This exemption applies mainly to reports prepared by federal agencies about the conditions of banks and other federally-regulated financial institutions. It covers records that are:

The exemption applies to federal government records of banks, trust companies, and investment banking firms and associations. Its purpose is to prevent disclosure of sensitive financial reports or audits that, if made public, might undermine public confidence in individual banks, or in the federal banking system. Traditionally, agencies have invoked the exemption to protect even the records of failed banks, holding that use of the exemption promotes candid disclosures by bank officers. But when Congress gave hundreds of billions of dollars to bail out the savings and loan industry in the late 1980s, it adopted measures to make financial institutions more accountable to the public.

The Federal Deposit Insurance Corporation Improvement Act of 1991 makes public federal written reports on material losses by insured depository institutions, except for customer names.

Agencies have some discretion to disclose some banking information, particularly factual parts of records.

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