One part of Mark Pittman's legacy is about to come to fruition. At noon today, the Fed will provide an information dump identifying recipients of $3.3
trillion in emergency aid which it dispensed as per its interpretation of its mandate following the Lehman collapse. From Bloomberg: "The data will probably show the magnitude of central bank support to companies including Bank of America Corp. and General Electric Co. after the collapse of Lehman Brothers Holdings Inc. spurred a surge in private borrowing costs. Lawmakers demanded disclosure after the Fed approved aid dwarfing the federal government’s $700 billion Troubled Asset Relief Program." Not all data will be available, however: all important discount window information will not be included as part of this package: "Congress excluded one Fed program from disclosure, the discount window, which is the subject of a 2008 lawsuit filed by Bloomberg LP, parent of Bloomberg News, against the central bank. A group of banks is appealing to the Supreme Court over lower-court decisions ordering the Fed to identify loan recipients. The program peaked at $110.7 billion in October 2008." Since today’s information relates to aid from Dec. 1, 2007,
through July 21, 2010, there will be enough information to satisfy the most detail-oriented forensic reverse engineers.
More from Bloomberg:
“We see this not as the end of a process but really a significant step forward in opening the veil of secrecy that exists in one of the most powerful agencies in government,” Senator Bernard Sanders, the Vermont Independent who wrote the provision on Fed disclosure, said to reporters Nov. 17.
U.S. central bankers stepped outside of their traditional role as a lender of last resort to banks as credit markets nearly ground to a halt in the wake of Lehman’s bankruptcy on Sept. 15, 2008. Bernanke pushed the boundaries of the Fed’s powers, using section 13(3) of the Federal Reserve Act, which allowed the central bank to aid non-banks under “unusual and exigent circumstances.”
No matter how this is spun it will not be beneficial to banks, as it will merely reinforce public anger as the media circuit discusses how the public provided $3.3 trillion in aid to a banking system which as we reported previously is about to experience another surging bonus season.