Four months after Bloomberg News asked for the names of recipients of $2 trillion in taxpayer dollars, the Federal Reserve finally said no.
Bloomberg filed a request under the U.S. Freedom of Information Act requesting details about the terms of 11 emergency lending programs and asked what assets the Fed accepted as collateral.
According to a story posted today by Bloomberg, the Fed responded on Dec. 8, saying it's allowed to withhold internal memos as well as information about trade secrets and commercial information.
Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson, however, said in September that they would comply with congressional demands for transparency in a $700 billion bailout of the banking system.
“Notwithstanding calls for enhanced transparency, the Board must protect against the substantial, multiple harms that might result from disclosure,” Jennifer J. Johnson, the secretary for the Fed’s Board of Governors, said in a letter e-mailed to Bloomberg News and reported by the Columbia Journalism Review.
One of the harms might be public knowledge of just how devalued those assets are right now, point out critics of the Fed loan program.
"If they told us what they held, we would know the potential losses that the government may take, and that's what they don't want us to know," Carlos Mendez, a senior managing director at ICP Capital, told Bloomberg.
As of Nov. 6, total Fed lending exceeded $2 trillion for the first time. It rose by 138 percent — $1.23 trillion — in the 12 weeks since Sept. 14, when central bank governors relaxed collateral standards to accept securities that weren't rated AAA, Bloomberg noted.
The lawsuit doesn't seek monetary damages. The Freedom of Information Act obliges federal agencies to make government documents available to the press and public.
"There has to be something they can tell the public because we have a right to know what they are doing," Lucy Dalglish, executive director of the Reporters Committee for Freedom of the Press, told the news service.
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