High court won’t consider halting Fed release of loan data

Monday, March 21, 2011

WASHINGTON — The Supreme Court today decided not to stop the release of Federal Reserve Board documents identifying financial companies that received Fed loans to survive the financial crisis.

The high court, without comment, refused to hear an appeal from an association of bankers trying to keep the information from becoming public.

News Corp.'s Fox News Network LLC and Bloomberg L.P. had sued separately for details about loans that commercial banks and Wall Street firms received and the collateral they put up. Other news agencies, including the Associated Press, filed briefs with the appellate court in their support.

The 2nd U.S. Circuit Court of Appeals in New York City had said that such information wasn't automatically exempt from requests under the Freedom of Information Act.

But the Fed had argued that if it identified banks which drew emergency loans, it could cause a run on those institutions, undermine the loan programs and potentially hurt the economy. The Fed acts as lender of last resort for banks that can't get money from private sources.

The Obama administration had asked the high court not to hear the appeal. But The Clearing House Association, which represents some of the nation's largest banks, wanted the high court to review the decision.

In the Fox case, the appeals court ruled that the documents should be available for review by news organizations and the public.

In the Bloomberg case, the 2nd Circuit rejected the Fed's argument that identifying the banks and providing other information would harm them and discourage other distressed banks from seeking the Fed's help. The appeals court said the disclosure requirements under FOIA are set by Congress, not the court.

“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, ” said Matthew Winkler, Bloomberg News editor in chief. “As only Congress has the constitutional power to coin money, Congress delegates that power to the Fed and the Fed must be accountable to Congress, especially in disclosing what it does with the people's money.”

Congress last year passed legislation requiring the release of some of the information being fought over in this lawsuit.

Justice Elena Kagan did not take part in the decision because she worked on the case while serving as solicitor general.

The cases are Clearing House Association v. Bloomberg, No. 10-543, and Clearing House Association v. Fox News Network, No. 10-660.

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