Frozen out

The Federal Reserve has made more than $2 trillion in emergency loans of taxpayer dollars and refuses to say who borrowed the money or what was accepted as collateral.

Bloomberg News filed a lawsuit on November 7 under the U.S. Freedom of Information Act to get that information, and on December 8, the Federal Reserve responded.

The Fed said there are 231 pages of documents that are responsive to the request, and Bloomberg News can't see any of them.

Why not?

The Fed says the documents are internal memos that contain trade secrets and commercial information.

And?

That's it. They're not releasing any information. Nobody sees the wizard, not nobody, not no how.

The problem here is that lots of people must know who borrowed this money. There are people inside the Fed, inside the Bush administration, inside the companies that borrowed the money, perhaps inside foreign governments, who know who borrowed this money.

In all likelihood, the information is fully discounted in the financial markets. The smart money already knows.

It's just the rest of us who are in the dark.

Does the Federal Reserve fear that the information will cause the public to lose confidence in banks and other financial services companies?

Well, secrecy doesn't increase confidence. Secrecy increases conspiracy theories.

Another six months of this and forty percent of Americans will think their retirement accounts were stolen away by black helicopters full of extra-terrestrials.

And Congressman William Jefferson won't be the only one with cash in his freezer.


Copyright 2008

Editor's note: The Bloomberg lawsuit is Bloomberg LP v. Board of Governors of the Federal Reserve System, 08-CV-9595, U.S. District Court, Southern District of New York (Manhattan).

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