Bloomberg Lawsuit Against Federal Reserve For Not Disclosing Emergency Loans

The Federal Reserve is refusing to identify the recipients of almost $2 trillion of emergency loans from American taxpayers or the troubled assets the central bank is accepting as collateral.

Bloomberg News has requested details of the Fed lending under the U.S. Freedom of Information Act and filed a federal lawsuit Nov. 7 seeking to force disclosure.

The Bloomberg lawsuit is Bloomberg LP v. Board of Governors of the Federal Reserve System, 08-CV-9595, U.S. District Court, Southern District of New York (Manhattan). (Bloomberg)

This is precisely what many feared. Firstly, that $700 billion was nowhere near enough, and secondly, that without a precise protocol about what transparency means the Fed will hide behind smokescreens of its own making. In September, both Bernanke and Paulson testified that they wanted the whole process to be transparent, like children promising they could look after the party food without eating it.

Now, the Federal Reserve, with what seems like the obvious complicity of the Treasury, are defaulting on their promises. These are not just promises to Congress, they are also promises to the American people and, because of the scale of the problem, to the world at large. This is yet another indication that people should never trust bankers and governments. The primary aim of governments is to keep control, with the supposed will of the people being a subsidiary concern once the electoral begging season is over. The primary aim of central banks is to keep control of money and to make profits for their owners. The US government is a client of the Federal Reserve. If that government either does not or cannot extract the information they need, or they can and do but are just not telling anybody else, then they are negligent in their office. Remember that Congress was bounced into the bailout bill by apocalyptic visions from both Bernanke and Paulson. Because of all the arm-twisting that was necessary just to get the bill passed, the oversight rules were big on words and small on specifics.

The corporate media is also complicit in this propaganda. However, occasionally one hears the odd independent analyst make some good points. Yesterday there was one talking head trying to talk up Goldman Sachs stock, for no good reason other than that the price is now so low. But as we are seeing, stock prices can quickly go to zero. Anyway, our bullish advisor was then contradicted by a fund manager who said in his opinion Goldman Sachs was vulnerable to changes in staff at the Treasury and Fed. It is well-known that Henry Paulson and many others are all fully signed up members of Goldmans and that more than a helping hand has been given to this bank compared to others that were fed to the lions. Nobody yet knows what changes the new president will make and whether he too has been brought into the fold, but such uncertainty is precisely what worries investors.

The defenders of secrecy - as the Fed are not answering the phone - claim that disclosing every loan or agreement could signal to the markets that the companies involved may have greater problems than anticipated and could lead to further market volatility. But the main reason for all this largesse was precisely to bring back market confidence. The fact that professional investors and fund managers are worried means that everybody else should be too. This slow motion crash is nowhere near over and any pundit seen talking up stocks is doing it for their own interest rather than the investor's.

As is often the case with these big decisions taken with public money, the individual feels powerless to do anything. The huge public outcry at the bailout bill was fended away and after all the emails and phonecalls and huffing and puffing the house of fiat money is still standing. I still think there is one protest that the public can still do. Take your money out of the banks and put it into credit unions. They operate under different rules to commercial banks and are not exposed to the credit crisis because their rules stopped them from ever participating in either fractional banking or leveraged financial products.