This is just in from Bloomberg:
The Federal Reserve must disclose details of emergency loans it made to banks in 2008, after the U.S. Supreme Court rejected an industry appeal that aimed to shield the records from public view.
The justices today left intact a court order that gives the Fed five days to release the records, sought by Bloomberg News’s parent company, Bloomberg LP. The Clearing House Association LLC, a group of the nation’s largest commercial banks, had asked the Supreme Court to intervene.
The order marks the first time a court has forced the Fed to reveal the names of banks that borrowed from its oldest lending program, the 98-year-old discount window. The disclosures, together with details of six bailout programs released by the central bank in December under a congressional mandate, would give taxpayers insight into the Fed’s unprecedented $3.5 trillion effort to stem the 2008 financial panic.
“I can’t recall that the Fed was ever sued and forced to release information” in its 98-year history, said Allan H. Meltzer, the author of three books on the U.S central bank and a professor at Carnegie Mellon University in Pittsburgh.
Chalk this up as a win for transparency and the freedom of information in the U.S. This post will be updated as more details come.
Source: Fed Must Release Bank Loan Data as High Court Rejects Appeal – Bloomberg
Update: 1530EDT – I have yet to see more current information on this. Bloomberg has been leading the push for more transparency on the bailout for a couple of years. See my posts on the Freedom of Information Request lawsuit. On the whole, the Fed has been dragged kicking and screaming to reveal who was getting money and when. Moreover, all of the government machinations have been covered up. Look at the situation regarding the AIG giveaways.
Here’s my question: why not reveal the information now that it is claimed the crisis is over? After all, some banks are on the road to paying dividend increases again. Doesn’t that mean all is well? I have yet to hear a satisfactory answer to these questions. The banks are saying:
Disclosure of this information threatens to harm the borrowing banks by allowing the public to observe their borrowing patterns during the recent financial crisis and draw inferences — whether justified or not — about their current financial conditions.
Maybe. But that sounds like propaganda to me. Of course people will draw a conclusion that some banks are still in distress from the fact that some banks were being propped up more than others. But there is nothing wrong with that. That’s what markets do all the time: allow people to express their views on the health of a particular company in relation to the prevailing price of the securities that company issues. It seems to me that we want more information to do this, not less – not least of all because more information is synonymous with liberty and freedom.
I think this case is pretty simple; more information is better, especially if there is no crisis. You have to come up with some pretty strong arguments to go against this. And so far I haven’t seen any.
Update 2240EDT: Below is a video of Bloomberg’s Editor-in-Chief Matthew Winkler discussing this issue and saying that the Fed had become used to secrecy.