Fed loses court appeal to keep bailout details secret
Bloomberg News won another battle in its war to force the Federal Reserve to disclose details of its massive lending program during the financial system bailout.
The full U.S. Court of Appeals in New York has refused to review a March decision by three of its judges requiring the Fed to release records of the $2 trillion in emergency loans it extended to banks and other institutions beginning in 2008.
Unless the court stays its decision, the Fed will have seven days to disclose the documents. In the event of a stay, the central bank and the Clearing House Association LLC, an organization of 20 commercial banks that joined the Fed in defense of the lawsuit, will have 90 days to petition the Supreme Court to consider their appeal. The Clearing House has already said it will ask the high court to rule on the case.
A Fed spokesman said the central bank was “considering our options.”
Bloomberg sued the Fed in November 2008, arguing that the public has the right to know the names of the banks that borrowed from the agency, the amounts of the loans and what kind of collateral was posted.
The Fed has argued that releasing that information could cause “irreparable harm” to the banks that got the money, presumably by labeling them as the weakest links in the financial-system chain, at least at the time. The Fed also fears that banks facing short-term distress in the future might be unwilling to turn to the Fed -- in its legal role as “lender of last resort” -- if they knew that their borrowing would become public knowledge.
The central bank is required under the new financial reform law passed by Congress this summer to disclose certain information about its lending by Dec. 1, but it has continued to fight to keep private the details that Bloomberg wants to publish.
-- Tom Petruno