Federal Reserve Board fights to keep its secrets

Warns disclosing where money went would cause 'irreparable harm'

By Drew Zahn
© 2009 WorldNetDaily

The Federal Reserve Board, despite being ordered to disclose to whom it awarded roughly $2 trillion in discount "stimulus" loans, is fighting to keep the information under wraps as a protected "trade secret."

Earlier this week, a U.S. district court judge rejected the Fed's argument that the names of borrowers are exempt from disclosure under the Freedom of Information Act and ordered the board to release the information by Monday, Aug. 31.

The Fed's board of governors, however, has now filed a motion asking the judge to delay enforcement of the order, seeking time to appeal and arguing that disclosing which banks borrowed the funds could lead to a backlash from the banks' customers and stockholders.

Demand the money managers come clean by signing the petition in support of an audit of the Federal Reserve now!

"The immediate release of these documents will destroy the board's claims of exemption and right of appellate review," the motion said. "The institutions whose names and information would be disclosed will also suffer irreparable harm."

Bloomberg LP, which sued the Fed on behalf of its Bloomberg News unit for not complying with a FOIA request last year, disagrees.

"Our argument is that the public interest in disclosure outweighs the banks' interest in secrecy," said Thomas Golden, a lawyer who represents Bloomberg.

"What has the Fed got to hide?" said Vermont's Sen. Bernie Sanders in an email reported by Bloomberg. "The time has come for the Fed to stop stonewalling and hand this information over to the public."

When the banking system threatened collapse last year, the Fed invoked its emergency lending powers to make discount loans to banks that now total into the trillions of dollars with the intent of stimulating the economy and preventing further financial meltdown. The names of the borrowing institutions were kept anonymous.

Bloomberg reporter Mark Pittman then filed a FOIA request in an attempt to get the Fed to disclose the borrowing banks and to identify the assets it accepted as collateral.

In return, Federal Reserve Board Secretary Jennifer Johnson sent Pittman a five-page response, telling him the Fed was withholding over 2,000 pages of information deemed protected against disclosure as "trade secrets" and "inter-agency or intra-agency memorandums or letters."

On Nov. 7, 2008, Bloomberg filed a suit seeking full disclosure, and earlier this week, Judge Loretta A. Preska of the U.S. District Court, Southern District of New York, ruled the Fed had until Monday to release the information.

The Fed's motion to delay enforcement of Preska's order argues the board's "ability to effectively manage the current, and any future, financial crisis" would be impaired by releasing the information and "significant harms" could befall the U.S. economy, as disclosure might unsettle shareholders and set off a run on the borrowing banks by worried depositors.

As WND has reported, a majority within the U.S. House called for greater transparency of the Fed by cosigning onto H.R. 1207, the Federal Reserve Transparency Act of 2009. The Act demands an audit of the Fed, a private institution that virtually controls U.S. interest rates, money supply and other economic influences.

U.S. Rep. Ron Paul, R-Texas

"To understand how unwise it is to have the Federal Reserve, one must first understand the magnitude of the privileges they have," wrote the bill's sponsor, U.S. Rep. Ron Paul, R-Texas, in a recent Straight Talk commentary. "They have been given the power to create money, by the trillions, and to give it to their friends, under any terms they wish, with little or no meaningful oversight or accountability."

"The tremendous grass-roots and bipartisan support in Congress for H.R. 1207 is an indicator of how mainstream America is fed up with Fed secrecy," said Paul. "I look forward to this issue receiving greater public exposure."

Sen. Jim DeMint, R-S.C., has also pushed in the Senate for greater transparency at the Fed.

"The Federal Reserve will create and disburse trillions of dollars in response to our current financial crisis," DeMint said. "Americans across the nation, regardless of their opinion on the bailout, want to know where the money has gone.

"Allowing the Fed to operate our nation's monetary system in almost complete secrecy leads to abuse, inflation and a lower quality of life," he said, according to Reuters.

Out of Context

In Washington, the clearer a statement is, the more certain it is to be followed by a "clarification" when people realize what was said. The clearly racist comments made by Judge Sonia Sotomayor on the Berkeley campus in 2001 have forced the spinmasters to resort to their last-ditch excuse, that it was "taken out of context."

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If that line is used during Judge Sotomayor's Senate confirmation hearings, someone should ask her to explain just what those words mean when taken in context.

What could such statements possibly mean-- in any context-- other than the new and fashionable racism of our time, rather than the old-fashioned racism of earlier times? Racism has never done this country any good, and it needs to be fought against, not put under new management for different groups.

Looked at in the context of Judge Sotomayor's voting to dismiss the appeal of white firefighters who were denied the promotions they had earned by passing an exam, because not enough minorities passed that exam to create "diversity," her words in Berkeley seem to match her actions on the judicial bench in the 2nd Circuit Court of Appeals all too well.

The Supreme Court of the United States thought that case was important enough to hear it, even though the three-judge panel on which Judge Sotomayor served gave it short shrift in less than a page. Apparently the famous "empathy" that President Obama says a judge should have does not apply to white males in Judge Sotomayor's court.

The very idea that a judge's "life experiences" should influence judicial decisions is as absurd as it is dangerous.

It is dangerous because citizens are supposed to obey the law, which means they must know what the law is in advance-- and nobody can know in advance what the "life experiences" of whatever judge they might appear before will happen to be.

It is absurd because it flies in the face of the facts. It was a fellow Puerto Rican judge on the 2nd Circuit Court of Appeals-- Jose Cabranes-- who rebuked his judicial colleagues for the cavalier way they dismissed the white firefighters' case.