Bloomberg Sues The Fed For More Transparency Over $2 Trillion In Emergency Loans

from the that-would-be-useful-info dept

Tue, Nov 11th 2008 8:40am — Mike Masnick

While plenty of people are focused on the $700 billion TARP bailout/rescue plan that Congress gave the Treasury Department, that's not the only cash the government has at its disposal. In fact, the Federal Reserve has apparently handed out $2 trillion in emergency loans, with almost no transparency over who received the loans and what the collateral is or how it's valued. Bloomberg (the company, not the mayor) is now suing to have the Fed reveal that info. The government has been talking up a storm about how all of these bailout efforts would be very transparent with respect to taxpayer money -- but the reality hasn't lived up to the rhetoric.

The article linked above is from Bloomberg (the party suing the gov't), so perhaps it's biased, but it does seem noteworthy how pretty much everyone tried to dodge questions concerning the $2 trillion in loans. The only person who seemed to be willing to say anything was Rep. Barney Frank, who is the House Financial Services Committee Chairman. Yet, his explanation for the secrecy is hardly compelling:

"I talk to [New York Fed CEO Timothy] Geithner and he was pretty sure that they're OK. If the risk is that the Fed takes a little bit of a haircut, well that's regrettable.''

Pretty sure they're OK? That's hardly a ringing endorsement for keeping the details of such loans a secret.

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Filed Under: bailout, financial crisis, transparency

16 Comments

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moore850 (profile), 11 Nov 2008 @ 9:10am

Bridge for sale
Hey, there's this guy selling a bridge downtown for 2 trillion dollars. I know, 2 trillion is a lot of money, but "I'm pretty sure it's OK".
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Dave (profile), 11 Nov 2008 @ 9:37am

Since when was the Fed subject to FOI act?
This privately run system was entrusted by our congress to have control of the money supply. The decisions the Fed makes cannot be overturned by anything. And since they have the authority of increasing and decreasing the supply of money, the central bank regulates the value of the currency being issued, that is, the value of what you work for. Slavery sucks...
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Anonymous Coward, 11 Nov 2008 @ 9:50am

Shhh, I got a large chunk of that and I don't want my wife to find out!
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Anonymous Coward, 11 Nov 2008 @ 9:54am

If Barney Frank is involved then just forget about anything of substance getting done.
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Danny (profile), 11 Nov 2008 @ 10:39am

Brooklyn Bridge comments don't get to the reality of the matter
So, people above joke about a bridge. But this is a real issue with legitimate needs on both sides of this, um, bridge.

On one hand, we do want transparency in government. We do want to know that bailout money is truly needed, deserved, and not going to cronies. We want to know our government is making good decisions - and we need data to know this.

On the other hand, when a company receives emergency government assistance, this signals to the financial markets -- and in the case of banks to depositors -- that the firm is in trouble. Money bails from the ship and (to continue the metaphor) is under the bridge. We learned from last month's bailout bill that the big banks couldn't take advantage of bailout funds on a solitary basis for fear of creating a run on deposits.

The solution to the problem has to address both of these hands.
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Killer_Tofu (profile), 11 Nov 2008 @ 10:42am

Oh but you know
You know the rich people on top of these places are taking millions off the top. Its just what they do. They have one sole emotion, greed.
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shmengie, 11 Nov 2008 @ 10:52am

reminds me of a joke...
dick cheney and a homeless guy walk into a bar. dick cheney kills the guy with a crowbar.

i got a million of 'em....
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Dave (profile), 11 Nov 2008 @ 11:06am

Re: Brooklyn Bridge comments don't get to the reality of the matter
They are not being sued over the tax payer's bailout money, they are being sued over the loans they have made.
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DrE, 11 Nov 2008 @ 11:09am

Problem is trust (or lack of it)
The real problem is that most of us don't trust congress. Members of congress (Barney Frank and others) ought to oversee government activities that "require" secrecy (intelligence, military tactics and plans, bailouts, etc). How many of the American voters trust those we elect to do the right thing, to not steal the tax payers blind, and to make decisions in the best interests of country (rather than themselves)? Until we can trust congress, keeping activities transparent to the news media and the public, and not just congress, seems essential.
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Hulser, 11 Nov 2008 @ 12:17pm

Re: Brooklyn Bridge comments don't get to the reality of the matter
On the other hand, when a company receives emergency government assistance, this signals to the financial markets -- and in the case of banks to depositors -- that the firm is in trouble.

Your point is basically this...

The purpose of the loans is to assist companies who are in trouble because of a lack of public confidence. If the loans are transparent, then the public would know who was accepting the loans, thus triggering more lack of confidence. Catch-22.

That's a valid point, but I don't think if fully applies to this situation. The potential damage to the system caused by the almost certain corruption given non-transparency would outweigh any Catch-22-like ill effects.

I personaly think there is a viable range between the point where a company needs extra funds to stay alive and the point where its death is imminent because of lack of funds. Also, the fact that you need the money so badly that you're willing to brave the transparency is a good litmus test to determine if you're deserving of the government loan.
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Anonymous Coward, 11 Nov 2008 @ 9:47pm

Re: Problem is trust (or lack of it)
If we don't trust 'em (and I don't), how do so many of 'em keep getting back in office?
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Michelle McCormack, 12 Nov 2008 @ 3:05am

2 trillion
Bush administration's last chance at a land-grab. Good of Bloomberg to sue for the rest of us. I never thought of them as activists.
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Scott Neuman, 12 Nov 2008 @ 7:02am

Hey, that's my 2 trillion dollars
How about the Federal Reserve is a joke designed to enslave us all with interest money. If the Government ran it, no interest. The Fed Reserve is all big bankers paying each other off with no oversite.
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The Guy, 12 Nov 2008 @ 9:40pm

The scoop
These guys know the government is going to go bankrupt. So maybe they are moving money to south America or Saudi Arabia. You can build a city with $2 trillion or you can buy a small country for escape when the U.S. goes bankrupt.
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Dave, 16 Nov 2008 @ 6:04am

transparency site
Check out Bailoutsleuth.com . They have the low down on all the so called "transparency" that's not been happening. I'm not associated with the site, but found it and find it extremely resourceful.
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Dave, 16 Nov 2008 @ 6:05am

Re: transparency site
oops, it was techdirts post a few weeks back that turned me on to bailoutsleuth.com!

damn, i'm not special.

:-)
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