Freedom of Information for Quangos: Think You Can Crack the Fed? Good Luck.
An astute JDA reader told me not that long ago that I shouldn't waste precious space on this case, at least not now while it's still being batted back and forth in court. Since I'm a words person and not a law person, I find the words to be absolutely worth a little wasted blog real estate. What the hell else am I going to write about? Fall fashion? LOLcats? Please.
Besides, the case of the big bad Fed v The Truth (erm, "Freedom of Information") is always good for conversation's sake and tends to bring out the best in people when it comes to the debate over where exactly the Fed sits on the politicogovernmentalsocioeconomic spectrum.
NEW YORK, Sept 9 (Reuters) - Fox News Network LLC on Wednesday appealed a U.S. judge's decision not to force the U.S. Federal Reserve to reveal the names of participants in its emergency lending programs.
The news network, part of Rupert Murdoch's News Corp. (NWSA) filed with the 2nd U.S. Circuit Court of Appeals seeking to over turn a July 30 ruling by U.S. District Judge Hellerstein that denied the network's Freedom of Information Act (FOIA) request of the U.S. central bank.
In a similar case in late August, the chief district judge of the same court - the U.S. Court for the Southern District of New York - ruled for Bloomberg News and ordered the Fed to release the names and amounts [Uhhh... Reuters forgot to finish its sentence so I'm assuming we can insert the words "of various Fed lending programs and/or bailouts" here]
Chief District Judge Loretta Preska ruled in favor of Bloomberg News and against the Fed saying the central bank had to release the names of the banks that participated in its emergency lending programs.
The Fed appealed Preska's ruling and now both cases are before the 2d Circuit.
The Fed argued in both cases that disclosure could cause "competitive and reputational harm" to participants, potentially triggering bank runs and hurting the economy if information or rumors were allowed to spread.
Judge Hellerstein said such concerns "cannot be dismissed," and that the Fed has "real concern" those disclosures would reveal proprietary trading strategies and portfolio details.
"The national economy is not so out of danger, and the frailty of banks so different now ... as to make the board's concern academic," he said.
Both cases raise the issue of how much the public has a right to know about how the government is bailing out a troubled financial system.
Far be it from me to allow Reuters to miss the point, I don't think there is any doubt as to the sentiment of the unwashed masses. In fact, our very own Treasury Secretary (who also happens to come from the very esoterica we are now delving into here) pointed out as much this evening in his fantastically warm and fuzzy Town Hall.
But is America even ready to face the fact that its central bank lies too far across the "private industry" line and therefore a tad too far out of the reach of Congress?
You tell me which member of Congress -- besides Ron Paul, of course, and even the leader of the tin hat brigade gets it terribly wrong sometimes -- can look you dead in the eye and explain the history, form and function, responsibilities and legal standing of not only the Federal Reserve System as a whole but more specifically of the intricacies within that divide the Board in Washington and the regional Fed banks. Name one. Please. Just one.
In fact, I guarantee you Ben Bernanke himself cannot fully recite the laws surrounding Fed secrecy. How could he when a large amount of it is entirely made-up on the fly? If you believe for a second that the AIG bailout was the most revolutionary Fed activity of the last 100 years I hate to be the bearer of bad news but revolution, or rather evolution, happens to be a Fed specialty. The only difference is that now more of us are watching.
To borrow the precious parlance of the esoterica, "functionally the Reserve Banks resemble government operations in many ways." The careful phrasing is but a side effect of esoterica overdose, surely, and a quality that I must reluctantly admit here I admire.
A favorite at End the Fed rallies is the phrase "The Federal Reserve is no more Federal than Federal Express" but this too is misinformation, perhaps just as much so as the nearly 100 years worth of blatant garbage coming directly from the Fed. Sadly, the line has not been, nor will it likely ever be as opaque and clearly-drawn as many of us would prefer. I can't speak for those standing on the other side of that particular line, of course, but I can imagine that it would make things a whole lot simpler for all of us.
Let's play out the scenario here. Let's just say that for some wildly ridiculous reason, 96 years of Fed obscurity are suddenly reversed and the Board is forced, by nature of its own "governmental" status (this is up for debate, despite assurances from those who might be better equipped to make this assessment to the contrary - sorry, you know who you are) to reveal any amount of information under judge's orders. Fine. Can't the NY Fed, as intermediary, serve as the ultimate alibi? You might be able to pick at the Board but they've always got that tricky regional bank thing to fall back on, right?
The answer here is I don't know.
But if I were the betting sort, I'd put a few bills on this being carefully swept away under the wonderful rug of endless nit-picking legality. Is it or isn't it? Well you know it isn't, and I know it isn't but do judges know it isn't?
Nope. It doesn't even know it isn't.
The saga continues. *yawn*