Bloomberg Wins Appellate Victory in Suit for Bailout Details

The U.S. Court of Appeals in Manhattan ruled in favor of Bloomberg in its suit against the Federal Reserve for access to bailout details, ruling the Fed must release records of the $2 trillion U.S. loan program.

U.S. Circuit Chief Judge Dennis Jacobs wrote that the FOIA "sets forth no basis for the exemption the Board asks us to read into it. If the Board believes such an exemption would better serve the national interest, it should ask Congress to amend the statute."

Read more about the decision here.

Eagerly Anticipating a Ruling on the Bloomberg/Fed Dispute

After hearing arguments in January, court watchers are awaiting a decision from the federal appellate court in the dispute between Bloomberg LP and the Federal Reserve regarding the news organization's request for access to a loan-by-loan accounting of its emergency bailout to banks. Bloomberg seeks information on how much was borrowed, when, on what terms, and in exchange for what collateral.

Despite a win for Bloomberg in the lower courts, the Fed has still not provided the records. The Fed argues that if such records were public, it would cause greater harm to the banks, could lead to bank panic, and could weaken the banking system further by making banks hesitant to seek future aid from the lender of last resort.

For Bloomberg, the lawsuit represents a principled stand for transparency and a tribute to its late reporter, Mark Pittman, who spearheaded efforts to obtain the information under FOIA before his sudden death in November 2009.

For more information, click here.

Transparency or Financial Stability? The Arguments in Bloomberg v. Fed

The New York Times brings this fascinating account of the legal wranglings of Bloomberg News against the Fed for information pertaining to the Bailout. Described as a "principled grudge match," the feud over the financial news giant's FOIA requests has the Fed arguing that the information sought could cause stigmatization of certain banks, potentially bank runs, and could jeopardize the government's efforts to stabilize the economy, while Bloomberg argues it is seeking transparency in order to fulfill its watchdog role.

Remembering Mark Pittman

Mark Pittman, an award-wining reporter, died tragically November 25 at age 52.

Pittman was a true freedom of information warrior. He pushed to open the Federal Reserve to more scrutiny. Thanks to the work of Pittman and his colleague, Craig Torres for seeking the information, in August, Bloomberg won a lawsuit in federal court in Manhattan requiring the Federal Reserve to release the names of the entities to which it has lent money. That decision is still being appealed.

Click here for remembrances by Pittman's colleagues.

The Washington Post Asks: Do we have a right to know the central bank's inner workings?

In this article, The Washington Post poses a question examining the scope of public inquiry into the inner workings of the Federal Reserve Board, especially with respect to two pending issues.  First is the legislation sponsored by Ron Paul (R-Tex.), a bill that would require annual audits of the Fed's monetary policy-making and short-term lending.  Second is the litigation brought by Bloomberg News for access to the Fed's data on crisis lending under the FOIA.  

What do you think?  

Bloomberg Demands Bank Names; Court Stays Release

The Bloomberg News Unit of Bloomberg LP is seeking the names of companies that received loans from the Federal Reserve.  Bloomberg attorneys say the central bank should be forced to disclose the corporate identities because the Federal Reserve can't demonstrate that borrowers would be harmed by such a disclosure.

The U.S. Court of Appeals for the Second Circuit disagreed, and stayed the release of information during the appeal. 

Click here for more information. 

Federal Reserve Ordered to Disclose Recipients of Emergency Loans

Bloomberg LP won a FOIA suit against the Federal Reserve System for disclosure of the financial firms it lent to or disclose the amounts or the assets put up as collateral under emergency lending programs.

In ordering the Fed Reserve to comply with the FOIA request, the court accepted Bloomberg's arguments that U.S. taxpayers need to know the terms of Fed lending because the public became an “involuntary investor” in the nation’s banks as the government began shoring up companies with capital injections and loans. The court rejected the central bank's argument that loan records aren’t covered by the law because their disclosure would harm borrowers’ competitive positions.

For more information, click here.

NFOIC Summit: Fiscal transparency

Charles Glasser, global media counsel for Bloomberg News; James Nobles, legislative auditor for the State of Minnesota; and Rebecca Otto, auditor for the State of Minnesota spoke about the secrecy surrounding the bank bailout and other fiscal transparency issues. Jane Kirtley, Silha professor of media ethics and law at the University of Minnesota School of Journalism & Mass Communication moderated. Here are the notes from this NFOIC Summit session:

Charles Glasser on the Bloomberg lawsuit:

• Glasser explains the "great freak-out of 2008" as follows. A network of banks borrow money from the Federal Reserve each night. The money's distributed through a discount window. Bank X says we need $200,000 until tomorrow so our checks clear. That discount window number is public. It's released every morning by the Treasury. The number usually hovers between $1 and $4 million a night. For the federal government, that’s not big money.
• Mark Pittman saw this number climbing. He noticed that the overnight window ballooned to $400 million inside two weeks. He called the Federal Reserve, which said that information is proprietary and can't be released. The Federal Reserve is lending public money to private banks but saying it doesn't have to disclose the criteria for collateral. What did the federal government take in return as a promise for your money? And on what terms was your money given and to whom?
• Bloomberg filed the lawsuit in November, and it's still under advisement. The suit's been assigned to a friend-of-the-press judge in the southern district, so Bloomberg is hopeful.
• Glasser said the fact that Bloomberg had to file this suit is something in and of itself that should raise your ire.
• Great credit goes to Matt Winkler and Mike Bloomberg, who from day one told reporters and editors to do the right thing and they'd deal with the cost later. So far the cost is estimated at $125,000.
• Two weeks after Bloomberg filed the lawsuit, FOX News announced that it was suing the federal government without any mention of Bloomberg. "The boat is always big enough," Glasser said. The more people involved, the better.
• The best federal agency to comply with FOIA requests was the Department of Defense, and this was under the Bush administration. The Securities and Exchange Commission rated the worst. It's the one federal agency that was created to promote transparency and fairness in the market.
• Bloomberg filed a FOIA letter to the Board of Governors for records on how much money was lent in a certain time period and under what terms. It resulted in a de facto denial. The board didn't respond. Bloomberg kept at them and received a response 30 days late. It said the material is considered proprietary trade secret and would cause harm to the parties involved. The Fed was basically saying if the public knew which banks were in trouble, the banks would get in trouble because of a run. In the meantime, the Troubled Asset Relief Program was announced. Bloomberg noticed that when a company announced that it was applying for TARP, its stock would jump. Investors felt better with a company that had the backing of the federal government. Therefore, this argument that knowing what banks were bailed out would cause competitive harm makes no sense.
• Bloomberg is now hoping to at least prove that the Board of Governors is FOIA-able.
  
• Bloomberg has launched a new iniative that has tasked all investigative reporters to use FOIA aggressively. In the Bloomberg terminals are built-in internal functions called FOIA Go, which provides guidelines and templates for FOI requests in most states and some nations.

Minnesota auditing:

• Rebecca Otto oversees local government spending. She helped revamp reports by telling her staff that if no one understands them, we're not doing our job. She aimed to make them understandable and nonpartisan. Her office did that by creating easy-to-read executive summaries with the report's most important information and references to page numbers of the report.
• Her office as overhauled the Web site so that audits and special investigations were easy to find online. She asked the media to sign up the her office's weekly newsletter, and she works closely with reporters to help them ensure their stories are accurate.
• When her office audits local governments, the audits are public. It's not as transparent when private CPAs audit local government. Their papers are sometimes proprietary. The same thing with special investigations done by her office versus by private investigators.
• James Nobles audits state government and outline four things needed for good government.

1. Strong laws that require records to be open. Minnesota has a presumption that all government data is public unless specifically classified by law as otherwise. Nobles would like to get to the point where citizens would have access to raw data related to the state's accounting system. The problem is how to also protect for privacy.
   
2. Active, vigorous citizen participation in government.
3. A vigorous media. Nobles worries about the diminished resources of media and whether investigative work will continue.
4. Paid agents of accountability. It's important in every state that there are independent agents to dig out data about how the government is spending money.
   

Great resources:

• States for a Transparent and Accountable Recovery
• Bailout Watch

Bloomberg argues that taxpayers are 'involuntary investors' who need bailout info

Yesterday, Bloomberg News filed its Memo of Law for Summary Judgment, which argues that as "involuntary investors," taxpayers should have access to information on which U.S. banks were provided emergency funding. Banks have opposed the release of this data because of its potential to "fuel market speculation and rumors." Bloomberg replied that “these speculative injuries relate only to the reactions of customers, shareholders and other members of the public, not to competitors’ use of the borrowers’ proprietary information to their advantage,” the exception to disclosure under the FOIA law. Bloomberg data indicates that more than $12.8 trillion in government loans, spending or guarantees have been used to rescue the financial system since August 2007.

The Federal Reserve should identify U.S. banks funded by its emergency lending because taxpayers are “involuntary investors” who need to know the risks, Bloomberg LP said today in a court filing.

The Fed refuses to name the borrowers, the amounts of loans or assets banks put up as collateral under 11 programs, arguing that doing so might set off a run by depositors and unsettle shareholders. Bloomberg, the closely held New York-based company majority-owned by Mayor Michael Bloomberg, sued Nov. 7 under the Freedom of Information Act on behalf of its Bloomberg News unit.

“The Board’s arguments are based on wispy speculation, lack evidentiary support and are contradicted by economic theory,” said Thomas Golden and Jared Cohen, lawyers with New York-based Willkie Farr & Gallagher LLP, in a motion asking the judge to require disclosure. “These government actions, which have been shrouded in secrecy, are at the heart of Bloomberg’s FOIA requests.”

More here.