Fed Refuses to Disclose Recipients of $2 Trillion in Lending

In a foxhole there are no atheists. But well before the praying begins, you find out what people are really made of. Perhaps the big, muscled kid who was unstoppable in basic training goes all to pieces while the skinny guy with the thick glasses saves everyone’s bacon. Or vice versa. The point being that prior to a crisis everything rests on appearances. During a crisis it is actions that matter. That’s when we find out what people, and institutions, are really made of.

Today the Federal Reserve effectively freaked out in the foxhole and declared the spirit of democracy, if not the rule of law, to be disposable conveniences of better times.

In response to a freedom of information act request by Bloomberg News for the names of the institutions receiving public money, the Fed invoked an obscure rule to block the release of this information.

Dec. 12 (Bloomberg) -- The Federal Reserve refused a request by Bloomberg News to disclose the recipients of more than $2 trillion of emergency loans from U.S. taxpayers and the assets the central bank is accepting as collateral.

Bloomberg filed suit Nov. 7 under the U.S. Freedom of Information Act requesting details about the terms of 11 Fed lending programs, most created during the deepest financial crisis since the Great Depression.

The Fed responded Dec. 8, saying it’s allowed to withhold internal memos as well as information about trade secrets and commercial information.

Trade secrets? A trade secret is something like the formula for Coke. A trade secret is an unpatented business process the release of which would harm the competitive position of the holder. I am really at a complete loss to understand what sort of “trade secrets” might apply to the acquisition of bad debt from poorly managed financial institutions.

If anybody can supply one that might make sense in this situation I am all ears.

The important principle here is that democracy cannot operate under the cover of darkness. If every emergency, no matter how slight, results in the immediate suspension of our right to know, then one might reasonably question whether it is a right at all and whether this is a democracy.

This is not an esoteric debate over some fine point of the law, this is a foundational matter. Either rules and laws matter or they don’t. Either they need to be followed by everybody or they can be ignored by everybody. There is no place in our legal system for each interested party to self-interpret laws in whatever manner fits them best.

If the Fed can unilaterally decide to follow some rules and not others, then why not anybody else? Would it be unreasonable for an individual to decide that their mortgage does not need to be repaid because they suddenly interpret their contract differently and to their benefit? Are they really “speed limits” or are they more like “speed guidelines?”

I am being quite serious here, the rule of law is not something to be trifled with. Either we are a nation of laws or we are not. It is no small point that our rule of law is one of the most essential components of our social contract and which separates us from other countries where I would not willingly choose to live.

The Freedom of Information Act requires federal agencies to make government documents available to the press and the public. The suit, filed in New York, doesn’t seek money damages.

“There has to be something they can tell the public because we have a right to know what they are doing,” said Lucy Dalglish, executive director of the Arlington, Virginia-based Reporters Committee for Freedom of the Press. “It would really be a shame if we have to find this out 10 years from now after some really nasty class-action suit and our financial system has completely collapsed.”

Did you catch those words and phrases? “Requires” and “right to know” are pretty straightforward. Requirements and rights are not really negotiable. They either exist or they don’t.

Predictably, the Fed claimed that this crisis is serious enough to trump our assumed (but rarely tested) right to know.

In its response to Bloomberg’s request, the Fed said the U.S. is facing “an unprecedented crisis” when the “loss in confidence in and between financial institutions can occur with lightning speed and devastating effects.”

But some are starting to catch on and noting that it is really not acceptable that a supposedly public institution is refusing to operate in a manner consistent with their charter.

“If they told us what they held, we would know the potential losses that the government may take and that’s what they don’t want us to know,” said Carlos Mendez, who oversees about $14 billion at New York-based ICP Capital LLC.

Congress is demanding more transparency from the Fed and Treasury on the bailout efforts, most recently during Dec. 10 hearings by the House Financial Services committee when Representative David Scott, a Georgia Democrat, said Americans had “been bamboozled.”

But now that the Fed has decided, unilaterally, to operate under the cover of secrecy I think they should be allowed to do so.

Of course I would also require that their operating charter be revoked and that a parallel currency be stood up so that we the people could decide for ourselves whether the Fed’s arguments for secrecy were worth risking our entire economic future upon.

Said another way, I am willing to let the Fed take all the primary risks it wants but not with my money. Let the Fed either swim or sink depending on how it plays its hand. Taxpayers should not be forced to shoulder whatever these risks are that the Fed feels are too dangerous to even name.

Otherwise people might begin to wonder about that “requirement” to pay back their credit card bills….

This is a companion discussion topic for the original entry at https://peakprosperity.com/fed-refuses-to-disclose-recipients-of-2-trillion-in-lending-2/


Maybe I’ve just become jaded but this doesn’t surprise me at all. It is the way all big governments work and always have. As the crises gets worse expect the abuses to increase.

I seem to recall that when Paulson was before Congress begging for the $700b bailout, he was quite adament about absolute transparency. Must’ve changed his mind, again.

I can tell you right now where a very large bulk of the money has been allocated.

I hope you are sitting down.

It has been allocated to European banks, primarily the UK. If taxpayers found out that their tax dollars were going to aid foreign financial institutions, the media would go berserk with the story.

On the BBC website there is a blogger called Robert Peston who I read regularly and his insights are a valuable companion to the CM forum and he, like Chris, points out some uncomfortable truths from a British perspective.

The UK is in a very precarious position at the moment. For those of you who don’t know, the city of London accounts for about one third of the UK economy. The UK’s biggest commodity in this world is banking and because of its loose regulation, the UK markets are often regarded as the sleaziest of traders in the western world. Even the NYSE are wary of dealing with certain areas of Canary Wharf.

The bottom line is this, it is London’s banking and insurance companies that are responsible for Britain’s economy. The UK GDP is heavily reliant on paper to keep cash sloshing around as the Brits manufacture very little apart from aerospace technology and other goods which tend to have military uses.

They have sold off the family silverware parcel by parcel for decades.

I could be wrong, but I do think if I had to pick a prime suspect for international under-the-table assistance, the UK is number one on my list.

Napoleon once called Britain ‘a nation of shopkeepers’.

Today it is a nation of hairdressers and call center droids.

I ordered 200 CC dvd but I think 2000 should be the starting point. We can do this folks but we need to push hard. In other words; we need to work while it is still daylight for a day of great darkness is settling in!


Chris said: "Either rules and laws matter or they don’t. Either they need to be followed by everybody or they can be ignored by everybody."
Of course, we know well that this is only theory in this country today. The Bush administration has found a way around, under or over virtually every law in the land. And to make it worse, they have either kept it secret, or, if known, have gotten away with it - all of it.
The state of our government is absolutely sickening to me. We have lost whatever it was that we had, and that for which so many have fought and died. Is there ANYWAY to get control of this runaway train? Or, are we completely beaten now, so we just need to sit down in our easy chair, pour ourselves a stiff drink, and wait until big brother actually breaks into our house and either kills us on the spot, or drags us off somewhere to die, or destroys every system that works for the common working person, so we all starve to death?
Am I the only one who is sick to death of how the fat cats are controlling everything? Is anybody going to do anything about this? Probably not ! So, I guess we’ll all just keep bitching about it.

So not right, so "un-American"!!! It makes me sick to see our country’s ideals trampled with such blatant disregard, and the memoriies of people who truly fought for those ideals dishonored.

It sure is convenient that the Gov from Illinois is such a big/distracting news story right now, pointing people’s attention somewhere else.

Do we know if Bloomberg is going to pursue this legally further?



RUN. Now.

And this is a surprise? It’s a consortium of PRIVATE banks. They answer to no one.

no run, stand and fight. Canada’s real "nice" this time of year, Mexico? nope. Spain? Caribbean? I’ll take my chances here. Spread the word.

a nation of shopkeepers indeed.

one of the shops has a red shield hanging out front.

we shipped a bunch of gold there in the 1920’s and thirties. i wonder who owns the bank of england ?

no ben you are not the only one

Here’s a balance sheet showing roughly where money are going http://www.federalreserve.gov/releases/h41/Current/

I wonder what could happen over the Christmas / New Year’s Holiday…bad things have happened before (Fed Reserve Act). Congress has been fairly pitiful lately, but I would still rather they get in the way of the executive branch and the banksters. God only knows what can be pulled when the rest of us are at Christmas parties…

the freedom of information act requires federal agencies to make government documents public.

see gang there’s the rub the fed AINT a government agency. it is a private corporation. look these guys are good . you will never beat them in court. they own the courts. they own the referees they own the ball they own the scorekeeper and they own the newspaper that will write up the story in the morning paper. and if they want a box score there will be a box score.

and i know some of you out there have been drinking the koolaid that the big o has been pushing.

just remember his treas sec is GEITHNER. name ring a bell. they are good very good

now when i was playing basketball in the playgrounds of new york we had a way of dealing with this stuff.

we didnt call the cops.


Run, not with your legs, but on your $$.

Not to nitpick your take, but trade secrets and patents are almost completely different. There is no way you can patent something and keep it a trade secret as well!

Patent: Totally public information that can only be used with permission

Trade secret: Totally secret that is not disclosed.

"A trade secret is a patented business process" - statement is like saying "public secret"!



roger that RedShift