The Right to Know: Show Us The Money

(9 am. – promoted by ek hornbeck)

Cross posted from The Stars Hollow Gazette

The Supreme Court let stand a ruling from the lower court that forces the Federal Reserve to disclose details about its emergency lending programs to banks during the financial crisis in 2008.

Fed’s Court-Ordered Disclosure Shows Americans’ ‘Right to Know’

A Supreme Court order that forces unprecedented disclosures from the Federal Reserve ended a two- year legal battle that helped shape the public’s perceptions of the U.S. central bank.

The high court yesterday let stand a lower-court ruling compelling the Fed to reveal the names of banks that borrowed money at the so-called discount window during the credit crisis. The records were requested by Bloomberg LP, the parent company of Bloomberg News. In July, Congress passed the Dodd-Frank law, which mandated the release of other Fed bailout details.

Fed Chairman Ben S. Bernanke “now must finally understand that this money doesn’t belong to the Federal Reserve, it belongs to the American people and the American people have a right to know how their taxpayer dollars are being put at risk,” said Senator Bernard Sanders, a Vermont Independent who wrote Fed transparency provisions in Dodd-Frank.

The financial crisis, which began in August 2007 and peaked after the bankruptcy of Lehman Brothers Holdings Inc. in September 2008, focused the public’s attention on the Fed and its $3.5 trillion effort to rescue the banking system, said U.S. Representative Ron Paul, who heads the House subcommittee that oversees the central bank.

“People wanted to know more about what the Fed was doing,” said Paul, a Texas Republican. “It’s been a significant change and the American people won’t ever be complacent about this.”

Fed Will Release Bank Loan Data as Top Court Rejects Appeal

The Clearing House Association contended that Bloomberg is seeking an unprecedented disclosure that might dissuade banks from accepting emergency loans in the future.

Obama Administration

“We are disappointed that the court has declined our petitions, which deal with the protection of highly confidential bank information provided to the Federal Reserve,” the group said in a statement after the high court acted.

A federal trial judge ruled in 2009 that the Fed had to disclose the records in the Bloomberg case, and a New York-based appeals court upheld that ruling.

The Clearing House Association’s chances at getting a Supreme Court hearing suffered a setback when the Obama administration urged the justices not to hear the appeal. The government said the underlying issues had limited practical significance because Congress last year laid out new rules for disclosing Fed loans in the Dodd-Frank law.

“Congress has resolved the question of whether and when the type of information at issue in this case must be disclosed” in the future, the administration said in a brief filed by acting Solicitor General Neal Katyal, President Barack Obama’s top Supreme Court lawyer.

While this is great news, unfortunately, it is a one time disclosure under the terms of the Dodd-Frank bill (pdf) and with the Republicans in control of the House it is unlikely that any amendment for future audits would pass. Obama should have worked harder for better oversight of our tax dollars.