Federal Reserve Ordered to Disclose Records on Emergency Lending Programs

The US Federal Reserve must reveal details of its emergency lending programs to banks during the financial crisis, a federal appeals court ruled on Friday. The decision, backed by a unanimous three-judge panel, was seen as a significant victory for news media, as Bloomberg LP and Fox News Network had sought information on the central bank's actions under the federal Freedom of Information Act (FOIA). The Fed had argued that releasing such details would cause "competitive and reputational harm" and impair its ability to manage future financial crises.

Key Takeaways:

• The US Second Circuit Court of Appeals ordered the Federal Reserve to release records on emergency lending programs to banks, which started in late 2007 to shore up the financial system.
• Bloomberg LP, the parent of Bloomberg News, and Fox News Network had sought details of the central bank's actions under the federal Freedom of Information Act (FOIA).
• The Federal Reserve argued against disclosure, citing an exemption for trade secrets and commercial or financial information, which could cause "competitive and reputational harm."
• The appeals court panel, led by Chief Judge Dennis Jacobs, ruled that disclosure, not secrecy, is the dominant objective of FOIA, and that the Fed should seek congressional amend if needed.
• Bloomberg had won its case at the district court level, while Fox News had lost its case, but the Second Circuit threw out the ruling against Fox and ordered a lower court judge to decide on disclosed materials.
• The decision is a significant victory for news media and transparency, as it pushes the Fed to release information that had been shrouded in secrecy.

Statistics:

• The Federal Reserve initiated emergency lending programs in late 2007 to forestall a complete meltdown of global financial markets.
• The programs were adopted to provide liquidity to banks during the financial crisis.
• The Second Circuit Court of Appeals upheld a FOIA request from Bloomber LP and Fox News Network.
• The unanimous three-judge appeals court panel ruled in favor of disclosure, citing the FOIA's objective of transparency.

Sources:

• Khaleej Times, Copyright 2009. All Rights Reserved.