Federal Reserve Loses Bloomberg FOIA Lawsuit, Sensitive Disclosures Forthcoming

Tyler Durden's picture

Just out from Bloomberg:

Aug. 24 (Bloomberg) -- The Federal Reserve must make
public reports about recipients of emergency loans from U.S.
taxpayers under programs created to address the financial
crisis, a federal judge ruled.

This is in relation to a lawsuit filed by Bloomberg LP against the Federal Reserve on November 7, 2008, in Southern District of New York (08-09595), in which Bloomberg sought material loan and collateral data in relation to emergency loans released by the Fed, and which were previously claimed to be non-FOIAble.

This is a large blow against the Fed and specifically against organizations using FOIA loopholes from providing critical information, particularly in cases involving trillions of taxpayer dollars bailing out huge, systematically and politically embedded financial organizations (which lately is pretty much all of them).

The conclusion from the order just issued by District Judge Loretta Preska is as follows:

The Board's Motion for Summary Judgment is DENIED, and Bloomberg's Motion for Summary Judgment is GRANTED. Specifically:

1. The Board shall produce forwith the Remaining Term Reports within five business days of the date hereof;

2. The Board shall search forthwith records at the FRBNY that constitute "Records of the Board" within the meaning of 12 C.F.R. # 231.2(i)(1); and

3. The parties shall confer following their review of the results of the search and inform the Court by letter no later than September 14, 2009 how they propose to proceed.

The beneficial outcome means that many more FOIA-based lawsuits against the Federal Reserve will now spring up, and with case law on their side, the outcomes of most will likely be on behalf of the plaintiffs. This could detour any short-circuit attempts by either Congress or Senate to prevent a Fed audit, as it may suddenly not be necessary, now that there is this alternative venue to get various pieces of information, previously not available to the general public.

 

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Anonymous's picture

Last Friday Big Ben said:

"The case of the investment bank Lehman Brothers proved exceptionally difficult, however.... [T]he company's available collateral fell well short of the amount needed to secure a Federal Reserve loan of sufficient size to meet its funding needs. As the Federal Reserve cannot make an unsecured loan, and as the government as a whole lacked appropriate resolution authority or the ability to inject capital, the firm's failure was, unfortunately, unavoidable....

"In contrast, in the case of the insurance company American International Group (AIG), the Federal Reserve judged that the company's financial and business assets were adequate to secure an $85 billion line of credit, enough to avert its imminent failure.

What was this $85-billion-loan-supporting collateral that AIG had? Perhaps that "collateral" will (not) be revealed via Bloomberg's FOIA request.

ghostfaceinvestah's picture

What's particularly ludicrous is that not all of that AIG money is now a loan, some of it has been converted into equity.  So rather than have a collateralized loan, the Fed has an equity position.

Anonymous's picture

The operating units were the collateral.

Spartacus's picture

I will put a $1 on bet that a news something like the following will appear sometimes in future.

"the senate  found it very difficult to accept the nomination of Ben Bernanke after it was revealed that chairman did not use his enormous power impartially. On certain occasions the treasury people also did not help him enough to take a proper decision. The outrage that has been seen in the information forums makes it doubly difficult for the senate to accept this nomination"

Hey I have a question? Has there been any decision in the past which  helped GS gain access to cheap funds which they have used to ramp up the markets?

AndItsGone's picture

Amazing! Isn't this basically what HR 1207 was all about disclosing?

MountainHawk's picture

Wooo hoo! Green shoots of hope...

Cheeky Bastard's picture

its fair to say that the FED is SEEMINGLY on the ropes; i just hope ( yeah i know ) they wont trash the economy ( as if ) in the forthcoming months just to take the heat off themselves ( although i don't think that would work anymore ). We need and economical equivalent of Mike Tyson's 1989-1993 KO punch to finish them. 

Anonymous's picture

If this thing has legs, mark my words they will bring the stock market to its knees in the coming months. They won't, nor will their parasitic Wall St. spawn, let this go through without leaving destruction in their path.

No matter, the market needs to correct sharply downwards anyhow, and some interim pain to rid ourselves of the cancer is necessary, no matter when or how we do it.

ghostfaceinvestah's picture

Yes they will.  Forget the stock market, they will suck up liquidity so fast it will make your head spin, and bring the economy to its knees.  Just like the Second Bank did when Andrew Jackson tried to bring it down.

matthylland's picture

Was just going to use that example as well...these bastards will do anything.

Spartacus's picture

Matthylland,

I would request you to desist from using certain words which are of not great quality. I am afraid that general public may not appreciate these words. I just got a feedback from a fund-manager whose attention  I had steered towards this website. Use **** in between to drown it out. The whole word stikes back at the readers.

Thank You.

Anonymous's picture

You received negative feedback from a fund manager about using the word 'bastard'? Are fund managers extreme type-A personalities?

Anonymous's picture

Jefferson wrote to James Monroe (who later served as our 5th President, 1817-25) in January, 1815: "The dominion which the banking institutions have obtained over the minds of our citizens ... must be broken, or it will break us." In 1816, Jefferson wrote to John Tyler (who became our 10th President, 1841-45):
"If the American people ever allow private banks to control the issuance of their currency, first by inflation, and then by deflation, the banks and the corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their father's conquered ... I believe that banking institutions are more dangerous to our liberties than standing armies.

To Jackson, the Second Bank symbolized how a privileged class of businessmen oppressed the will of the common people of America. He made clear that he planned to challenge the constitutionality of the bank, much to the horror of its supporters. In response, the director of the bank, Nicholas Biddle, flexed his own political power, turning to members of Congress, including the powerful Kentucky Senator Henry Clay and leading businessmen sympathetic to the bank, to fight Jackson.

Anonymous's picture

The second quote is considered spurious, as the words deflation and inflation did not exist back in 1816.

The More You Know ......::::::::::::*

rapier's picture

The market absolutely loves every single aspect of Fed actions which seem to outsiders to be corrupt. Every lie now exposed and every too good to be true deal revealed will be good for stocks.

 

There was very little negative public sentiment, even and especially among politicians and  celebrities, against Al Capone in Chicago. That off the top of my head analogy isn't very good I guess.  At any rate the more it seems the markets are managed the better for the market.  Why otherwise was Greenspan made into a demigod? If guys with FED on their coats showed up in the futures pits the personalities on CNBC would be orgasmic with delight. Explaining how this was the ultimate expression of free markets.

monmick's picture

Who wants to bet this will be appealed?

Cheeky Bastard's picture

i call your bet and raise you another 10 billion and say it wont.

MountainHawk's picture

Really... cause a appeal is analogous to admidditing corruption perhaps?

Cheeky Bastard's picture

no; not because of that; its simply a bet based on my intuition ( which when translated means i raise you without even knowing my cards ) so tsa bet or what 

Anonymous's picture

You don't think the Fed will appeal it, or you don't think it will get repealed by a higher court?

monmick's picture

As long as it's tied up in the process long enough for the crisis to pass, or for the ADD-public to lose interest...

E Thomas St.'s picture

Will Bloomberg lose interest?

monmick's picture

No, the ADD-public will...

 

ADD = Attention Deficit Disorder

Anonymous's picture

Precisely. The Fed will tie it up for as long as possible, and if they can't do that, this whole case will probably result in releasing mundane useless info.

The Fed however, will NOT appeal this. The higher up the court chain it goes, the more public attention. They'd never dare let it go to the Supreme Court unless they are buffoons. Though people do give them far too much credit in the intellect department.

Even if they gave some sort of "smoking gun" (which I presume would be destroyed in the worst case scenario) which they won't, instead it'll be useless info, but even if they did, if it is released in a small case, the public won't care. If the public had a brain left they'd of realized human nature by now, but they haven't for thousands of years, so why would they start now?

Banks have been fabricating currency for centuries, even millennia. Even without the Fed, they would still do so (much to the dismay of the Mises fools who don't understand how the deception works, and that the Fed was actually regulating the counterfeiting process keeping a handle on it for stability purposes). Today's banks do what the goldsmiths of old did. The goldsmiths figured out everyone preferred to carry their gold notes and the amount of gold they needed to keep on hand was minimal. Thus, they could "spend"/loan out, tens of times more of "gold notes" than they really had in gold, and no one would be the wiser, since only a fraction of people withdrew the actual gold (it'd make you an easy target for thieves).

In this way, they became more powerful than Kings (who often were in debt to the bankers, financing their wars). One of the great banking houses, the Medicis were one such family, who became monarchs themselves, and 3 of the Medicis even bribed their way to become ruler of all "christendom", Popes. They made massive profits, despite following the usury ban in Europe, which meant they could not loan out money at "interest", yet still they profited.

But how can you make a profit without usury? Only through the methods I described. Lending BEYOND what you have deposited. There was nothing to stop banks from lending gold notes for gold they never had, as long as they had enough gold to deal with day to day transactions. It works the same way with currency, (since our current currency is actually DEBT not credit) banks are allowed to issue "commercial bank money" (as opposed to "central bank money"), so essentially banks only have to keep as much "central bank money" on hand to deal with day to day transactions.

Just the same as the gold bankers only had to keep enough gold to deal with the day to day transactions. Simple, huh? In the event of a bank run, like in the past, the banks would just go bankrupt.

The term "bankrupt" comes from "broken bank", when bankers would literally destroy their bench (bank=bench) they peddled from and disappear with whatever profits they had. This practice goes back over 2,000 years, to the Roman "argentarii" who would often run off with the money entrusted to them.

Thus, without the Fed even, the slavery will not end. You would have to outlaw all banking or humanity will never be freed. But humans don't want to be responsible, and will always want money they don't have, and be willing to become debt slaves. Who here can say they have no credit card, or have never gotten a loan, or mortgage? Few indeed. Or who can say they wouldn't be more at ease with a gold note which is not as noticeable as gold swinging around in our pockets to the thieves?

Thus we are all responsible for enabling these criminals. There is a reason the only humans Jesus ever got angry at were the bankers (they were Roman argentarii bankers back then) whom he called "thieves" and knocked over their banks (benches).

Cheeky Bastard's picture

that it wont be repealed by a higher court; the appeal itself is standard procedure; I'm not THAT stupid.

SV's picture

We should get Marla in here on that.  My limited legal basis says that there's a level of proof that a summary judgement by it's nature must achieve.  Not something capriciously overturned to the best of my knowledge.

SWRichmond's picture

CB I am more interested in just how any determination will be made as to whether or not the documents furnished by the Fed are actually responsive.  If they redact everything, for example.  This fight is far from over.  We still need the audit; we need people going in there and looking at, and disclosing, everything.

No one should let this ruling diminish their vigor in pursuing 1207/604.

Cheeky Bastard's picture

maybe that's the plan; FED "loses" the case; gives the necessary documents ( of course redacted ) and say that it will be willing to do so in the future and that HR1207/S604 is really not necessary. Maybe I'm paranoid, but if i was BB that's how i would play it.

Anonymous's picture

Oh yeah... An emergency appeal to a FOIA.
THAT would instill confidence!!!
Bwua ha hoo hoo ha ha haa!

dot_bust's picture

That's possible. Dick Cheney worked the appeals courts until he could find a judge who would help him keep the Energy Task Force documents sealed.

However, there's a flip side to that coin: If the Fed appeals, it looks like a coverup. Besides, the Federal Reserve isn't actually a government body, so they can't exactly claim national security.

Either way, if the stink from this thing get too big, the Fed ends up on the ropes anyway.

 

Anonymous's picture

an amicus brief could be filed by the cia or
nsa claiming national security.....this is one
of the benefits of the gestapo act..i mean
patriot act....

Spartacus's picture

The appeal has already been decided. Check it out. FED will not like to be fed commonsense. It will fight back with all its might.

Thanks

Anonymous's picture

I suddenly feel warm and fuzzy inside.

Anonymous's picture

This is potentially very big. It seems almost too good to be true. Expect an appeal.

Leonard Koscianski

ZerOhead's picture

More importantly expect a veeeeery long appeals process considering the potential impact that releasing this information will have on the political and economic landscape...

Ultimately this judgement will be overturned... take that to the bank... but not before it derails S.604 from achieving critical mass.

Wagers anyone?

 

Spartacus's picture

Bloomberg for the next presidency. I can bet on this one.

Anonymous's picture

woohoooooooooooo

docsdoc's picture

It will end up in the Supreme Court

Anonymous's picture

Filed on November 7th?

This is as good as 1207, which was going to take too long.

Anonymous's picture

this is a foia request which in no way carries the
implications which hr 1207 carries....

one is ad hoc the other is an organic attachment
to a bureaucracy....

payitdown's picture
payitdown (not verified) Aug 25, 2009 11:02 AM

will give up some sort of as an branch but truthfully it will be one that will be of no use or consequense to them going forward.

good articles; good articles 4 slow news day ..http://www..
hat tip: finance news & finance opinions

Gilgamesh's picture

No way.  This is a drop in the bucket of what 1207 would be, if done legitimately (virtually zero chance of that, but the fallout of obstruction would/will be worth the fight).  But this will hopefully open the floodgates of FOIAs on the Fed from every walk of American life.

pigpen's picture

Home flippers are back with avengence in so cal. Flippers are making $100k in three months flipping to you guessed it american taxpayers via FHA. So glad our govt is the new sanctioned subprime low down payment provider.

FHA - the new toxic receptacle.

If you think animal spirits are wild in the stock markets just watch what is happening in the low end of the real estate market.

http://www.bubbleinfo.com/2009/08/our-flippers-part-1/#comment-20550

 

deadhead's picture

FHA will implode....just a question of when.  All the mortgage scammers found their way to FHA some time ago and are they pulling the wool over FHA.

payitdown's picture
payitdown (not verified) pigpen Aug 25, 2009 11:02 AM

An analysis of their options looking forward, particularly in the realm of the high interest rates

good articles; good articles 4 slow news day ..http://www..
hat tip: finance news & finance opinions

deadhead's picture

great start.  i've always said that out of our 3 branches of government, the Judiciary is the only one we can count on.  if they go, so goes the republic.

the Fed has a very delicate political decision to make in terms of the appeal......if they do appeal, the House bill calling for a Fed audit has a much greater likelihood of seeing the light of day.  Either way it's a win for the little guy as TD said.

Cheeky Bastard's picture

the Judiciary is the only one we can count on.  if they go, so goes the republic.

 

try again; did you know that 99% of court cases is won by either state or federal government; statistically that's an anomaly of giant proportions; realistically; its called a repression.

Miles Kendig's picture

Yep.

And forbid that you actually exercise your rights to defend yourself.  Under the CCCA you get an enhancement for doing so.