Federal Reserve Loses Bloomberg FOIA Lawsuit, Sensitive Disclosures Forthcoming

[girl gone mad]

The judge rejected arguments from the Fed that information relating to these loans is proprietary and she ruled that Bernanke is acting in bad faith by withholding documents.




via http://www.zerohedge.com/article/federal-reserve-loses-bloomberg-foia-lawsuit-sensitive-disclosures-forthcoming">Zero hedge:

Just out from http://www.bloomberg.com/apps/news?pid=20601087&sid=afi7TJiJFys0">Bloomberg:

Aug. 24 (Bloomberg) -- The Federal Reserve must make public reports about recipients of emergency loans from U.S. taxpayers under programs created to address the financial crisis, a federal judge ruled.

This is in relation to a lawsuit filed by Bloomberg LP against the Federal Reserve on November 7, 2008, in Southern District of New York (08-09595), in which Bloomberg sought material loan and collateral data in relation to emergency loans released by the Fed, and which were previously claimed to be non-FOIAble.

This is a large blow against the Fed and specifically against organizations using FOIA loopholes from providing critical information, particularly in cases involving trillions of taxpayer dollars bailing out huge, systematically and politically embedded financial organizations (which lately is pretty much all of them).

The conclusion from the order just issued by District Judge Loretta Preska is as follows:

The Board's Motion for Summary Judgment is DENIED, and Bloomberg's Motion for Summary Judgment is GRANTED. Specifically:

1. The Board shall produce forwith the Remaining Term Reports within five business days of the date hereof;

2. The Board shall search forthwith records at the FRBNY that constitute "Records of the Board" within the meaning of 12 C.F.R. # 231.2(i)(1); and

3. The parties shall confer following their review of the results of the search and inform the Court by letter no later than September 14, 2009 how they propose to proceed.

The beneficial outcome means that many more FOIA-based lawsuits against the Federal Reserve will now spring up, and with case law on their side, the outcomes of most will likely be on behalf of the plaintiffs. This could detour any short-circuit attempts by either Congress or Senate to prevent a Fed audit, as it may suddenly not be necessary, now that there is this alternative venue to get various pieces of information, previously not available to the general public.

[OffWithTheirHeads]

1. And #5

[Sanity Claws]

3. What are you referring to?

It's a 50 page opinion. The quoted three items are from the end; there is no #5.

[HamdenRice]

2. Interesting but probably moot. The Fed is rapdily winding down its position.

This is just my theory because obviously the Fed withheld a lot of information. But if you look at what it did disclose, as I've written before, during the height of the crisis, the Fed was highly, highly leveraged as lender of last resort, holder of trillions in commercial paper and mortgage backed securities. It had become analogous to the world's largest ever hedge fund.

It was in a dangerous position and wanted to conceal that to prevent a loss of confidence in its ability to backstop the financial system.

But those positions are being rapidly wound down. By the time the Fed has to disclose that information to Bloomberg, it won't be in that leveraged position.

The financial sector will look at the information and say, "that was scary," but it will be too late for it to have an effect on the financial panic, which is already over.