In a major victory for transparency, a federal court has ruled that the Federal Reserve Bank must turn over documents that show which companies received emergency loans from the Fed in response to a FOIA request by Bloomberg news.
The Fed has made literally trillions of dollars in emergency loans with taxpayer money to banks and corporations over the last year or so but has refused to identify which corporations got those loans and what was put up for collateral. They argue that revealing who received those loans could make people wonder about the soundness of those companies:
Manhattan Chief U.S. District Judge Loretta Preska ruled against the central bank yesterday, rejecting the argument that loan records aren’t covered by the law because their disclosure would harm borrowers’ competitive positions.
The Fed has refused to name the financial firms it lent to or disclose the amounts or the assets put up as collateral under 11 programs, most put in place during the deepest financial crisis since the Great Depression, saying that doing so might set off a run by depositors and unsettle shareholders.
Well no kidding. They can’t release that information because people might actually act on it in their own best interests. That’s quite an excuse for keeping in the dark the very people who became investors in companies they’d never even heard of.
“When an unprecedented amount of taxpayer dollars were lent to financial institutions in unprecedented ways and the Federal Reserve refused to make public any of the details of its extraordinary lending, Bloomberg News asked the court why U.S. citizens don’t have the right to know,” said Matthew Winkler, the editor-in-chief of Bloomberg News. “We’re gratified the court is defending the public’s right to know what is being done in the public interest.”
The Fed’s balance sheet about doubled after lending standards were relaxed in the wake of the collapse of Lehman Brothers Holdings Inc. on Sept. 15, 2008. For the week ended Aug. 19, Fed assets rose 2.3 percent to $2.06 trillion as it continued to buy mortgage-backed securities under a program allowing the central bank to purchase non-government securities for the first time.
This is a big victory for transparency.