Interesting times for the Fed
The Fed tried to keep the list of companies it gave money to secret.
Manhattan Chief U.S. District Judge Loretta Preska said no.
From
Bloomberg:
Court Orders Fed to Disclose Emergency Bank Loans
The Federal Reserve must for the first time identify the companies in its emergency lending programs after losing a Freedom of Information Act lawsuit.
Manhattan Chief U.S. District Judge Loretta Preska ruled against the central bank yesterday, rejecting the argument that loan records aren�t covered by the law because their disclosure would harm borrowers� competitive positions.
The Fed has refused to name the financial firms it lent to or disclose the amounts or the assets put up as collateral under 11 programs, most put in place during the deepest financial crisis since the Great Depression, saying that doing so might set off a run by depositors and unsettle shareholders. Bloomberg LP, the New York-based company majority-owned by Mayor Michael Bloomberg, sued on Nov. 7 on behalf of its Bloomberg News unit.
�The Federal Reserve has to be accountable for the decisions that it makes,� said U.S. Representative Alan Grayson, a Florida Democrat on the House Financial Services Committee, after Preska�s ruling. �It�s one thing to say that the Federal Reserve is an independent institution. It�s another thing to say that it can keep us all in the dark.�
It is one thing to protect a client but it is another thing to obfuscate a legitimate inquiry. Their rationale:
Banks are worried that the disclosure of borrowers� identities by the Fed, the lender of last resort, would cause customers to empty their bank accounts in a run on the bank, said Scott Talbott, vice president of governmental affairs at the Washington-based Financial Services Roundtable, a lobbying group.
�This issue is: �This bank borrowed X billion from the Fed, therefore they must be in trouble, therefore I�m going to pull my money out,� said Talbott. �That�s the type of danger that we�re worried about. That�s the risk.�
It is not that. I am involved in a local foundation just starting up and we specifically chose not to use one local bank because they had taken TARP money. When a bank does this, they are subject to additional regulation and scrutiny from the Federal Government and this is one camels nose under the tent that I simply will not deal with. The board felt this too -- unanimously.
Now that Ben Bernanke is getting a second term as head of the Fed, things will only continue on their slide. Bernanke is a Keynesian. We need an Austrian to pull us out of this depression.
Posted by DaveH at August 25, 2009 9:48 PM