Federal reserve finally reveals secret bailout loan details per judgement

April 1, 2011 by · Leave a Comment
Filed under: Legal News 

Remember, nothing is for free and this disclosure is not an exception.   It has been 2 years since this legal action start to get the secret bank bailout loans that were made during the financial crisis of 2008-present.  The U.S. Federal Reserve released the details per the judgment of the courts that has to do with the Bloomberg L.P lawsuit.  But now we have a law in place that starting in 2012, the Fed will be required to reveal these type of details in the future but with a mandatory 2-month delay.

What this means is now we have codified in law a delay on secret loans as public-private partnership makes on behalf of the U.S. Congress.   Who I add are not elected so we do not really know at all times which mandate they are following, full employment (pro-banks) or stable prices (pro-savers & investors).  We have basically codified secrecy in this part of our market system.  That gives great advantage to the organizations that are receiving this type of public support and harmful to  anyone who competes with these institutions and does not get the same favor (ie: WaMu, Lehman, Bear Sterns, etc.).  Not to say those companies I mentioned did not operate is a self-interested greedy manner but they did not get the red carpet treatment.

MSN Money – The Federal Reserve released thousands of pages of secret loan documents under court order, almost three years after Bloomberg LP first requested details of the central bank’s unprecedented support to banks during the financial crisis.

The records reveal for the first time the names of financial institutions that borrowed directly from the central bank through the so-called discount window. The Fed provided the documents after the U.S. Supreme Court this month rejected a banking industry group’s attempt to shield them from public view.

“This is an enormous breakthrough in the public interest,” said Walker Todd, a former Cleveland Fed attorney who has written research on the Fed lending facility. “They have long wanted to keep the discount window confidential. They have always felt strongly about this. They don’t want to tell the public who they are lending to.”

The central bank has never revealed identities of borrowers since the discount window began lending in 1914. The Dodd-Frank law exempted the facility last year when it required the Fed to release details of emergency programs that extended $3.3 trillion to financial institutions to stem the credit crisis. While Congress mandated disclosure of discount-window loans made after July 21, 2010 with a two-year delay, the records released today represent the only public source of details on discount- window lending during the crisis.

Protecting Its Reputation

“It is in the interest of a central bank to put a premium on protecting its reputation, and, in the modern world, that means it should do everything to be as transparent as possible,” said Marvin Goodfriend, an economist at Carnegie Mellon University in Pittsburgh who has been researching central bank disclosure since the 1980s.

“I see no reason why a central bank should not be willing to release with a lag most of what it is doing,” said Goodfriend, who is a former policy adviser at the Richmond Fed.

Bloomberg News reporters received two CD-ROMs, each containing an identical set of 894 PDF files, from Fed attorney Yvonne Mizusawa at about 9:45 a.m. in the lobby of the Martin Building in Washington. Bloomberg News has posted the raw documents here. Accessing them will take several minutes.


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