion of the “privilege must be carefully scrutinized to
ensure that the privilege retains its proper narrow scope.” Id.

        Fifth, with respect to the possibility of future timidity by government employees who will
be forced to recognize that their secrets are violable, it is highly unlikely, given the protective
order that is already in place in this case, that any type of disclosure would result in a chilling of
frank policy discussions between government employees.

        Thus, with respect to Documents 26-37, plaintiffs’ evidentiary need for the information
outweighs defendant’s interest in preventing the documents’ disclosure. In other words, the
deliberative process privilege cannot shield the disclosure of the documents in this instance
because evidence relating to the Enterprises’ future profitability, the lifespan of the
conservatorships, the relationship between the FHFA and the Treasury Department, the
reasonableness of plaintiffs’ expectations regarding the Enterprises’ future profitability, and the
reasons behind the government’s actions implicates both the court’s jurisdiction and the merits of
the case and therefore is discoverable. The documents must be disclosed.

                                         J. GSE Projections

 Doc. Bates No.        From / To /        Description of Document / Privilege(s) Asserted
 No.                   Date / CC
 38   UST              A. Eberhardt       “Draft document prepared for Treasury by consultant
      00409040         to J. Foster on    containing predecisional deliberations concerning GSE
                       3/12/2012          financial projections”

                                                -63-
                                  DPP
39   UST        A. Eberhardt      “Predecisional financial analysis prepared by Treasury
     00473767   to J. Foster on   consultant reflecting Treasury deliberations regarding
                12/10/2011        GSEs”

                                  DPP
40   UST        A. Eberhardt      “Predecisional financial analysis prepared by Treasury
     00473770   to J. Foster on   consultant reflecting Treasury deliberations regarding
                12/10/2011        GSEs”

                                  DPP
41   UST        A. Eberhardt      “Predecisional financial analysis prepared by Treasury
     00473773   to J. Foster on   consultant reflecting Treasury deliberations regarding
                12/10/2011        GSEs”

                                  DPP
42   UST        A. Eberhardt      “Predecisional financial analysis prepared by Treasury
     00473776   to J. Foster on   consultant reflecting Treasury deliberations regarding
                12/10/2011        GSEs”

                                  DPP
43   UST        A. Eberhardt      “Predecisional financial analysis prepared by Treasury
     00473779   to J. Foster on   consultant reflecting Treasury deliberations regarding
                12/10/2011        GSEs”

                                  DPP
44   UST        A. Eberhardt      “Predecisional financial analysis prepared by Treasury
     00473782   to J. Foster on   consultant reflecting Treasury deliberations regarding
                12/10/2011        GSEs”

                                  DPP
45   UST        J. Foster to A.   “Predecisional deliberative analysis of GSE financial
     00481423   Chepenik on       projections prepared by Treasury consultant”
                12/13/2011
                                  DPP
46   UST        J. Foster to A.   “Predecisional deliberative analysis of GSE financial
     00481424   Chepenik on       projections prepared by Treasury consultant”
                12/13/2011
                                  DPP
47   UST        J. Foster to A.   “Predecisional deliberative analysis of GSE financial
     00481425   Chepenik on       projections prepared by Treasury consultant”
                12/13/2011
                                  DPP

                                        -64-
 48     UST           A. Chepenik to “Predecisional deliberative analysis of GSE financial
        00556294      J. Foster on   projections prepared by consultant”
                      1/6/2012
                                     DPP
 49     UST           A. Chepenik to “Predecisional deliberative analysis of GSE financial
        00556295      J. Foster on   projections prepared by consultant”
                      1/6/2012
                                     DPP
 50     UST           A. Chepenik to “Predecisional deliberative analysis of GSE financial
        00556459      J. Foster on   projections prepared by consultant”
                      1/6/2012
                                     DPP
 51     UST           A. Chepenik to “Predecisional deliberative analysis of GSE financial
        00556460      J. Foster on   projections prepared by consultant”
                      1/6/2012
                                     DPP

         The next group of documents included in defendant’s privilege log concern GSE
projections. According to Mr. Pearl, “[t]he draft analyses and draft documents in this category
relate to analyses of GSE financial projections provided by Grant Thornton, a Treasury
consultant, to Treasury.” Def.’s Resp. A75. He further claims that “[e]ach of the documents in
this category contains outputs from Grant Thornton’s model in spreadsheet form,” and that
“Treasury used these projections in considering whether to make modifications to the PSPAs.”
Id. In addition, he notes that “[a]t Treasury’s request, Grant Thornton made modifications to
certain assumptions in its model and provided Treasury with the results,” and that it is these
assumptions, which are “embedded in the financial projections,” that are deliberative because
they “reflect the subjective judgments and choices of the agency.” Id. Finally, he claims that the
documents at issue should not be disclosed:

               Requiring production of these deliberative materials would have a
               chilling effect on the ability of Treasury staff to engage with
               consultants as they develop and execute financial policies. If
               Treasury officials and staff believe that such draft documents will
               be disclosed to litigation adversaries, they are unlikely to feel
               comfortable making use of expert consultants in the policy
               development process. As a result, Treasury’s ability to devise and
               execute financial policies would be harmed.

Id.

       Mr. Pearl asserts the deliberative process privilege as to Documents 38-51.

                                               -65-
                                  1. Procedural Requirements

       a. The Authority to Invoke the Privilege Was Properly Delegated to Mr. Pearl

       As noted above, the authority to invoke the deliberative process privilege was properly
delegated to Mr. Pearl. See supra Section III.G.1.a.i.

 b. Defendant Has Identified With Particularity the Documents It Claims Are Privileged

        Mr. Pearl’s declaration, which provides a description of the GSE projections documents,
coupled with defendant’s privilege log, which (1) identifies the documents by their Bates
number, (2) provides the documents’ authors and recipients, (3) provides a description of the
documents, and (4) identifies the specific privilege claimed, allows the court to identify with
particularity the documents at issue.

       c. Defendant Has Provided Precise and Certain Reasons for Maintaining the
                           Confidentiality of the Documents

        According to Mr. Pearl, the documents contain deliberations within the Treasury
Department that take into account third-party financial projections, which reflect modifications
dictated by the Treasury Department. Def.’s Resp. A75. Based on Mr. Pearl’s declaration,
which provides precise and certain reasons for maintaining the confidentiality of the documents
at issue, the court can balance the government’s interest in maintaining that confidentiality with
plaintiffs’ evidentiary need for the documents’ disclosure.

                                 2. Substantive Requirements

 a. Defendant Has Not Shown That the Documents Are Predecisional but, for the Purpose
  of Providing an Alternative Analysis, the Court Will Proceed as if Defendant Has Made
                                     Such a Showing

        The decision to approve the Net Worth Sweep was made by Secretary Geithner on
August 16, 2012. See Pls.’ Mot. A178. According to the privilege log: Document 38 was sent
by A. Eberhardt to J. Foster on March 12, 2012; Documents 39-44 were sent by A. Eberhardt to
J. Foster on December 10, 2011; Documents 45-47 were sent by J. Foster to A. Chepenik on
December 13, 2011; and Documents 48-51 were sent by A. Chepenik to J. Foster on January 6,
2012. The privilege log does not explicitly state that the documents were created on those dates,
and upon its own examination, the court finds that the documents are undated. Therefore,
defendant has not established that the documents are predecisional. However, the court notes
that even if the documents were clearly predecisional, it would not affect the court’s ultimate
conclusion that, under the balancing test for the deliberative process privilege, plaintiffs’
evidentiary need for the documents outweighs defendant’s interest in preventing the documents’
disclosure. Thus, for the purpose of providing an alternative analysis, the court deems the
documents to be predecisional.

                                               -66-
   b. Defendant Has Not Shown That All of the Documents Are Deliberative But, for
Purposes of Providing an Alternative Analysis, the Court Will Proceed as if Defendant Has

         In order to determine whether a document is subject to the deliberative process privilege,
the court must be able to discern whether the document reflects the “intra-governmental
exchange of thoughts that actively contribute to the agency’s decisionmaking process,” Texaco
P.R., Inc., 60 F.3d at 884-85. Thus, as to each document, the court must be able to identify the
affiliations of the individuals on defendant’s privilege log and also discern the document’s
deliberative nature.

        In this case, defendant has not met its burden of showing that the documents are
deliberative. Upon examination of the privilege log and all of the documents submitted for in
camera review, which include some individuals’ e-mail domains, the court has identified J.
Foster and A. Chepenik as Treasury Department employees and A. Eberhardt as an employee of
Grant Thornton. However, the documents’ deliberative nature is not apparent on their face. This
is so despite the fact that Mr. Pearl’s descriptions of each of the documents, provided above,
proclaim their deliberative nature.

       In any event, the court notes that even if the documents were clearly deliberative, it
would not affect the court’s ultimate conclusion that, under the balancing test for the deliberative
process privilege, plaintiffs’ evidentiary need for the documents outweighs defendant’s interest
in preventing the documents’ disclosure. Thus, for the purpose of providing an alternative
analysis, the court deems the documents to be deliberative.

                                         3. Balancing Test

        Although defendant has not met its burden to demonstrate that the GSE projection
documents are protected by the deliberative process privilege, the court will perform an
alternative analysis. Recognizing that the privilege is qualified, the court will balance plaintiffs’
evidentiary need for the documents against defendant’s interest in preserving their
confidentiality. In order to do so, the court weighs the five factors described in In re Subpoena.

         First, with respect to the relevance of the evidence sought to be protected, the documents
relate to the Enterprises’ future profitability, the Enterprises’ future solvency, and the
reasonableness of plaintiffs’ expectations regarding the Enterprises’ future profitability. See
supra Section I.B. Document 38, UST 00409040, is a twenty-six-page document [. . .].
Document 39, UST 00473767, is a partially numbered nine-page document that contains various
financial projections for Freddie Mac. Document 40, UST 00473770, is a partially numbered
twelve-page document that contains various financial projections for Freddie Mac. Document
41, UST 00473773, is a partially numbered eleven-page document that contains various financial
projections for Freddie Mac. Document 42, UST 00473776, is an unnumbered nine-page
document that contains various financial projections for Fannie Mae. Document 43, UST
00473779, is an unnumbered nine-page document that contains various financial projections for
Fannie Mae. Document 44, UST 00473782, is an unnumbered eight-page document that
contains various financial projections for Fannie Mae. Document 45, UST 00481423, is a
partially numbered twelve-page document that contains various financial projections for Freddie

                                                -67-
Mac. Document 46, UST 00481424, is a partially numbered twelve-page document that contains
various financial projections for Freddie Mac. Document 47, UST 00481425, is a partially
numbered nine-page document that contains various financial projections for Freddie Mac.
Document 48, UST 00556294, is an unnumbered fifteen-page document that contains various
financial projections for Fannie Mae. Document 49, UST 00556295, is an unnumbered twelve-
page document that contains various financial projections for Fannie Mae. Document 50, UST
00556459, is a partially numbered twelve-page document that contains various financial
projections for Freddie Mac. Finally, Document 51, UST 00556460, is a partially numbered
thirteen-page document that contains various financial projections for Freddie Mac. [. . .]

        Second, with respect to the availability of other evidence, there is no other source of
evidence available to plaintiffs that would similarly inform their understanding of the
Enterprises’ future profitability, the Enterprises’ future solvency, and the reasonableness of
plaintiffs’ expectations regarding the Enterprises’ future profitability.

        Third, with respect to the seriousness of the litigation and the issues involved, neither
party disputes the importance of the case, both in terms of the damages and equitable relief
sought, as well as in terms of the case’s implication for litigation and “executive and legislative
branch policy repercussions.” Dairyland Power I, 77 Fed. Cl. at 342.

        Fourth, with respect to the government’s role in the litigation, because “the Government
is a party to this litigation and is the party that seeks to benefit from the invocation of the
deliberative process privilege,” its assertion of the “privilege must be carefully scrutinized to
ensure that the privilege retains its proper narrow scope.” Id.

        Fifth, with respect to the possibility of future timidity by government employees who will
be forced to recognize that their secrets are violable, it is highly unlikely, given the protective
order that is already in place in this case, that any type of disclosure would result in a chilling of
frank policy discussions between government employees.

        Thus, with respect to Documents 38-51, plaintiffs’ evidentiary need for the information
outweighs defendant’s interest in preventing the documents’ disclosure. In other words, the
deliberative process privilege cannot shield the disclosure of the documents in this instance
because evidence relating to the Enterprises’ future profitability, the Enterprises’ future
solvency, and the reasonableness of plaintiffs’ expectations regarding the Enterprises’ future
profitability implicates both the court’s jurisdiction and the merits of the case and therefore is
discoverable. The documents must be disclosed.

                                      K. Valuation Reports

 Doc. Bates No.        From / To /        Description of Document / Privilege(s) Asserted
 No.                   Date / CC
 52   UST              R. Rominiecki      “Draft memorandum prepared containing predecisional
      00475757         to A. Eberhardt,   deliberative analysis of financial projections for Fannie
                       C. Banks, K.       Mae”
                       Taylor, S.

                                                -68-
                      Mickey, J.         DPP
                      Foster, B.
                      Mlynarczyk, J.
                      Grover, A.
                      Bankole, M.
                      Fitzgerald, R.
                      Cumba, B.
                      Faber, B.
                      Wilson, D.
                      Dufendach, and
                      J. Burchett on
                      11/1/2011

                      CC: Y.
                      Tchamourliyski
                      and S. Lee
 53     UST           A. Eberhardt to    “Document prepared by Treasury consultant reflecting
        00506346      C. Banks, S.       predecisional deliberations concerning financial
                      Mickey, K.         conditions of the GSEs”
                      Taylor, J.
                      Foster, M.         DPP
                      Fitzgerald, and
                      R. Rominiecki
                      on 6/29/2012

                      CC: J. Short, D.
                      Dufendach, and
                      J. Burchett

        The next category of documents identified in defendant’s privilege log is valuation
reports. According to Mr. Pearl, “[t]he draft documents in this category relate to the valuation
services provided by Grant Thornton to Treasury in connection with the preparation of
Treasury’s annual financial statements,” and as such “reflect predecisional deliberations central
to the process of preparing and producing Treasury’s financial statements and the considerations
weighed by Treasury officials and staff in connection with these deliberations.” Def.’s Resp.
A75. He further claims that the “documents reflect judgment calls and decisions with respect to
the preparation of Grant Thornton’s reports that are used by Treasury in preparing its annual
financial statements,” and that Treasury Department “staff involved in housing-finance reform
reviewed and provided input on Grant Thornton’s valuation reports, and these documents reflect
that input.” Id.

       Mr. Pearl asserts the deliberative process privilege as to Documents 52-53.

                                               -69-
                                  1. Procedural Requirements

       a. The Authority to Invoke the Privilege Was Properly Delegated to Mr. Pearl

       As noted above, the authority to invoke the deliberative process privilege was properly
delegated to Mr. Pearl. See supra Section III.G.1.a.i.

b. Defendant Has Identified With Particularity the Documents It Claims Are Privileged

        Mr. Pearl’s declaration, which provides a description of the valuation reports, coupled
with defendant’s privilege log, which (1) identifies the documents by their Bates numbers, (2)
provides the documents’ authors and recipients, (3) provides a description of the documents, and
(4) identifies the specific privilege claimed, allows the court to identify with particularity the
documents at issue.

        c. Defendant Has Provided Precise and Certain Reasons for Maintaining the
                            Confidentiality of the Documents

        According to Mr. Pearl, the documents contain deliberations within the Treasury
Department that take into account third-party valuations, which reflect input from Treasury
Department staff. Def.’s Resp. A75. Based on Mr. Pearl’s declaration, which provides precise
and certain reasons for maintaining the confidentiality of the documents at issue, the court will
be able to balance the government’s interest in maintaining that confidentiality with plaintiffs’
evidentiary need for the documents’ disclosure.

                                  2. Substantive Requirements

 a. Defendant Has Not Shown That the Documents Are Predecisional but, for the Purpose
  of Providing an Alternative Analysis, the Court Will Proceed as if Defendant Has Made
                                     Such a Showing

        The decision to approve the Net Worth Sweep was made by Secretary Geithner on
August 16, 2012. See Pls.’ Mot. A178. According to the privilege log, Document 52 was sent
by R. Rominiecki to A. Eberhardt, C. Banks, K. Taylor, S. Mickey, J. Foster, B. Mlynarczyk, J.
Grover, A. Bankole, M. Fitzgerald, R. Cumba, B. Faber, B. Wilson, D. Dufendach, and J.
Burchett, with copies to Y. Tchamourliyski and S. Lee, on November 1, 2011. Although the
privilege log does not explicitly state that the document was created on that date, upon its own
examination, the court finds that Document 52 is undated. Therefore, defendant has not
established that this document is predecisional. However, the court notes that even if the
document was clearly predecisional, it would not affect the court’s ultimate conclusion that,
under the balancing test for the deliberative process privilege, plaintiffs’ evidentiary need for the
document outweighs defendant’s interest in preventing the document’s disclosure. Thus, for the
purpose of providing an alternative analysis, the court deems this document to be predecisional.

      According to the privilege log, Document 53 was sent by A. Eberhardt to C. Banks, S.
Mickey, K. Taylor, J. Foster, M. Fitzgerald, and R. Rominiecki, with copies to J. Short, D.

                                                -70-
Dufendach, and J. Burchett, on June 29, 2012. Although the privilege log does not explicitly
state that the document was created on that date, upon its own examination, the court finds that
Document 53 is undated. Therefore, defendant has not established that this document is
predecisional. However, the court notes that even if the document was clearly predecisional, it
would not affect the court’s ultimate conclusion that, under the balancing test for the deliberative
process privilege, plaintiffs’ evidentiary need for the document outweighs defendant’s interest in
preventing the document’s disclosure. Thus, for the purpose of providing an alternative analysis,
the court deems this document to be predecisional.

b. Defendant Has Not Shown That the Documents Are Deliberative but, for the Purpose of
Providing an Alternative Analysis, the Court Will Proceed as if Defendant Has Made Such
                                        a Showing

         In order to determine whether a document is subject to the deliberative process privilege,
the court must be able to discern whether the document reflects the “intra-governmental
exchange of thoughts that actively contribute to the agency’s decisionmaking process,” Texaco
P.R., Inc., 60 F.3d at 884-85. Thus, as to each document, the court must be able to identify the
affiliations of the individuals on defendant’s privilege log and also discern the document’s
deliberative nature.

        In this case, defendant has not met its burden of showing that the documents are
deliberative. Upon examination of the privilege log and all of the documents submitted for in
camera review, which include some individuals’ e-mail domains, the court has identified the
following individuals as Treasury Department employees: C. Banks, K. Taylor, S. Mickey, J.
Foster, B. Mlynarczyk, J. Grover, A. Bankole, M. Fitzgerald, R. Cumba, B. Faber, and S. Lee.
The court has further identified the following individuals as Grant Thornton employees: A.
Eberhardt, B. Wilson, D. Dufendach, J. Burchett, and J. Short. In addition, the court has
identified R. Rominiecki and Y. Tchamourliyski as KPMG employees. However, the
documents’ deliberative nature is not apparent on their face. This is so despite the fact that Mr.
Pearl’s descriptions of each of the documents, provided above, proclaim their deliberative nature.

       In any event, the court notes that even if the documents were clearly deliberative, it
would not affect the court’s ultimate conclusion that, under the balancing test for the deliberative
process privilege, plaintiffs’ evidentiary need for the documents outweighs defendant’s interest
in preventing the documents’ disclosure. Thus, for the purpose of providing an alternative
analysis, the court deems the documents to be deliberative.

                                        3. Balancing Test

        Although defendant has not met its burden to demonstrate that the valuation reports are
protected by the deliberative process privilege, the court will perform an alternative analysis.
Recognizing that the privilege is qualified, the court will balance plaintiffs’ evidentiary need for
the documents against defendant’s interest in preserving their confidentiality. In order to do so,
the court weighs the five factors described in In re Subpoena.

                                                -71-
         First, with respect to the relevance of the evidence sought to be protected, the documents
relate to the Enterprises’ future profitability. See supra Section I.B. Document 52, UST
00475757, is an unnumbered three-page document [. . .]. Document 53, UST 00506346, is a
four-page document [. . .]. Both documents implicate plaintiffs’ status as shareholders of the
Enterprises.

       Second, with respect to the availability of other evidence, there is no other source of
evidence available to plaintiffs that would similarly inform their understanding of the
Enterprises’ future profitability.

        Third, with respect to the seriousness of the litigation and the issues involved, neither
party disputes the importance of the case, both in terms of the damages and equitable relief
sought, as well as in terms of the case’s implication for litigation and “executive and legislative
branch policy repercussions.” Dairyland Power I, 77 Fed. Cl. at 342.

        Fourth, with respect to the government’s role in the litigation, because “the Government
is a party to this litigation and is the party that seeks to benefit from the invocation of the
deliberative process privilege,” its assertion of the “privilege must be carefully scrutinized to
ensure that the privilege retains its proper narrow scope.” Id.

        Fifth, with respect to the possibility of future timidity by government employees who will
be forced to recognize that their secrets are violable, it is highly unlikely, given the protective
order that is already in place in this case, that any type of disclosure would result in a chilling of
frank policy discussions between government employees.

        Thus, with respect to Documents 52-53, plaintiffs’ evidentiary need for the information
outweighs defendant’s interest in preventing the documents’ disclosure. In other words, the
deliberative process privilege cannot shield the disclosure of the documents in this instance
because evidence relating to the Enterprises’ future profitability implicates both the court’s
jurisdiction and the merits of the case and therefore is discoverable. The documents must be
disclosed.

                            L. Estimates for the President’s Budget

 Doc. Bates No.        From / To /        Description of Document / Privilege(s) Asserted
 No.                   Date / CC
 54   UST              A. Chepenik to     “Draft document prepared by Treasury staff containing
      00503672         M. Miller on       predecisional deliberations regarding GSE budget
                       1/10/2012          estimates”

                       CC: B. Hester,     DPP
                       T. Bowler, J.
                       Foster, and A.
                       Johnson

                                                -72-
        The next document included in defendant’s privilege log relates to the President’s budget.
According to Mr. Pearl, “[t]he document. . . contain[s] estimates for the President’s budget,” and
as such “reflects draft analyses and projections regarding estimates of future draws and dividend
payments to be made by the GSEs.” Def.’s Resp. A76. He further claims that “[t]hese numbers
were prepared for incorporation into the President’s budget . . . [and] reflect predecisional
deliberations regarding such estimates.” Id. Finally, he claims that the document at issue should
not be disclosed:

                Requiring production of these deliberative materials would have a
                chilling effect on Treasury’s ability to assist in developing the
                President’s budget. The ability to circulate and receive comments
                on draft budget documents is an essential aspect of the budget
                process. If Treasury officials and staff believe that such draft
                documents will be disclosed to litigation adversaries, they are
                unlikely to feel at liberty to offer their opinions and fully engage in
                the budget process. As a result, Treasury’s ability to provide input
                into the preparation of the President’s budget would be adversely
                affected.

Id.

         Mr. Pearl asserts the deliberative process privilege as to Document 54.

                                   1. Procedural Requirements

         a. The Authority to Invoke the Privilege Was Properly Delegated to Mr. Pearl

       As noted above, the authority to invoke the deliberative process privilege was properly
delegated to Mr. Pearl. See supra Section III.G.1.a.i.

      b. Defendant Has Identified With Particularity the Document It Claims Is Privileged

        Mr. Pearl’s declaration, which provides a description of the document, coupled with
defendant’s privilege log, which (1) identifies the document by its Bates number, (2) provides
the document’s authors and recipients, (3) provides a description of the document, and (4)
identifies the specific privilege claimed, allows the court to identify with particularity the
document at issue.

          c. Defendant Has Provided Precise and Certain Reasons for Maintaining the
                              Confidentiality of the Document

        Based on Mr. Pearl’s declaration, which provides precise and certain reasons for
maintaining the confidentiality of the document at issue, Def.’s Resp. A76, the court will be able
to balance the government’s interest in maintaining that confidentiality with plaintiffs’
evidentiary need for the documents’ disclosure.

                                                 -73-
                                 2. Substantive Requirements

a. Defendant Has Not Shown That the Document Is Predecisional but, for the Purpose of
Providing an Alternative Analysis, the Court Will Proceed as if Defendant Has Made Such
                                        a Showing

        The decision to approve the Net Worth Sweep was made by Secretary Geithner on
August 16, 2012. See Pls.’ Mot. A178. According to the privilege log, Document 54 was sent
by A. Chepenik to M. Miller, with copies to B. Hester, T. Bowler, J. Foster, and A. Johnson, on
January 10, 2012. Although the privilege log does not explicitly state that the document was
created on that date, upon its own examination, the court finds that Document 54 is undated.
Therefore, defendant has not established that this document is predecisional. However, the court
notes that even if the document was clearly predecisional, it would not affect the court’s ultimate
conclusion that, under the balancing test for the deliberative process privilege, plaintiffs’
evidentiary need for the document outweighs defendant’s interest in preventing the document’s
disclosure. Thus, for the purpose of providing an alternative analysis, the court deems this
document to be predecisional.

 b. Defendant Not Has Shown That the Document Is Deliberative but, for the Purpose of
Providing an Alternative Analysis, the Court Will Proceed as if Defendant Has Made Such
                                        a Showing

         In order to determine whether a document is subject to the deliberative process privilege,
the court must be able to discern whether the document reflects the “intra-governmental
exchange of thoughts that actively contribute to the agency’s decisionmaking process,” Texaco
P.R., Inc., 60 F.3d at 884-85. Thus, as to each document, the court must be able to identify the
affiliations of the individuals on defendant’s privilege log and also discern the document’s
deliberative nature.

        In this case, defendant has not met its burden of showing that the document is
deliberative. Upon examination of the privilege log and all of the documents submitted for in
camera review, which include some individuals’ e-mail domains, the court has identified A.
Chepenik, M. Miller, B. Hester, T. Bowler, J. Foster, and A. Johnson as Treasury Department
employees. However, the document’s deliberative nature is not apparent on its face. This is so
despite the fact that Mr. Pearl’s description of the document, provided above, proclaims its
deliberative nature.

        In any event, the court notes that even if the document was clearly deliberative, it would
not affect the court’s ultimate conclusion that, under the balancing test for the deliberative
process privilege, plaintiffs’ evidentiary need for the document outweighs defendant’s interest in
preventing the document’s disclosure. Thus, for the purpose of providing an alternative analysis,
the court deems the document to be deliberative.

                                               -74-
                                         3. Balancing Test

        Although defendant has not met its burden to demonstrate that the document relating to
the President’s budget is protected by the deliberative process privilege, the court will perform
an alternative analysis. Recognizing that the privilege is qualified, the court will balance
plaintiffs’ evidentiary need for the document against defendant’s interest in preserving its
confidentiality. In order to do so, the court weighs the five factors described in In re Subpoena.

         First, with respect to the relevance of the evidence sought to be protected, the document
relates to the reasonableness of plaintiffs’ expectations regarding the Enterprises’ future
profitability. See supra Section I.B. Document 54, UST 00503672, is an unnumbered three-
page document [. . .]. The document necessarily implicates plaintiffs’ status as shareholders of
the Enterprises.

       Second, with respect to the availability of other evidence, there is no other source of
evidence available to plaintiffs that would similarly inform their understanding of the
reasonableness of their expectations regarding the Enterprises’ future profitability.

        Third, with respect to the seriousness of the litigation and the issues involved, neither
party disputes the importance of the case, both in terms of the damages and equitable relief
sought, as well as in terms of the case’s implication for litigation and “executive and legislative
branch policy repercussions.” Dairyland Power I, 77 Fed. Cl. at 342.

        Fourth, with respect to the government’s role in the litigation, because “the Government
is a party to this litigation and is the party that seeks to benefit from the invocation of the
deliberative process privilege,” its assertion of the “privilege must be carefully scrutinized to
ensure that the privilege retains its proper narrow scope.” Id.

        Fifth, with respect to the possibility of future timidity by government employees who will
be forced to recognize that their secrets are violable, it is highly unlikely, given the protective
order that is already in place in this case, that any type of disclosure would result in a chilling of
frank policy discussions between government employees.

        Thus, with respect to Document 54, plaintiffs’ evidentiary need for the information
outweighs defendant’s interest in preventing the document’s disclosure. In other words, the
deliberative process privilege cannot shield the disclosure of the document in this instance
because evidence relating to the reasonableness of plaintiffs’ expectations regarding the
Enterprises’ future profitability implicates the merits of the case and therefore is discoverable.
The document must be disclosed.

                                                -75-
                    M. Potential Implications of the Terms of the PSPAs

 Doc. Bates No.       From / To /        Description of Document / Privilege(s) Asserted
 No.                  Date / CC
 55   UST             J. Parrott to T.   “Email communications between Treasury and White
      00061067        Bowler on          House staff containing predecisional deliberations
                      8/18/2012          related to the terms of the PSPAs”

                                         DPP
 56     UST           T. Bowler to J.    “Email communications containing predecisional
        00385562      Parrott on         deliberations related to the budget and the amended
                      8/18/2012          PSPAs”

                                         DPP

         The next category of documents identified in defendant’s privilege log concerns the
potential implications of the terms of the PSPAs. According to Mr. Pearl, “[t]he correspondence
in this category [consists of] two emails from the same email chain . . . discussing the effect of
the terms of the amended PSPAs on long term housing finance reform plans,” and as such
“reflect considerations weighed by Treasury and White House officials in connection with these
predecisional deliberations.” Def.’s Resp. A76-77. He further claims that the documents at issue
should not be disclosed:

               Requiring production of these deliberative materials would have a
               chilling effect on the free exchange of ideas between Treasury and
               White House officials as they develop and execute financial
               policies. Treasury’s ability to communicate with the White House
               is an essential function of the policy-making process. If officials
               believe that such exchanges will be disclosed to litigation
               adversaries, they are unlikely to offer their opinions and fully
               engage in the policy development process. As a result, Treasury’s
               ability to devise and executive financial policies would be
               adversely affected.

Id.

       Mr. Pearl asserts the deliberative process privilege as to Documents 55-56.

                                  1. Procedural Requirements

       a. The Authority to Invoke the Privilege Was Properly Delegated to Mr. Pearl

       As noted above, the authority to invoke the deliberative process privilege was properly
delegated to Mr. Pearl. See supra Section III.G.I.A.i.

                                               -76-
 b. Defendant Has Identified With Particularity the Documents It Claims Are Privileged

        Mr. Pearl’s declaration, which provides a description of the e-mails discussing the
potential implications of the terms of the PSPAs, coupled with defendant’s privilege log, which
(1) identifies the documents by their Bates numbers, (2) provides the documents’ authors and
recipients, (3) provides a description of the documents, and (4) identifies the specific privilege
claimed, allows the court to identify with particularity the documents at issue.

       c. Defendant Has Provided Precise and Certain Reasons for Maintaining the
                           Confidentiality of the Documents

        Based on Mr. Pearl’s declaration, which provides precise and certain reasons for
maintaining the confidentiality of the documents at issue, Def.’s Resp. A76-77, the court will be
able to balance the government’s interest in maintaining that confidentiality with plaintiffs’
evidentiary need for the documents’ disclosure.

                                 2. Substantive Requirements

 a. Defendant Has Not Shown That the Documents Are Predecisional but, for the Purpose
  of Providing an Alternative Analysis, the Court Will Proceed as if Defendant Has Made
                                     Such a Showing

        The decision to approve the Net Worth Sweep was made by Secretary Geithner on
August 16, 2012. See Pls.’ Mot. A178. According to the privilege log, Document 55 was sent
by J. Parrott to T. Bowler on August 18, 2012. Although the privilege log does not explicitly
state that the document was created on that date, upon its own examination, the court finds that
Document 55, an e-mail chain, is dated from August 17, 2012, to August 18, 2012. Thus, the
document is not predecisional.

       The privilege log further provides that Document 56 was sent by T. Bowler to J. Parrott
on August 18, 2012. Although the privilege log does not explicitly state that the document was
created on that date, upon its own examination, the court finds that Document 56—the same e-
mail chain as Document 55 with one additional message—is dated from August 17, 2012, to
August 18, 2012. Thus, the document is not predecisional.

        Since Documents 55-56 are not predecisional, defendant cannot claim that they are
protected by the deliberative process privilege. However, the court notes that even if it were to
follow the reasoning of the D.C. Circuit in Mead Data Central Inc. and the Court of Federal
Claims in Ford Motor Company, discussed supra, wherein documents created after a decision is
made are deemed predecisional if they simply report on previous recommendations and opinions,
it would not affect the court’s ultimate conclusion that, under the balancing test for the
deliberative process privilege, plaintiffs’ evidentiary need for the documents outweighs
defendant’s interest in preventing the documents’ disclosure. Thus, for the purpose of providing
an alternative analysis, the court deems the documents to be predecisional.

                                               -77-
b. Defendant Has Not Shown That the Documents Are Deliberative but, for the Purpose of
Providing an Alternative Analysis, the Court Will Proceed as if Defendant Has Made Such
                                        a Showing

         In order to determine whether a document is subject to the deliberative process privilege,
the court must be able to discern whether the document reflects the “intra-governmental
exchange of thoughts that actively contribute to the agency’s decisionmaking process,” Texaco
P.R., Inc., 60 F.3d at 884-85. Thus, as to each document, the court must be able to identify the
affiliations of the individuals on defendant’s privilege log and also discern the document’s
deliberative nature.

        In this case, defendant has not met its burden of showing that the documents are
deliberative. Upon examination of the privilege log and all of the documents submitted for in
camera review, which include some individuals’ e-mail domains, the court has identified J.
Parrott and T. Bowler as Treasury Department employees. However, the documents’
deliberative nature is not apparent on their face. This is so despite the fact that Mr. Pearl’s
descriptions of each of the documents, provided above, proclaim their deliberative nature.

       In any event, the court notes that even if the documents were clearly deliberative, it
would not affect the court’s ultimate conclusion that, under the balancing test for the deliberative
process privilege, plaintiffs’ evidentiary need for the documents outweighs defendant’s interest
in preventing the documents’ disclosure. Thus, for the purpose of providing an alternative
analysis, the court deems the documents to be deliberative.

                                        3. Balancing Test

        Although defendant has not met its burden to demonstrate that the documents regarding
the potential terms of the PSPAs are protected by the deliberative process privilege, the court
will perform an alternative analysis. Recognizing that the privilege is qualified, the court will
balance plaintiffs’ evidentiary need for the documents against defendant’s interest in preserving
their confidentiality. In order to do so, the court weighs the five factors described in In re
Subpoena.

         First, with respect to the relevance of the evidence sought to be protected, the documents
relate to the lifespan of the conservatorships. See supra Section I.B. Document 55, UST
00061067, is a partially redacted two-page e-mail chain between Treasury Department and
White House staff dated from August 17, 2012, to August 18, 2012. Document 56, UST
00385562, as noted above, is the same as Document 55 but has one additional e-mail message
and is three pages long. Both documents contain discussions of the August 17, 2012 Net Worth
Sweep.

       Second, with respect to the availability of other evidence, there is no other source of
evidence available to plaintiffs that would similarly inform their understanding of the lifespan of
the conservatorships.

                                                -78-
        Third, with respect to the seriousness of the litigation and the issues involved, neither
party disputes the importance of the case, both in terms of the damages and equitable relief
sought, as well as in terms of the case’s implication for litigation and “executive and legislative
branch policy repercussions.” Dairyland Power I, 77 Fed. Cl. at 342.

        Fourth, with respect to the government’s role in the litigation, because “the Government
is a party to this litigation and is the party that seeks to benefit from the invocation of the
deliberative process privilege,” its assertion of the “privilege must be carefully scrutinized to
ensure that the privilege retains its proper narrow scope.” Id.

        Fifth, with respect to the possibility of future timidity by government employees who will
be forced to recognize that their secrets are violable, it is highly unlikely, given the protective
order that is already in place in this case, that any type of disclosure would result in a chilling of
frank policy discussions between government employees.

        Thus, with respect to Documents 55-56, plaintiffs’ evidentiary need for the information
outweighs defendant’s interest in preventing the documents’ disclosure. In other words, the
deliberative process privilege cannot shield the disclosure of the documents in this instance
because evidence relating to the lifespan of the conservatorships implicates the court’s
jurisdiction and therefore is discoverable. The documents must be disclosed.

                       N. Other Documents Listed on the Privilege Log

        There are two remaining documents listed on the privilege log and produced to the court
for in camera review. However, the court need not consider them because defendant has
withdrawn its claim of privilege. The first document is designated UST 00418517. In its
response to plaintiffs’ motion to compel, defendant states:

               After Fairholme filed its motion to compel, the Government
               produced Document UST00418517 (Pls. App. A007) in redacted
               form. Document UST00418517 is a large compilation of briefing
               materials periodically prepared by Treasury staff for the Secretary,
               and was produced pursuant to an agreement between the parties
               stipulating that non-responsive materials would be redacted and
               that responsive memoranda would be produced in full.

Def.’s Resp. 21 n.8. The second document is designated UST 00061011. According to
defendant, “the Government has withdrawn its initial assertion of deliberative process privilege
over document UST00061011, and will produce that document in full.” Id.

                                                -79-
                                     IV. CONCLUSION

        For the foregoing reasons, the court GRANTS plaintiffs’ motion to compel in its entirety.
Furthermore, pursuant to RCFC 37(a)(5), defendant, by no later than October 14, 2016, shall
file a memorandum with the court explaining why the court should not require defendant “to pay
[plaintiffs’] reasonable expenses incurred in making the motion, including attorney’s fees.”

       IT IS SO ORDERED.

                                                     s/ Margaret M. Sweeney
                                                     MARGARET M. SWEENEY
                                                     Judge

                                              -80-