The lawsuit Bloomberg reporters won yesterday against the Fed asking it to release information about its emergency bank loans is pretty untimely for Ben Bernanke, who was appointed for a second term today. It could give a whole lot more ammo for its detractors who have been pushing for more scrutiny of the central bank, and weaken Bernanke’s argument that providing the Government Accountability Office more scrutiny of the Fed could be harmful.
The Fed had so far refused to provide the names of the banks that took the loans, saying it would “harm them.”
According to the lawsuit, staff members in the board’s division of monetary affairs justified their refusal to unveil the info by saying that “the stigma [to borrow from the FED] can quickly place an institution in a weakened condition vis-à-vis its competitors by causing a loss of confidence in the institution, a sudden outflow of deposits, a loss of confidence by market analysts, a drop in the institution’s stock price and a withdrawal of market sources of liquidity. “
Ah yeah, sure. But there’s just one problem here–this is taxpayers’ money we’re talking about. And remember what Bernanke said last month when he delivered his semiannual monetary policy report to the Congress?
Let us refresh your memory: “The Congress and the American people have a right to know how the Federal Reserve is carrying out its responsibilities and how we are using taxpayers’ resources. The Federal Reserve is committed to transparency and accountability in its operations. We report on our activities in a variety of ways.”
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