Fed asks court to block release of documents to Bloomberg

The Federal Reserve asked a U.S. appeals court to block a ruling that for the first time would force the central bank to reveal the identities of financial firms that might have collapsed without the government bailout, report David Glovin and Thom Weidlich of Bloomberg News.

Bloomberg News filed a lawsuit against the Fed in 2008.

Glovin and Weidlich report, “Bloomberg argues that the public has the right to know basic information about the ‘unprecedented and highly controversial use’ of public money. Banks and the Fed warn that bailed-out lenders may be hurt if the documents are made public, causing a run or a sell-off by investors. Disclosure may hamstring the Fed’s ability to deal with another crisis, they also argued. The lower court agreed with Bloomberg.

“The question is at what point does the government get so involved in the life of the institution that the public has a right to know?

“The ruling by the three-judge appeals panel may not come for months and is unlikely to be the final word. The loser may seek a rehearing or appeal to the full appeals court and eventually petition the U.S. Supreme Court, said Anne Weismann, chief lawyer for Citizens for Responsibility and Ethics, a Washington advocacy group that supports Bloomberg’s lawsuit.

“New York-based Bloomberg, majority-owned by Mayor Michael Bloomberg, sued in November 2008 after the Fed refused to name the firms it lent to or disclose the amounts or assets used as collateral under its lending programs. Most were put in place in response to the deepest financial crisis since the Great Depression.”

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