Fed Should Keep Emergency Lending Secret – Banks Vow Supreme Court Appeal

April 14, 2010 by · Leave a Comment
Filed under: Opinion 

This was an interesting article about the lawsuit Bloomberg LP filed against the Federal Reserve about the $2 trillion on secret loans they gave and to this day have not given any details.   As I have written here before, I believe this information should be public record and if the loans caused a run on some banks, it would be for good reason because they were insolvent at the time and should of been shut down and their assets sold off the the banks that were not in the same position.

Just as Walter Bagehot wrote in his seminal work “Lombard Street, workings of the London Money Market”,  bad  money will always chase away good money.  And bad banking practices will always chase away good  banking practices because the bad banks will provide the cheapest credit / money on the most favorable terms so there is not incentive for a borrower to go the more prudent bank that has higher standard.

This is why it is so important to make sure bad banks always go out of business and the prudent banks rise to the top to set the standard for all banking.

NOTE *IMPORTANT PLEASE READ*: Here is the most interesting part of the article and if you were not paying attention or you did not read into what they were saying and more important “not saying“.

Quote:  “The central bank contends that 231 pages of daily reports summarizing lending activity, which were prepared by the Federal Reserve Bank of New York for the Fed Board of Governors in Washington, aren’t covered by the FOIA (Freedom of Information Act). The statute obliges federal agencies to make government documents available to the press and the public.

Here is plan English the Federal Reserve is asserting they ARE NOT a Government Agency but actually a Private Banking Cartel (definition of cartel) that has a mandate from the U.S. government since 1913 to issue the U.S. Dollar as the sole Lender Tender.

BIG QUESTION?: Do we want to have a private institution have the ability with no oversight be able to have the monopoly to issue our dollar and to be able to help out their banking buddies with any amount of assistance they deemed necessary?  Please think about this for a bit before you answer.

If you have any question or want me to back up these claims, I am happy to provide many official references.   Please comment below, I am approving any comment, positive and negative.  Please back-up any claims so we can have a real discussion.  Slander will not be tolerated.

Bloomberg – The biggest U.S. commercial banks will take their fight against disclosure of Federal Reserve lending in 2008 to the Supreme Court if necessary, the top lawyer for an industry-owned group said.

Continued legal appeals will delay or block the first public look at details of the central bank’s $2 trillion in emergency lending during the 2008 financial crisis. The Clearing House Association LLC, a group that includes Bank of America Corp. and JPMorgan Chase & Co., joined the Fed in defense of a lawsuit brought by Bloomberg LP, the parent company of Bloomberg News, seeking release of records related to four Fed lending programs.

The U.S. Court of Appeals in Manhattan ruled March 19 that the central bank must release the documents. A three-judge panel of the appellate court rejected the Fed’s argument that disclosure would stigmatize borrowers and discourage banks from seeking emergency help.

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