Federal Reserve loses again in court over secret bailout of financial industry
Wouldn’t it be nice to know what really happened behind closed doors? If our government is going to talk about openness and transparency then perhaps – crazy thought, I know – they ought to actually deliver openness and transparency. The more the Fed moves to keep the bailout details secret, the more voters will be suspicious of the deep connections linking government and industry. It does make one wonder if those links are even more extensive than we currently know.
Let’s have the ugly details.
The U.S. 2d Circuit Court of Appeals denied the Fed’s motion on Friday to rehear the case in which Bloomberg LP, the parent of Bloomberg News and News Corp’s Fox News Network sought information on the U.S. central bank’s emergency lending programs that began in late 2007.
The programs, designed to shore up the financial markets, more than doubled the Fed’s balance sheet to well over $2 trillion, especially in the wake of the September 2008 collapse of Lehman Brothers.
The Fed maintained that disclosing the information sought by the news outlets under the Freedom of Information Act (FOIA) could stigmatize banks, causing a loss of confidence that could lead to deposit runs and the demise of some lenders. The Clearing House Association, a group of major U.S. and European banks, supported the Fed’s efforts.