Today, in a huge win for transparency, the U.S. Court of Appeals in Manhattan ruled that the Federal Reserve Board must disclose records containing information about how it intervened to bail out banks during the financial crisis.
Since Bloomberg News filed the lawsuit in November of 2008, the Fed has claimed that if the information is released it could do more harm to the already weakened banks by stigmatizing them, thus hurting their ability to compete.
Supporters of Bloomberg’s lawsuit say the public has the right to know where their money is going. These records tell which banks borrowed taxpayer money from the Fed and whether or not it was at a discounted rate.
For transparency and research purposes, the Sunlight Foundation submitted FOIAs for various information regarding the bailout. Many of those FOIAs never returned any information at all. One requested the identity of any banks that might have been taking advantage of the multiple government programs available to them during the bailout. We were looking, in other words, for double dippers. For instance, Bank of America received $45 billion through the Capital Purchase Program and the Targeted Investment Program which can be verified on the Office of Financial Stability Web site. But we can’t be sure that the bank didn’t also sell the bad assets – the reason they were able to receive CPP funds — to government backed investors through a program administered by the Fed.