Posted on Monday, April 4, 2011
WASHINGTON — The Federal Reserve will publish new details about its emergency lending to banks during the 2008 financial crisis after the Supreme Court on Monday rejected an industry appeal for secrecy.
The Fed said it would release detailed information soon about its main emergency aid program, the so-called discount window, breaking a policy of confidentiality that dates to its founding in 1913. The Fed was required by Congress to publish similar data about its other lending programs last year.
“The board will fully comply with the court’s decisions and is preparing to make the information available,” David Skidmore, a Fed spokesman, said.
The disclosures could embarrass some of the nation’s largest banks, which are eager to focus public attention on their renewed profitability, by returning a spotlight to the extent of their dependence on federal aid during the crisis. It also signaled a victory for Bloomberg News, which first requested the data in 2008.
But the industry and the Fed also won a victory of sorts simply by delaying the release of the information for more than two years, as investors now will be less likely to draw inferences about the current condition of the banks that needed help during the crisis.
Bloomberg News filed a request for the discount window data under the Freedom of Information Act in 2008. When the Fed denied the request, the company filed a lawsuit. After a trial court ruled in favor of Bloomberg in 2009, the Fed appealed. A federal appeals court handed Bloomberg a second victory last March and the Fed conceded the issue, but the verdict was appealed by the Clearing House Association, which represents 10 of the nation’s largest banks.
The Supreme Court rejected that appeal Monday in a brief written order.
“The Federal Reserve forgot that it is the central bank for the people of the United States and not a private academy where decisions of great importance may be withheld from public scrutiny,” Matthew Winkler, editor in chief of Bloomberg News, said in a statement.
The Clearing House Association said it was disappointed, but added that the ruling had no broader significance. The sweeping financial law passed last year stipulated that the Fed must release data on future discount-window loans, but only after a two-year lag — effectively, the same outcome reached by the legal process.
By BINYAMIN APPELBAUM, THE NEW YORK TIMES