org> Fed must release loan data as Supreme Court rejects appeal
Submitted by cpowell on 08:11AM ET Monday, March 21, 2011. Section:
By Greg Stohr and Bob Ivry Bloomberg News Monday, March 21, 2011
The Federal Reserve must disclose details of emergency loans it
made to banks in 2008, after the U.S. Supreme Court rejected an
industry appeal that aimed to shield the records from public view.
The justices today left intact a court order that gives the Fed
five days to release the records, sought by Bloomberg News' parent
company, Bloomberg LP.
The Clearing House Association LLC, a group of the nation's largest
commercial banks, had asked the Supreme Court to intervene.
The order marks the first time a court has forced the Fed to reveal
the names of banks that borrowed from its oldest lending program,
the 98-year-old discount window. The disclosures, together with
details of six bailout programs released by the central bank in
December under a congressional mandate, would give taxpayers insight
into the Fed's unprecedented $3.5 trillion effort to stem the 2008
"I can't recall that the Fed was ever sued and forced to release
in its 98-year history, said Allan H. Meltzer, the author of three
books on the U.S central bank and a professor at Carnegie Mellon
University in Pittsburgh.
(GATA EDITOR'S NOTE: Actually, through a Freedom of Information Act
lawsuit in U.S. District Court, GATA last month compelled the Fed
to release a gold-related document. See http://www.gata.org/node/9623.)
Under the trial judge's order, the Fed must reveal 231 pages of
documents related to borrowers in April and May 2008, along with
loan amounts. News Corp.'s Fox News is pressing a bid for 6,186
pages of similar information on loans made from August 2007 to
The records were originally requested under FOIA, which allows
citizens access to government papers, by the late Bloomberg News
reporter Mark Pittman.
As a financial crisis developed in 2007, "The Federal Reserve forgot
that it is the central bank for the people of the United States and
not a private academy where decisions of great importance may be
withheld from public scrutiny," said Matthew Winkler, editor in
chief of Bloomberg News. "The Fed must be accountable to Congress,
especially in disclosing what it does with the people's money."
The Clearing House Association contended that Bloomberg was seeking
an unprecedented disclosure that might dissuade banks from accepting
emergency loans in the future.
"Disclosure of this information threatens to harm the borrowing
banks by allowing the public to observe their borrowing patterns
during the recent financial crisis and draw inferences -- whether
justified or not -- about their current financial conditions," the
group said in its appeal.
A federal trial judge ruled in 2009 that the Fed had to disclose
the records in the Bloomberg case, and a New York-based appeals
court upheld that ruling.
The Clearing House Association's chances at getting a Supreme Court
hearing suffered a setback when the Obama administration urged the
justices not to hear the appeal. The government said the underlying
issues had limited practical significance because Congress last
year laid out new rules for disclosing Fed loans in the Dodd-Frank
"Congress has resolved the question of whether and when the type
of information at issue in this case must be disclosed" in the
future, the administration said in a brief filed by acting Solicitor
General Neal Katyal, President Barack Obama's top Supreme Court
The Fed had previously fought alongside the banks in opposing
disclosure. It also sought to join the industry group in seeking
high court review, only to be overruled by Katyal, according to
Bloomberg initially requested similar information for aid recipients
under three other Fed emergency programs. The central bank released
details for those facilities and others in December, after Congress
required disclosure through the Dodd-Frank law.
The legislation didn't apply retroactively to the discount window
lending program, which provides short-term funding to financial
institutions. Discount window loans made after July 21, 2010, must
be released following a two-year lag.
The New York-based Clearing House Association, which has processed
payments among banks since 1853, includes Bank of America NA, Bank
of New York Mellon, Citibank NA, Deutsche Bank Trust Co. Americas,
HSBC Bank USA NA, JPMorgan Chase Bank NA, U.S. Bank NA, and Wells
Fargo Bank NA.
In trying to shield the documents from disclosure, the Clearing
House invoked a FOIA exemption that covers "trade secrets and
commercial or financial information obtained from a person and
privileged or confidential."
The cases are Clearing House Association v. Bloomberg, 10- 543, and
Clearing House Association v. Fox News Network, 10-660.
* * *
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