Fed loses court ruling on loan confidentiality
The Federal Reserve must reveal documents identifying companies that received Fed loans to survive the financial crisis, an appeals court ruled Friday.
A panel of the 2nd U.S. Circuit Court of Appeals in Manhattan said in two opinions that such information isn’t automatically exempt from requests under the Freedom of Information Act.
The Fed argued that if it identified banks that drew emergency loans, it could cause a run on those institutions, undermine the loan programs and hurt the economy, and lower-court judges were split on the issue.
“We are reviewing the decision and considering our options for reconsideration or appeal,” said Fed spokeswoman Michelle Smith.
Until a final ruling, the Fed is not compelled to turn over any documents.
Lawmakers, picking up on public anger over the Fed’s role in bailing out Wall Street, have demanded the Fed be more open.
Fed Chairman Ben Bernanke in February said the bank would support legislation to identify companies that used the Fed’s special lending facilities — “after an appropriate delay.” A delay in identifying them would help discourage investors from viewing a company as having financial troubles, he said.
But Bernanke said the confidentiality of banks drawing emergency loans from the Fed’s “discount window” must be preserved. The Fed acts as lender of last resort for banks that can’t get money from private sources.
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Tags: Loans