The more the Federal Reserve continues to fight the public disclosure of what banks and financial institutions were the recipients of billions in taxpayers’ dollars to artificially prop them up, the more it looks like the Fed has something to hide.
Vermont Senator Bernie Sanders asks that very question in an email communication saying, “What has the Fed got to hide? The time has come for the Fed to stop stonewalling and hand this information over to the public.”
In a motion filed against the decision of Manhattan Chief U.S. District Judge Loretta Preska that the Fed must turn over the identities of those financial institutions which received bailout funds from 11 different programs, the Fed attempted to argue that they would not be able to carry out the management of any existing or future financial crisis if they had to reveal their actions.
So what is the disingenuous but effective tactic of the Federal Reserve and its lawyers in the case? They’re trying to say if they comply with the order to turn over documents by August 31, their revelation will “destroy the board’s claims of exemption and right of appellate review.” Then of course they added the usual comment that “The institutions whose names and information would be disclosed will also suffer irreparable harm.”
We’ve talked about that last comment recently on American Banking News, and this is nothing other than withholding information from consumers in order for them to make informed decisions; that doesn’t fall upon the Federal Reserve to decide what information the public gets, which is of course what this battle is all about. Poorly run banks deserve to fail, and the consumer is the one which should determine that, not Ben Bernanke and his Federal Reserve cohorts. In other words, the Fed is attempting to cloud the issue and cause confusion so consumers lose track of what the real reason the Fed needs to be audited is.
But back to the Fed strategy to circumvent this. When Fed lawyers communicated with Manhattan Chief U.S. District Judge Loretta Preska concerning delaying enforcing her ruling, it became immediately apparent what they’re going to attempt to do if she caves on it.
Here are a couple of comments from a conference call Fed attorney Kit Wheatley had with Preska concerning the matter.
First, she told the judge that the Fed hadn’t told her when the appeal would be filed. In other words, Wheatley and the Fed want the decision of the judge to be delayed without filing an appeal.
Next, Wheatley communicated to Judge Preska that the Fed had no clue as to how long a search of the New York Federal Reserve records would take.
What’s going on here? They’re attempting to delay the execution of the order for so long that once a search of the records takes place, it could render moot the information that the public needs now to make informed decisions; and that’s assuming the ruling is upheld.
If this judge has any integrity and guts, they should publicly chastise the Fed for these delay tactics, and go forward with the decision that they must release the records by August 31.
Along with the motion for a stay, a Wall Street-owned group called Clearing House Association LLC, attempted to reinforce the Fed’s assertions saying in a filed declaration accompanying the motion, that “Experience in the banking industry has shown that when customers and market participants hear negative rumors about a bank, negative consequences inevitably flow. Our members have accessed the discount window with the understanding that the Fed will not disclose information about their borrowing, especially their identity.”
Listen to the manipulation included with that farcical statement, where the organization says “when customers and market participants hear negative rumors about a bank …”
This is extraordinary when you think it through. All the judge has ruled is that the documents revealing what actually transpired be released. The spokesman for Clearing House Association is evidently confused or inept, as he’s basically saying that what is in the documents would be considered “negative rumors” by the public. How would it be if the data is taken directly from the records? It would be very simple and easy to confirm whether it was rumor or not. This literally makes no sense at all.
Again, the strategy is to prolong the enforcement of the order so by time it goes through legal channels it won’t matter anymore – for the consumers being affected and the financial institutions being protected – in finding out how deep in trouble they really are.
I hope this judge rejects the motion and allows it to go forward, as the Federal Reserve has no right to withhold information that affects the financial well-being and data needed for consumers to make the most informed decisions. That’s what’s really at stake here, and not the ability for the Federal Reserve to “manage” the economy, which it has proven from it’s numerous failures it never has been able to do.
