Saturday, March 20, 2010

The Rebellion Strikes Back - Fed Loses

Some time back we discussed the federal court decision that held:
1) The Federal Reserve Is Federal, Not Private

2) Therefore it is subject to Freedom of Information Act (FOIA) requests
(Banker Jekyll Will Hyde Your Money). That decision was upheld yesterday by the U.S. Court of Appeals For the Second Circuit.

A companion case, where another federal district court had ruled the other way, was reversed.

The Fed had gone all rogue and mavericky saying the sky would fall if they had to disclose what they did with federal money:
The Federal Reserve Board must disclose documents identifying financial firms that might have collapsed without the largest U.S. government bailout ever, a federal appeals court said.

The U.S. Court of Appeals in Manhattan ruled today that the Fed must release records of the unprecedented $2 trillion U.S. loan program launched primarily after the 2008 collapse of Lehman Brothers Holdings Inc. The ruling upholds a decision of a lower-court judge, who in August ordered that the information be released.

The Fed had argued that disclosure of the documents threatens to stigmatize borrowers and cause them “severe and irreparable competitive injury,” discouraging banks in distress from seeking help. A three-judge panel of the appeals court rejected that argument in a unanimous decision.
(Bloomberg). Now we can expect them to ask for an en banc hearing (all the judges on the 2nd Circuit) and/or an appeal to the Supreme Court.


  1. Nice! The Fed truly has the best of both worlds now! Privatized gains, socialized losses AND protection. Who needs the mafia when you can run a racket like this?

  2. Good point - since it operates across State lines they should be subject to RICO...