The Federal Reserve will release details of the banks it lent money to during the financial crisis after losing a court battle to keep the information private.
Bloomberg, the parent company of Bloomberg News, sued the Fed under the Freedom of Information Act, demanding that it release names and details of the banks that borrowed money from the “discount window,” where U.S. banks have turned for emergency funds — confidentially — for nearly a century.
Federal courts ruled that the Fed had no compelling reason to keep the information private. On Monday, the Supreme Court declined to hear an appeal by a group representing large banks, meaning the judgments by the lower courts will stand.
The Fed “will fully comply with the courts’ decisions and is preparing to make the information available,” said Michelle Smith, a spokeswoman for the Fed, declining to specify when the disclosures will be made. She said some of the information sought in the Bloomberg suit has already been made public in compliance with the Dodd-Frank regulatory overhaul passed last summer.
“The Federal Reserve forgot that it is the central bank for the people of the United States and not a private academy where decisions of great importance may be withheld from public scrutiny,” Matthew Winkler, editor in chief of Bloomberg News, said in a written statement. “The Fed must be accountable to Congress, especially in disclosing what it does with the people’s money.”
The discount window allows banks to receive emergency funds by pledging collateral and is a key part of the Fed’s role as “lender of last resort,” backstopping the banking system.
Lawyers for the Fed and the Clearing House Association, a group of the big banks, had argued that secrecy was justified because publicizing the names of banks that received loans could create a greater stigma to the practice and would hurt the Fed’s ability to respond to financial crises.
Courts had little sympathy for that argument, finding that with public funds in play, the federal Freedom of Information Act required disclosure.