Fed Loses Court Appeal to Keep Bailout Details Secret

[Donnachaidh]

http://latimesblogs.latimes.com/money_co/2010/08/fed-disclosure-bank-lending-bailout-bloomberg-court-decision.html

Bloomberg News won another battle in its war to force the Federal Reserve to disclose details of its massive lending program during the financial system bailout.

The full U.S. Court of Appeals in New York has refused to review a March decision by three of its judges requiring the Fed to release records of the $2 trillion in emergency loans it extended to banks and other institutions beginning in 2008.

From Bloomberg:

Unless the court stays its decision, the Fed will have seven days to disclose the documents. In the event of a stay, the central bank and the Clearing House Association LLC, an organization of 20 commercial banks that joined the Fed in defense of the lawsuit, will have 90 days to petition the Supreme Court to consider their appeal. The Clearing House has already said it will ask the high court to rule on the case.

A Fed spokesman said the central bank was “considering our options.”

Bloomberg sued the Fed in November 2008, arguing that the public has the right to know the names of the banks that borrowed from the agency, the amounts of the loans and what kind of collateral was posted.

The Fed has argued that releasing that information could cause “irreparable harm” to the banks that got the money, presumably by labeling them as the weakest links in the financial-system chain, at least at the time. The Fed also fears that banks facing short-term distress in the future might be unwilling to turn to the Fed -- in its legal role as “lender of last resort” -- if they knew that their borrowing would become public knowledge.


More at the link ---

[Lost4words]

1. I wish it would happen, we have a right to know! nt

[Mimosa]

2. Thank goodness. We need to know. n/t

[mike r]

3. What are they hiding?

and who are they trying to protect?

[Orrex]

5. I can think of three basic reasons for secrecy

1. They don't want to reveal how shaky they are. This would be the "weak link" described in the article. However, if their survival is indeed so tenuous, then this should certainly be revealed because creditors have a right to know the fiscal health of the loan petitioners.

2. They don't want to reveal that they weren't very shaky after all, meaning that they took the bailout money as a huge, free loan. Revelation of such dishonest tactics would certainly cause future clients or shareholders to question the integrity of the institution.

3. They don't want to reveal how much of the bailout was directly used to fund executive bonuses.


None of these objections is legitimate in my opinion, but if the case goes before the Roberts court I'm confident that at least four of the justices will find these reasons utterly compelling and unassailable, causing them to overturn the current ruling as fast as they can.

[mike r]

6. They might even invoke equal protection to overturn it too

or another random theory from the air.

[Orrex]

4. If I seek a loan, I am required to reveal every last detail about myself to my creditor

Including cash on hand, current sources of income, my current fiscal health, and other current debt obligations that might affect my ability to repay the loan.


Debtor banks should certainly be required, at the very least, to reveal their identities to their creditors, the taxpayers.

[OhioChick]

7. Hmmm....What's to hide? n/t

[indepat]

8. Is the Fed afraid of the irreparable harm that might come to itself were the public made aware of

its largess and pandering to, cheer-leading for, covering up for, and hiding the iniquities of: the likes of you-know-who and those of their ilk? Moreover, does the invincible and mysterious Fed not want the light of the day shown on its own possibly questionable actions for the world to see? :shrug: