While money printing has become a fairly transparent business for central banks in the past 2 decades, the Fed acts like comical Ali in Baghdad, claiming there is no fire when everybody can see plumy smoke.
Going out of its way in order not to disclose documents related to the give-away of $2 trillion, the Fed rejected a Freedom of Information Act request by information provider Bloomberg that requested information about the recipients of this sizable addition to taxpayers burden.
Bloomberg filed suit Nov. 7 under the U.S. Freedom of Information Act requesting details about the terms of 11 Fed lending programs, most created during the deepest financial crisis since the Great Depression.
The Fed responded Dec. 8, saying it’s allowed to withhold internal memos as well as information about trade secrets and commercial information. The institution confirmed that a records search found 231 pages of documents pertaining to some of the requests.
A True Novelty In Journalism
Bloomberg's move to sue the Fed is a novelty in journalism. The former bond trader who built the leading financial information provider from scratch in 2 decades has opened a front against the secretive Fed, a privately owned organization that has never been audited and is constitutionally questionnable. Bloomberg must know what he is doing. The rule #1 for bond traders was always "never fight the Fed."
In the Fed's view, disclosing the recipients could obviously aggravate the financial crisis, taking it from their response to Bloomberg:
In response to Bloomberg’s request, the Fed said the U.S. is facing “an unprecedented crisis” in which “loss in confidence in and between financial institutions can occur with lightning speed and devastating effects.”In its latest report on the matter Bloomberg quoted lawyers, journalists and market participants who share the desire to know more about the recipients of rapidly expanding Fed credit.
The Fed supplied copies of three e-mails in response to a request that it disclose the identities of those supplying data on collateral as well as their contracts.
While the senders and recipients of the messages were revealed, the contents were erased except for two phrases identifying a vendor as "IDC.” One of the e-mails’ subject lines refers to “Interactive Data -- Auction Rate Security Advisory May 1, 2008.”
Brian Willinsky, a spokesman for Bedford, Massachusetts- based Interactive Data Corp., a seller of fixed-income securities information, declined to comment.
"Notwithstanding calls for enhanced transparency, the Board must protect against the substantial, multiple harms that might result from disclosure," Jennifer J. Johnson, the secretary for the Fed’s Board of Governors, said in a letter e-mailed to Bloomberg News.
Accoding to the Wall Street Journal bank credit is on a runaway pace and could top $3 trillion next spring.
When all lending facilities are included, the Fed's balance sheet stood at over $2.26 trillion on Wednesday. Once recently announced programs to help consumer credit and mortgage markets are up and running, that figure should climb toward $3 trillion. The balance sheet was under $1 trillion as recently as mid-September. The U.S. commercial-paper market has expanded for seven consecutive weeks, jumping $48.6 billion in the latest week alone. Thursday's data suggest Fed purchases account for most of the growth in that sector.Banks are refusing to release this information too as it would shed a light on their financial weakness.
Bloomberg is not alone in his fight. American lawmakers have demanded more transparency as recent as December 10.
Congress is demanding more transparency from the Fed and Treasury on bailout, most recently during Dec. 10 hearings by the House Financial Services committee when Representative David Scott, a Georgia Democrat, said Americans had “been bamboozled.Right to Know
Media representatives tune into the choir for more transparency.
“There has to be something they can tell the public because we have a right to know what they are doing,” said Lucy Dalglish, executive director of the Arlington, Virginia-based Reporters Committee for Freedom of the Press.
“It would really be a shame if we have to find this out 10 years from now after some really nasty class-action suit and our financial system has completely collapsed,” she said.
It won't take 10 years to find out that an empire in decline has tried all dirty tricks to stay above the waterline.