Fed Will Release Bank Loan Data as Top Court Rejects Appeal

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Fed Will Release Bank Loan Data as Top Court Rejects Appeal

Post by ToddS on Mon Mar 28, 2011 12:15 pm

Fed Will Release Bank Loan Data as Top Court Rejects Appeal

By Greg Stohr and Bob Ivry -
Mar 21, 2011 11:22 AM CT

The Federal Reserve will 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’s
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 board will fully comply with the court’s decision and
is preparing to make the information available,” said David Skidmore, a spokesman for the Fed.
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 financial
“I can’t recall that the Fed was ever sued and forced to
release information” 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.
Unprecedented Disclosure

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. (NWSA)’s Fox News is pressing a bid
for 6,186 pages of similar information on loans made from August
2007 to November 2008.
The records were originally requested under the Freedom of
Information Act, 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 is
seeking an unprecedented disclosure that might dissuade banks
from accepting emergency loans in the future.
Obama Administration

“We are disappointed that the court has declined our
petitions, which deal with the protection of highly confidential
bank information provided to the Federal Reserve,” the group
said in a statement after the high court acted.
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 law.
“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 lawyer.
Discount Window

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 court documents.
Justice Elena Kagan, formerly Obama's top Supreme Court
lawyer, didn’t take part in the court’s consideration of the
appeal. Since joining the court last year, she has
disqualified herself from cases in which she took part as
a government lawyer.
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.
Clearing House Association

“Fortunately, Congress was well aware of the sensitivity
of disclosing this information,” the Clearing House Association
said in its statement. “As part of the Dodd-Frank Act, Congress
adopted a specific rule to ensure that in the future this
confidential information will not be disclosed prematurely to
the detriment of our financial system.”
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.
To contact the reporters on this story:
Greg Stohr in Washington at
[You must be registered and logged in to see this link.];
Bob Ivry in New York at [You must be registered and logged in to see this link.].
To contact the editor responsible for this story:
Mark Silva at [You must be registered and logged in to see this link.];
Gary Putka at [You must be registered and logged in to see this link.].

[You must be registered and logged in to see this link.]

“We have the wolf by the ears, and we can neither hold him, nor safely let him go. Justice is in one scale, and self-preservation in the other.”

Thomas Jefferson

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Join date : 2011-03-26
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