Bloomberg sues to get list of banks borrowing from the Fed

Should the Federal Reserve have to disclose the names of the banks and other companies that are getting special Fed financial help?

Bloomberg News thinks so. And because the Fed won’t tell, the news organization now is suing for the information.

From a Bloomberg story today:

The Federal Reserve is refusing to identify the recipients of almost $2 trillion of emergency loans from American taxpayers or the troubled assets the central bank is accepting as collateral.

Fed Chairman Ben S. Bernanke and Treasury Secretary Henry M. Paulson said in September they would comply with congressional demands for transparency in a $700 billion bailout of the banking system. Two months later, as the Fed lends far more than that in separate rescue programs that didn't require approval by Congress, Americans have no idea where their money is going or what securities the banks are pledging in return.

Bloomberg News has requested details of the Fed lending under the U.S. Freedom of Information Act and filed a federal lawsuit Nov. 7 seeking to force disclosure.

The Fed made the loans under terms of 11 programs, eight of them created in the past 15 months, in the midst of the biggest financial crisis since the Great Depression.

Federal Reserve spokeswoman Michelle Smith declined to comment on the loans or the Bloomberg lawsuit. Treasury spokeswoman Michele Davis didn't respond to a phone call and an e-mail seeking comment.

The Fed, of course, can argue that it has a good reason for keeping borrowers’ identities secret: It doesn’t want to risk another banking panic by giving stock traders and depositors a list of institutions that would immediately be seen as the weakest links in the financial chain. No regulator wants to force a failure if there's a decent chance an institution could survive, with time.

From the Bloomberg story:

Banks oppose any release of information because it might signal weakness and spur short-selling or a run by depositors, said Scott Talbott, senior vice president of government affairs for the Financial Services Roundtable, a Washington trade group.

"You have to balance the need for transparency with protecting the public interest," Talbott said. "Taxpayers have a right to know where their tax dollars are going, but one piece of information standing alone could undermine public confidence in the system."

Comments

[Lex Roland]

What are the 11 programs, eight created in the past 15 months? Who runs these programs? Our government is government for the people, by the people and all information should be disclosed to the taxpayers. The indiviudals in the federal agencies which participated in actions related to these loans should have their names published on the agency website and/or disclosed through a press release. They should answer to the American people. They have no right to give our money away without advising the people where the money went. We need to know their personal relationships with the banks and/or officer of the banks.

This looks like the last grab-fest of the Cheney/Rove/Goldman Sachs/NeoCon group raping our government.

[lbiker]

Go Bloomberg! What a joke our government is! All this malarkey over the past 8 years about capitalism this and capitalism that, and when the capitalists make stupid decisions, the government charges in to the rescue. If the capitalists are allowed to benefit from laissez-faire, than why is it when the capitalists falter, they suffer no consequences? Without consequences, they are not capitalists, they are PROFITEERS! They bore NO RISK! The way our government has structured this, the consumer/taxpayer gets shafted coming and going. Once by the profiteers, and then again by the very government that is supposed to protect them. Hmm, as in all other things, to find the true wrongdoers here, just follow the money. And it sure ain't in my pocket!

[Mike G]

Without any over-sight or fulll disclosure of who these banking institutions and companies are, aren't we simply doomed to repeat the financial crises that we are currently experiencing? I vote for absolute full disclosure to the American people (since we are the poor saps who are being told-not asked, to foot the bill for these institutions' mismanagement of our money to begin with) so that we can make educated decisions about how and where our tax dollars are being spent, and whether or not they are being spent prudently! I call this treatment "Rich Welfare", not capitalism!

[Web Smith]

The credit card companies have preyed on the population loaning them money and raising the interest rate until they have taken every last dime. Now that no money is going towards the purchase of goods and services, their greed has destroyed the country's economy and we are expected to bail then out.

http://ewebsmith.com/Finance/hiddendemon.html

[Jambalaya]

Since our Treasury seems to be learning about Shariah-Compliant Finance and since Shariah-compliant equities have lost a bundle (over $5 trillion) of late, I wonder if a good part of the $2 trillion is bailing out Sharia-Compliant financial institutions. Might be why they want to keep it quiet.

Pres.-elect Obama ran saying he wanted more transparency so maybe we have only to wait until January 20th. I'd like to know his answer now.

[M. Chandler]

These are PUBLIC companies who have a duty to reveal their condition to the public who may buy equity in the company. The government will be helping defraud that public if people invest and lose their money due to conditions that should have been revealed. How can they expect anyone to continue investing if it is this obvious the entire market is a blind game rigged to cheat the public?
Liars, liars,and crooks - the lot of them.

[Tom Atkins]

The outcome of this suit could be telling, under the freedom of information act, they would be compelled to release the info. Will the Fed argue that they are not a government agency, but a private institution that has government oversight, much like an investment bank?

These bad loans will lead to a bond defautl by the US, it may take some time but will happen. Looks like the crooks are looting what is left of this once great country before GW leaves and the party ends.

The FED will not exist in 10 years, either we wake up as a country and end it or the US government will go bankrupt letting it bail out it's buddies.

Eitherway it will end.

[Ryan]

This is so incredibly outrageous and yet NONE of the major news sources are reporting on this!!! This is at least as big of news as the bailout. Once again, taxpayers are being told to grab their ankles and bite their tongue. I say we need to start a mass tax resistance and stop feeding the system that oppresses us. Real change won't come from their hierarchy, a revolution of non-particpation.

"Everybody's worried about stopping terrorism. Well, there's a really easy way: stop participating in it. " - Noam Chomsky

[Neil McLaughlin]

$2 Trillion is about $18,000 for each household in the US. It is $400 for every person on Earth. It would pay an army of 100 Million Mercenaries $20,000 each. It is about 14% of the current money supply, meaning it will cause what is $7 today to cost $8 tomorrow.

[Eric]

They wouldn't have to worry about these bank runs if they didn't allow fractional reserve banking, which is really just legal counterfeiting. Our entire monetary policy is a joke.