In a show of how much our government thinks that serving the financial oligarchy, rather than the citizenry, is its prime duty, the Fed is fighting to stop the court-ordered disclosure of who borrowed money under the Fed’s various lending facilities. The reason I lump the Fed in with “the government” is that the central bank has been serving as an off-balance sheet entity of the Treasury for quite some time. And not only are the Fed and Treasury acting in near lockstep, but there has been no meaningful change in the government stance towards the banksters. Yes, Team Obama makes more of a show of trying to rein them in, but push comes to shove, it’s merely Paulson version 2.0: same content, better packaging.
Paulson’s success in muscling through the TARP shows that “when in doubt, claim the economy will fall apart..” That worked so well that now the Fed has the temerity to assert that revealing such delicate information as who is into the Fed most deeply might send the markets into a tailspin. The idea that the recovery is so fragile that a little disclosure would prove damaging is at odds with the official line that the economy is recovering and we no longer need to worry about banks.
The Fed has asked the judge’s order to be stayed until it can file an appeal.
The Fed’s board of governors asked Manhattan Chief U.S. District Judge Loretta Preska to delay enforcement of her Aug. 24 decision that the identifies of borrowers in 11 lending programs must be made public by Aug. 31. The central bank wants Preska to stay her order until the U.S. Court of Appeals in New York can hear the case.
“The immediate release of these documents will destroy the board’s claims of exemption and right of appellate review,” the motion said. “The institutions whose names and information would be disclosed will also suffer irreparable harm.”
The Fed’s “ability to effectively manage the current, and any future, financial crisis” would be impaired, according to the motion. It said “significant harms” could befall the U.S. economy as welll….
The Fed has refused to name the financial firms it lent to or disclose the amounts or the assets put up as collateral under the emergency programs, saying disclosure might set off a run by depositors and unsettle shareholders….
“Our argument is that the public interest in disclosure outweighs the banks’ interest in secrecy,” said Thomas Golden, a lawyer with New York-based Willkie Farr & Gallagher LLP who represents Bloomberg.
Preska’s Aug. 24 ruling rejected the Fed’s argument that the records should remain private because they are trade secrets and would scare customers into pulling their deposits.
“What has the Fed got to hide?” said Senator Bernie Sanders, a Vermont independent who sponsored a bill to require the Fed to submit to an audit by the Government Accountability Office. “The time has come for the Fed to stop stonewalling and hand this information over to the public,” he said in an e-mail.
The lawyers for the Fed sound as if they were grasping at straws. Trade secrets? Bank runs? It is true that banks were afraid to borrow at the discount window last year for fear of being stigmatized. But I would presume that use of these facilities is so widespread that the revelation of information would hardly be stigmatizing now.