Financial news organisation Bloomberg has requested the details of who the US Federal Reserve is lending its trillion dollar bailout cash to under the Freedom of Information Act, as well as suing the Fed in a bid to force disclosure.
While Fed chairman Ben Bernanke and Treasury Secretary Hank Paulson said in September they’d comply with congressional demands for transparency, to date they have refused to name a single company to receive some of the trillion dollars they have dispersed thus far.
Federal Reserve spokeswoman Michelle Smith wouldn’t comment to Bloomberg on the lawsuit or the loans.
“The collateral is not being adequately disclosed, and that's a big problem. In a liquid market, this wouldn't matter, but we're not. The market is very nervous and very thin”, vice chairman of Loomis Sayles & Co. Dan Fuss told Bloomberg.
Bloomberg argues the Fed's lending is significant because it stepped into a rescue role that was also the purpose of the $700 billion Troubled Asset Relief Program, or TARP, bailout plan – but without safeguards put into the TARP legislation by Congress.
Bloomberg reports total Fed lending topped $2 trillion for the first time last week and has risen by 140%, or $1.172 trillion, in the seven weeks since Fed governors relaxed the collateral standards on September 14.
The difference includes a $788 billion increase in loans to banks through the Fed and $474 billion in other lending, mostly through the central bank's purchase of Fannie Mae and Freddie Mac bonds.
New Zealand’s annual GDP is roughly $US120 billion.
The reason for the lack of transparency appears to be Wall St Banks, who oppose releasing information because it might signal weakness and spur a run by depositors or short-selling.
Citigroup, Bank of America Corp., JPMorgan Chase, Wells Fargo & Co., Goldman Sachs Group Inc. and Morgan Stanley – America’s biggest banks – would not comment on whether they have borrowed from the Fed.
The Bloomberg lawsuit is Bloomberg LP v. Board of Governors of the Federal Reserve System, U.S. District Court, Southern District of New York (Manhattan).
This article is tagged with the following keywords. Find out more about MyNBR Tags
- Parent, widow of Pike River casualties fail to force review of decision to drop charges against Whittall
- iPredict decision the work of 'officious aliens' – Crampton
- Scentre Group to sell three Westfield malls to NZ firms for $549m
- Tech expert's complaint about 'snake oil' ad upheld
- Editor’s Insight: New complex caps strong year for cinemas
Most listened to
- Tim Hunter on why Veritas is doing it the hard way
- Matthew Hooton on whether Steven Joyce will be the next national leader
- Rodney Hide on why all city planners should be fired
- Nevil Gibson discusses his latest Editor's Insight on films
- The NBR crew throw around some of the week's top stories
- Rob Hosking breaks down the political and economic week that was
- "A tragedy" - David Farrar on his disappointment with Simon Bridges
- New F&P product pipeline exciting, says Macquarie senior investment adviser Brad Gordon
- Taupo Motorsport Park executive director Tony Walker on the park's rebranding
- NZIER senior economist Christina Leung on why she does not think the OCR will hit 2%
- NBR's Cameron Officer talks about the NBR Car of the Year 2015
- John Barnett on Brewer: ‘Boy, has he got a bit to learn’