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Bloomberg Response To Fed's Chickening Out Of Appealing Pittman Decision, Clearing House Appeal

Tyler Durden's picture




 

FED WON’T JOIN BANK
SUPREME COURT APPEAL ON LOAN DISCLOSURES

 

Statement by
Bloomberg News Editor in Chief Matthew Winkler:

“Greater
transparency results in more accountability, and the banks’ fight continues

to engender
suspicion among taxpayers about the bailouts.

The banks’ move to
appeal will deepen the public’s skepticism and defend a position that every
other court has disagreed with. The public has the right to know. “

 

New York, October 26 – The Federal Reserve won’t join a banking industry
trade group in asking the U.S. Supreme Court to let the government continue to
withhold details of emergency loans made to financial firms in 2008.

 

The Clearing House Association
LLC, a group of the biggest commercial banks filed the appeal today. The
Federal Reserve won’t file its own appeal, according to Kit Wheatley, an
attorney for the central bank.

 

The banks are appealing a lower
court order requiring the Federal Reserve to disclose lending records to
Bloomberg LP, parent company of Bloomberg News. A federal judge ruled in August
2009 that the Fed had to disclose the names of banks that borrowed from its
emergency lending programs.

 

 “Greater transparency
results in more accountability, and the banks’ fight continues to engender suspicion
among taxpayers about the bailouts,” said Matthew Winkler, Bloomberg News
editor-in-chief. “The banks’ move to appeal will deepen the public’s skepticism
and defend a position that every other court has disagreed with. The public has
the right to know.”

 

Full story online at: http://www.bloomberg.com/news/2010-10-26/fed-won-t-join-banks-appeal-to-high-court-over-emergency-loan-disclosures.html

 

The Fed is facing unprecedented
oversight by Congress. The Wall Street Reform and Consumer Protection Act,
known as Dodd- Frank, mandates a one-time audit of the Fed as well as the
release of details on borrowers from Fed emergency programs. The Discount
Window, which provides short-term funding to financial institutions, would have
to disclose loans made after July 21, 2010, following a two-year lag. The
Bloomberg lawsuit asks for information on that facility.

 

Term Sheets

 

At issue are 231 “remaining
term reports,” originally requested by the late Bloomberg News reporter Mark
Pittman, documenting loans to financial firms in April and May 2008, including
the borrowers’ names and the amounts borrowed. Pittman asked for details of
four lending programs, the Discount Window, the Primary Dealer Credit Facility,
the Term Securities Lending Facility and the Term Auction Facility.

 

After averaging $257 million a
week in the five years before March 2008, Discount Window borrowing jumped to a
peak of $111 billion on Oct. 29, 2008. It was $20 million last week. The other
three programs accounted for more than $800 billion in lending at their peak,
according to Fed data.

 

 “The Discount Window is
problematic because the Fed since the 1930s has used it to provide assistance
to banks on the verge of failure,” said Joseph R. Mason, a finance professor at
the Ourso College of Business at Louisiana State University in Baton Rouge.
“Making loans means you add liabilities to the bank, so lending a bank money
makes it more insolvent. This is a chance to show that the Fed did not lend to
weak banks.”

 

The New York-based Clearing
House, which has processed payments among banks since 1853, includes Bank of
America Corp., Bank of New York Mellon Corp., Citigroup Inc., Deutsche Bank AG,
HSBC Holdings Plc, JPMorgan Chase & Co., US Bancorp and Wells Fargo &
Co.

 

Trade Secrets

 

In trying to avoid disclosing
the documents, the Fed invoked one of nine exemptions to the Freedom of
Information Act, or FOIA, which mandates the rules for public disclosures by
the federal government. Exemption 4 makes allowance for “trade secrets and
commercial or financial information obtained from a person and privileged or
confidential,” according to the law.

 

Revealing borrowers’ names may
stigmatize them, said Brian F. Madigan, the Fed’s former director of monetary
affairs.

 

The stigma “can quickly place
an institution in a weakened condition vis-à-vis its competitors by causing a
loss of public confidence in the institution, a sudden outflow of deposits (‘a
run’), a loss of confidence by market analysts, a drop in the institution’s
share price, and a withdrawal of market sources of liquidity,” Madigan said in
a declaration that was part of the Fed’s defense.

 

Risk of Looking Weak

 

Manhattan Chief District Judge
Loretta A. Preska wrote in her Aug. 24, 2009, ruling that the risk of looking
weak to shareholders and competitors was not reason enough to keep the
information from the public. On March 19, an appeals court upheld Preska’s
decision and on Aug. 20 the appeals panel denied the Fed’s request to
reconsider.

 

 “Confidential business
information can properly be withheld only when disclosure clearly creates a
risk of competitive harm that outweighs the public interest in disclosure,”
said David A. Schulz, a partner with the New York law firm Levine Sullivan Koch
& Schulz LLP who filed a friend- of-the-court letter supporting Bloomberg’s
position.“Otherwise, just about any information a corporation gives the
government could be kept from public consumption.”

 

On his first day on the job,
President Barack Obama vowed to open government information to its citizens.

 

 “The government should
not keep information confidential merely because public officials might be
embarrassed by disclosure, because errors and failures might be revealed, or
because of speculative or abstract fears,” Obama said in a Jan. 21, 2009, memo.

 

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Tue, 10/26/2010 - 11:07 | 677664 SheepDog-One
SheepDog-One's picture

Pray for a meteor the size of Rhode Island to land directly on Manhattan Island. Amen.

Tue, 10/26/2010 - 11:11 | 677677 economessed
economessed's picture

An alter to the meteor gods was hastily constructed, and offerings of various commodities were made.

Tue, 10/26/2010 - 11:15 | 677687 b_thunder
b_thunder's picture

i'm tired of waiting.  enough already.  can zerohedge get wikileaks on the case? 

 

Tue, 10/26/2010 - 12:28 | 677880 imapopulistnow
imapopulistnow's picture

Excellent suggestion.

Tue, 10/26/2010 - 13:16 | 678010 President Palin
President Palin's picture

+1 

Most excellent suggestion.

Tue, 10/26/2010 - 14:46 | 678246 brodix
brodix's picture

I don't think the Fed allows twenty year old boy scouts unlimited access to its records.

Wed, 10/27/2010 - 11:35 | 680576 tamboo
tamboo's picture

wikileaks is controlled opposition, real threats get rubbed out a la jfk and his executive order 11110. julian's racket gets the front page of washington post, that should tell you everything. just wait and see how he becomes an excuse to toss the 1st amend and shut down the net in the name of 'natl. security'.

 

Tue, 10/26/2010 - 11:21 | 677704 Oh regional Indian
Oh regional Indian's picture

The fact that this is even a case going to SCOTUS is probably the elephant in the courthouse that is being missed.

In a nation of laws (supposedly), one of the biggest heists of tax-payer monies, happened in the most manipulated of circumstances and it's going to take a highly compromised SCOTUS to say spill the beans? Or worse, agree that the heist's details are somehow in a position to compromise national security, so shut up?

Liars, lawyers, judges, smudges, the whole thing is beyond sad and beyond funny.

ORI

http://aadivaahan.wordpress.com

Tue, 10/26/2010 - 11:23 | 677711 Sean7k
Sean7k's picture

Funny, since those banks ARE the Federal Reserve. They have become so accustomed to creating shells that they actually believe the shells are real. HAHAHAHAHAHA!

Burn Banks, Burn.

Tue, 10/26/2010 - 12:20 | 677859 janchup
janchup's picture

Burn and explode.

Tue, 10/26/2010 - 11:27 | 677723 Temporalist
Tue, 10/26/2010 - 11:43 | 677763 carbon based unit
carbon based unit's picture

since two lower courts have properly ruled against the defendant in this case, and said defendant isn't interested in engaging the SCOTUS on this issue, should they even hear the case?  shouldn't they just let the judgement stand and move onto more important matters like rooting out any last bastions of democracy and turning them over to the corporations??

Tue, 10/26/2010 - 11:50 | 677782 Hard1
Hard1's picture

Next step: BAC, C, JPM et al. will threaten to cancel thousands of Bloomberg terminals to try to stop these guys for finding the truth.

Freedom of information bitchez!

Tue, 10/26/2010 - 11:54 | 677799 jus_lite_reading
jus_lite_reading's picture

This, my dear friends, is just the tip of the social unrest iceberg. The truth can only be hidden for so long and with each passing day that they hide their fraud from us, the situation deteriorates rapidly until it culminates into a full blown apocalypse.

Tue, 10/26/2010 - 12:01 | 677821 markar
markar's picture

I dunno. The truth behind the Kennedy assassination, which in essence was a coup de tat has been successfully hidden for almost 50 years.

Tue, 10/26/2010 - 12:19 | 677857 centerline
centerline's picture

The difference I see is that the Kennedy assissination (among other horrific incidents) did not affect things like the food supply, cost of gas, taxes, etc.  I don't think people will care so much until something strikes right at their primal levels/instints.  Then, all of a sudden, the added atrocities could be like TNT thrown into a fire.

Tue, 10/26/2010 - 12:05 | 677825 centerline
centerline's picture

I was just thinking along the same lines.  Here in the US, we do not protest and strike like they do in Europe... some countries like France seem to be near considering it a recreational activity.  Rather, we remain in what appears to be comatose state.  I do fear there is a potential we will see a "straw breaking the camels back" moment.  A distinct change where  we go from passive to explosive in a very short time frame.  The odds of this happening increase every day that the truth and rule of law is further trampled in plain sight.  Not by virtue of this regular dose of humiliation each day - but as accummulated weight that will come to bear at the moment something else breaks (something in welfare, commodities, food supply, etc.).

Tue, 10/26/2010 - 12:11 | 677836 Fearless Rick
Fearless Rick's picture

It's ON, bitchez!

The day of reckoning is at hand. Sadly, I am a revolution of One. Maybe a few hundred, counting ZH readers. Our nation is no more. The criminals have taken it and there will be no widespread popular movement until all the welfare, disability and SS checks stop.

In other words, they've created a welfare state and it's working for them. Time to ex-patriate because nothing will change here.

Tue, 10/26/2010 - 16:54 | 678701 Ben Fleeced
Ben Fleeced's picture

NO! I'll stand.

Tue, 10/26/2010 - 12:17 | 677849 Something Wicke...
Something Wicked This Way Comes's picture

Like so many here, I am beyond frustrated. Zombie nation still rules.

Whats at stake? We have bought and paid for politicians. The FED not only buys and sell shit paper, robs us blind, but they own every fucking pocket of power and authority in this country. The fucking FED makes Osama look like a piker.

These bastards are like a pack of rabid dogs. I knew what they were before the latest commie appointments about the time they ruled on corporate campaign contributions. The FED will survive until we give them the business end of a barrel. I truly believe thats what it will come to.

Tue, 10/26/2010 - 13:27 | 678040 President Palin
President Palin's picture

Osama is jealous of Banana Ben - BB will destroy America long before Osama ever could.

Tue, 10/26/2010 - 13:19 | 678013 Fraud-Esq
Fraud-Esq's picture

Ahhhhh, of course. Let the bank party carry your torch to the Surpemes. 

It's either Bush v. Gore II or bust. 

We need a leak inside the Fed. What happened to all the rogue bankers?

Tue, 10/26/2010 - 13:26 | 678034 hangemhigh
hangemhigh's picture
by SheepDog-One
on Tue, 10/26/2010 - 08:07
#677664

"Pray for a meteor the size of Rhode Island to land directly on Manhattan Island. Amen."

 

this is just like the govt........where's bldg 7 when you really need it?

Tue, 10/26/2010 - 13:41 | 678072 steelhead23
steelhead23's picture

Excuse me, but if lower courts have ruled in favor of disclosure and the agency holding the documents does not appeal, why not just release the documents and force the banks to seek an injunctive order.  If I ran the zoo, that's just what I'd do.

At some point - a point most believe we passed over two years ago, the U.S. Government should recognize that the major banking cartel is the blood enemy of the American People and respond accordingly.  The other point I would make is that such a move would be enormously popular - ENORMOUSLY POPULAR - and why in the world TPTB simply cannot see this is frankly, beyond my comprehension.  It is almost as if they are so afraid of the financial convulsions that would follow collapse of the big banks that they are paralyzed.  I very much hope that there is a cadre of government employees detailing out how such an event could be managed - because it is increasingly clear - it is coming.  Please note - today European institutional investors are pooling their resources and claims to request $100s of billions in put-backs.  There is nothing Bernanke or Geithner could do to prevent this.

Tue, 10/26/2010 - 14:02 | 678133 ziggy59
ziggy59's picture

fluoride and chemtrails a docile flock it doth make

 

 

Tue, 10/26/2010 - 16:56 | 678705 asteroids
asteroids's picture

Having discovered a fair number of asteroids, I'd love to send one the FED's way but alas, I live in the real world. Pity.

Thu, 12/09/2010 - 10:35 | 792242 senthil456
senthil456's picture

I love zerohedge policy.

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