The details around the bank bailouts have been rather hazy to date. Although JPMorgan Chase (NYSE: JPM), Citigroup (NYSE: C), Bank of America (NYSE: BAC) and many others were given cash by the treasury department, few know the full details of what occurred, when, and how. The Federal Reserve seems intent on keeping it that way, and rumors abound it has plans to ask the Supreme Court to block the release of the records.
The Obama Administration’s top courtroom lawyer directed the Federal Reserve to drop its plan .The Fed was not part of the Clearing House Association LLC, a group of 20 banks, which appealed to the high court yesterday. The banks hope to reverse a lower court ruling forcing disclosure of Fed lending programs. Bloomberg LP sued the Fed in 2008 after the central bank refused to disclose names of recipients of emergency loans from four programs in response to a request under the Freedom of Information Act. Fox News also submitted a FOIA request after Bloomberg’s, seeking information on more lending programs over a longer time frame. However, Fox lost an initial judgment in U.S. District Court, so the Clearing House did not intervene in that case.
The Clearing House has responded that the Fed’s emergency programs were “essential responses to the recent financial crisis,” and would be harmed if the central bank is forced to disclose lending records. Many of the financial firms that accepted the so called bailout money clearly didn’t need it in retrospect, but they took at as mandated by the treasury department in an effort to restore trust and stability to the system. All of the major national banks paid back those funds in less than a year, in full, with interest.
Like most federal agencies, the Fed must get approval from the solicitor general before filing an appeal at the Supreme Court. The high court is already considering another dispute over corporate privacy rights under FOIA. In that case, which is predicated on a separate FOIA provision, the solicitor general is urging the release of documents concerning AT&T Inc., the largest U.S. phone company.
