Crocodile Tears are flowing at the Federal Reserve and US Treasury after Manhattans district judge Loretta Preska’s August 24 decision to allow an audit of the Fed’s ballooning balance sheet. Under the freedom of information act, this would allow taxpayers who are unwilling investors in this racketeering game to see who has borrowed their money under the Fed’s new lending programs to enable zombie banks a new lease on a life they didn’t earn and don’t deserve.
In a WSJ interview Timmy Geithner moaned yesterday that an audit of the Fed, would be problematic for the country. Now the Federal Reserve board of governors filed a motion to delay Loretta Preska’s decision that the identities of borrowers under the Feds 11 lending programes be made public by Aug 31.
From Bloomberg:
“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.”
The Fed’s “ability to effectively manage the current, and any future, financial crisis” would be impaired, according to the motion. It said “significant harms” could befall the U.S. economy as well.
The central bank didn’t say when it would file its appeal.
Fed lawyer Kit Wheatley told Preska in a conference call today that she did not know how long it would take for the Fed board to search the New York Fed for records. “We really don’t know what’s in New York,” Wheatley said. “We don’t control the system of record-keeping in New York.”
The Fed’s lawyer went on to say that she did not know what records would fall under a “delegated function,” which would be a task assigned to the New York Fed.
Preska interrupted Wheatley, saying that “Ms. Wheatley, I held that’s not the standard. You didn’t search under the regulation. You’re supposed to search under the regulation.”
Preska scheduled another conference call for 2:30 p.m. today to discuss the schedule for a search of the New York Fed.
“Nobody is going to deny you your right to an appeal,” Preska said on the call, “We’re going to do it expeditiously, not in a piecemeal fashion and hand it all off to the Second Circuit.”
The Fed has refused to name the financial firms it lent to or disclose the amounts or the assets put up as collateral under the emergency programs, saying disclosure might set off a run by depositors and unsettle shareholders.
Bloomberg LP, the New York-based company majority-owned by Mayor Michael Bloomberg, sued on Nov. 7 under the Freedom of Information Act on behalf of its Bloomberg News unit.
Public Interest
“Our argument is that the public interest in disclosure outweighs the banks’ interest in secrecy,” said Thomas Golden, a lawyer with New York-based Willkie Farr & Gallagher LLP who represents Bloomberg.
Preska’s Aug. 24 ruling rejected the Fed’s argument that the records should remain private because they are trade secrets and would scare customers into pulling their deposits.
“What has the Fed got to hide?” said Senator Bernie Sanders, a Vermont independent who sponsored a bill to require the Fed to submit to an audit by the Government Accountability Office. “The time has come for the Fed to stop stonewalling and hand this information over to the public,” he said in an e- mail.
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.
Negative Consequences
“Experience in the banking industry has shown that when customers and market participants hear negative rumors about a bank, negative consequences inevitably flow,” Norman Nelson, vice president and general counsel for the group, said in the document. “Our members have accessed the discount window with the understanding that the Fed will not disclose information about their borrowing, especially their identity.”
Members of the Clearing House are ABN Amro Holding NV, Bank of America Corp., Bank of New York Mellon Corp., Citigroup Inc.Deutsche Bank AG, HSBC Holdings Plc, JPMorgan Chase Inc., UBS AG, U.S. Bancorp and Wells Fargo & Co.
So, the Fed is pushing back on judge Preska’s decision. We should not be surprised. Nor should we be surprised if the Fed does not obey the court order should the Fed’s appeal be rejected. The Fed would then be in contempt of court.
Note the nature of the appeal is a Henny-Penny argument based on fear-mongering, the sky is falling, and the world will come to an end. The banksters would “suffer irreparable harm” they say adding that “significant harms” could rip through the economy. This is the same argument the Treasury and Fed made to Congress when they ex-propriated $700 billion taxpayer dollars out of TARP. It turns out, if you believe the banksters claims, that they did not need TARP dollars and because they are doing so well now, they are paying those TARP dollars back. Never mind that they have been borrowing trillions of dollars at the Fed’s lending facilities to stay afloat all this time. Nothing but double-speak from these disingenous groups. In recent months all the soundbites from the Fed and Treasury and banksters themselves have told us things are getting better, stabilizing, leveling out, green shooting. So, how would the JP Morgans of the world suffer irreparable harm? It’s not that we don’t know who the Fed has doled trillions of taxpayer dollars out to. We just don’t know how much went to each particular bankster.
http://www.bloomberg.com/apps/news?pid=20601103&sid=a6mdEyvr7Mpk
