Next step for the Fed weasels - petitioning the Supreme Court in an attempt to completely trample America's constitution. In the meantime, Mark Pittman smiles from above as Satan reevaluates the amend and extend provisions of his affirmative covenants with the Fed.
March 19 (Bloomberg) -- The Federal Reserve must disclose
documents identifying financial firms that might have collapsed
without the largest ever U.S. government bailout, a federal
appeals court said.
The U.S. Court of Appeals in Manhattan ruled today that the
Fed must release records of the unprecedented $2 trillion U.S.
loan program launched primarily after the 2008 collapse of
Lehman Brothers Holdings Inc. The ruling upholds a decision of a
lower-court judge, who in August ordered that the information be
The opinion might not be the final word in the bid for the
documents, which was launched by Bloomberg LP, the parent of
Bloomberg News, with a November 2008 lawsuit. The Fed could seek
a rehearing or appeal to the full appeals court and eventually
petition the U.S. Supreme Court.
The court was asked to decide whether loan records are
covered by the U.S. Freedom of Information Act, or FOIA.
Historically, the type of government documents sought in the
case has been protected from public disclosure because they
might reveal competitive trade secrets. The Board of Governors
of the Federal Reserve System had argued that disclosure of the
documents threatens to stigmatize lenders and cause them
“severe and irreparable competitive injury.”
Bloomberg, majority-owned by New York Mayor Michael
Bloomberg, sued after the Fed refused to name the firms it lent
to or disclose loan amounts or assets used as collateral under
its lending programs. Most of the loans were made in response to
the deepest financial crisis since the Great Depression.
Lawyers for Bloomberg argued in court that the public has
the right to know basic information about the “unprecedented
and highly controversial use” of public money.
“Bloomberg has been trying for almost two years to break
down a brick wall of secrecy in order to vindicate the public’s
right to learn basic information,” Thomas Golden, an attorney
for the company with Willkie Farr & Gallagher LLP, wrote in
Banks and the Fed warned that bailed-out lenders may be
hurt if the documents are made public, causing a run or a sell-
off by investors. Disclosure may hamstring the Fed’s ability to
deal with another crisis, they also argued.
Much of the debate at the appeals court argument on Jan. 11
centered on the potential harm to banks if it was revealed that
they borrowed from the Fed’s so-called discount window. Matthew
Collette, a lawyer for the government, said banks don’t do that
unless they have liquidity problems.
FOIA requires federal agencies to make government documents
available to the press and public. An exception to the statute
protects trade secrets and privileged or confidential financial
data. In her Aug. 24 ruling, U.S. District Judge Loretta Preska
in New York said the exception didn’t apply because there’s no
proof banks would suffer.
The Fed’s balance sheet debt doubled after lending
standards were relaxed following Lehman’s failure on Sept. 15,
2008. That year, the Fed began extending credit directly to
companies that weren’t banks for the first time since the 1930s.
Total central bank lending exceeded $2 trillion for the first
time on Nov. 6, 2008, reaching $2.14 trillion on Sept. 23, 2009.
The Clearing House Association, which processes payments
among banks, joined the case and sided with the Fed. The group
includes ABN Amro Bank NV, a unit of Royal Bank of Scotland Plc,
Bank of America Corp., The Bank of New York Mellon Corp.,
Citigroup Inc., Deutsche Bank AG, HSBC Holdings Plc, JPMorgan
Chase & Co., US Bancorp and Wells Fargo & Co.
More than a dozen other groups or companies filed friend-
of-the-court briefs. Those arguing for disclosure of the records
included the American Society of News Editors and individual
The case is Bloomberg LP v. Board of Governors of the
Federal Reserve System, 09-04083, U.S. Court of Appeals for the
Second Circuit (New York).