[Infowarrior] - Court: Fed must release bank loan reports

[Richard Forno]

Fed Must Release Reports on Emergency Bank Loans, Judge Says
http://www.bloomberg.com/apps/news?pid=20670001&sid=aMO_r2xLw7e8

By Mark Pittman and Karen Gullo

Aug. 25 (Bloomberg) -- The Federal Reserve must make records about  
emergency lending to financial institutions public within five days  
because it failed to convince a judge the documents should be exempt  
from the Freedom of Information Act.

Manhattan Chief U.S. District Judge Loretta Preska rejected the  
central bank’s argument that the records aren’t covered by the law  
because their disclosure would harm borrowers’ competitive positions.  
The collateral lists “are central to understanding and assessing the  
government’s response to the most cataclysmic financial crisis in  
America since the Great Depression,” according to the lawsuit that led  
to yesterday’s ruling.

The Fed has refused to name the borrowers, the amounts of loans or the  
assets put up as collateral under 11 programs, saying that doing so  
might set off a run by depositors and unsettle shareholders. Bloomberg  
LP, the New York-based company majority-owned by Mayor Michael  
Bloomberg, sued Nov. 7 on behalf of its Bloomberg News unit.

“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.”

‘Involuntary Investor’

Bloomberg said in the suit U.S. taxpayers need to know the risks  
behind the central bank’s $2 trillion in lending because the public is  
an “involuntary investor” in the nation’s banks.

The Federal Reserve’s balance sheet about doubled beginning in  
September to more than $2 trillion because of a historic attempt to  
rescue financial institutions. For the week ended Aug. 19, Fed assets  
rose 2.3 percent to $2.06 trillion as the central bank bought more  
mortgage-backed securities. Non- government securities were allowed to  
be purchased by the Fed for the first time.

The Freedom of Information Act obliges federal agencies to make  
government documents available to the press and public. The Bloomberg  
suit, filed in New York, doesn’t seek money damages.

David Skidmore, a Fed spokesman, said the board’s staff was reviewing  
the ruling and declined to comment on it at this time.

The case is Bloomberg LP v. Board of Governors of the Federal Reserve  
System, 08-CV-9595, U.S. District Court, Southern District of New York  
(Manhattan).

To contact the reporters on this story: Mark Pittman in New York at mpittman at bloomberg.net 
; Karen Gullo in San Francisco at kgullo at bloomberg.net.

Last Updated: August 25, 2009 00:01 EDT