Actually New York, but you get the idea.
Bloomberg is sueing the Fed to force disclosure of exactly what it’s been taking from banks as collaterals for loans:
Nov. 7 (Bloomberg) — Bloomberg News asked a US court today to force the Federal Reserve to disclose securities the central bank is accepting on behalf of American taxpayers as collateral for $1.5 trillion of loans to banks.
The lawsuit is based on the U.S. Freedom of Information Act, which requires federal agencies to make government documents available to the press and the public, according to the complaint. The suit, filed in New York, doesn’t seek money damages.
‘The American taxpayer is entitled to know the risks, costs and methodology associated with the unprecedented government bailout of the U.S. financial industry,’ said Matthew Winkler, the editor-in-chief of Bloomberg News, a unit of New York-based Bloomberg LP, in an e-mail.
The Fed has lent $1.5 trillion to banks, including Citigroup Inc. and Goldman Sachs Group Inc., through programs such as its discount window, the Primary Dealer Credit Facility and the Term Securities Lending Facility. Collateral is an asset pledged to a lender in the event that a loan payment isn’t made.
The Fed made the loans under 11 programs in response to the biggest financial crisis since the Great Depression. The total doesn’t include an additional $700 billion approved by Congress in a bailout package.
The suit is all the more timely considering the Fed widened its collateral criteria in September to include lower-rated securities, rather than the usual, top-rated government and asset-backed securities — increasing, one would think, the risk (and interest) to taxpayers. See for instance the spoof Fed press release that was circulating that month, below.
As of today though, the Fed is refusing to make the data public — apparently claiming the data to be commercially sensitive. This from Monday morning’s update:
Massachusetts Democrat Barney Frank ] … said the Fed shouldn’t reveal the assets it holds or how it values them because of ‘delicacy with respect to pricing.’ He said such disclosure would ‘give people clues to what your pricing is and what they might be able to sell us and what your estimates are.’
And wasn’t that the whole point of the Tarp? So the Fed could buy up illiquid assets and provide a theoretical floor for prices?
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Related links:
Bloomberg sues Fed to force disclosure of collateral — Bloomberg
Fed defies transparency aim in refusal to identify bank loans – Bloomberg