The Fed is Forced to Share What They’ve Been Trying to Hide

March 31st, 2011

The Federal Freedom of Information Law is forcing the Fed to open up their books to their lending practices during the financial crisis. We got a glimpse of where the bailout funding went, now we get to see which enormous banking institutions benefited from the emergency loans that the Fed offered at discounted rates and with minimal penalty fees. Over 25,000 pages were released from the report, but this information wasn’t willfully disclosed. The Fed has been fighting to keep it behind closed doors BECAUSE according to New York’s economists Joao Santos and Stavros Peristiani:

“It should be emphasized that confidentiality is not meant to protect the identities of individual banks per se, but rather to make the discount window more effective in dealing with market disturbances.”

The emergency lending to the banks reached its high point in October of 2008, near the failure of Lehman Bros. It was recorded that $111 Billion dollars was lent during that time. Before this “rescue plan” began banks were only tapping into $4 million dollars of emergency funds. Ben Bernanke said that all but one bank had failure in sight, thus this action was necessary to save the financial system:

“If you look at the firms that came under pressure in that period … only one … was not at serious risk of failure.”

This practice of publicly disclosing lending practices will be required by the Fed in the coming years, however by making appeals and through other loop holes the central bank can make the process lag 2 years before information is sent to the public. Should we buy their excuse that they are protecting the market my not releasing their lending information? Could there be other reasons they want to protect this information? Just wondering…

About the Author: megan

Megan is the Marketing Manager for Silver Circle who spends endless amounts of time on making sure the word gets out about this film and graphic novel! As a liberty activist since '08 she also has gained a passion for advancing liberty in her personal life and helping others to do the same. Questions about getting involved with the film, events, liberty, and hip-hop can go straight to her!