Federal Reserve Seeks Delay in Disclosure of Emergency Lending
The Federal Reserve asked a judge yesterday to delay enforcement of her decision requiring the central bank to identify companies in its emergency lending programs.
Chief U.S. District Judge Loretta Preskain Manhattan said on Aug. 24 that the Fed had until Aug. 31 to disclose daily reports on borrowing by banks and other financial institutions. The central bank wants Preska to stay her order, made in a Freedom of Information Act lawsuit, until the U.S. Court of Appeals in New York can act on an appeal that the Fed said it intends to file.
The Fed and U.S. banks would suffer irreparable harm if details of the loan programs were made public, according to the central bank’s senior counsel,Yvonne Mizusawa.
The Clearing House Association LLC, an industry-owned group in New York that processes payments between banks, filed a declaration that accompanied the request for a stay.
“There are numerous examples of financially sound institutions collapsing or suffering further financial deterioration from the loss of public confidence,” Norman Nelson, vice president and general counsel for the group, said in the document.
Preska’s Aug. 24 ruling against the central bank rejected the Fed’s argument that the records shouldn’t be disclosed because they are trade secrets and would scare customers into pulling their deposits and exacerbating a run on the banks.
The Fed has refused to name the financial firms it lent to or disclose the amounts or the assets put up as collateral under 11 programs, saying that doing so might set off a run by depositors and unsettle shareholders.
Bloomberg LP, the New York-based company that’s majority- owned by MayorMichael Bloomberg, sued on Nov. 7 on behalf of its Bloomberg News unit. Bloomberg News opposes the Fed’s request for a stay.
The case is Bloomberg LP v. Board of Governors of the Federal Reserve System, 08-CV-9595, U.S. District Court, Southern District of New York (Manhattan).
Source: Bloomberg
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