Fed Loses Suit Over Lending Programs’ Transparency

In general, when it comes to the Federal Reserve's activities, we know what the Fed wants us to know. As a quasi-governmental, semipublic institution, the Fed has much more autonomy than the Treasury Department -- and consequently, much less transparency. When it comes to the billions it lent financial institutions through special programs launched in the midst of the financial crisis, the Fed's stance has been against giving any information beyond the general size of its programs. (Our bailout database shows only recipients of taxpayer aid via the Treasury.)

Bloomberg News sued the Fed for more details on these loans: which companies had received them and how much they'd received. In a ruling Monday in U.S. District Court in Manhattan, Judge Loretta Preska sided with Bloomberg. The Fed's main argument, that it couldn't release the names of its borrowers because it would signal a bank's weakness to the market, didn't fly with the judge, Bloomberg reports:

The central bank “essentially speculates on how a borrower might enter a downward spiral of financial instability if its participation in the Federal Reserve lending programs were to be disclosed,” Preska wrote. “Conjecture, without evidence of imminent harm, simply fails to meet the Board’s burden” of proof.

The judge gave the Fed five days to turn over its documents, but it could appeal the decision. An appeal seems likely, given that last month the Fed won a similar suit brought by Fox News (before a different judge).

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