Fed Doesn't Have To Release Names, Yet
Somehow I missed this news from yesterday, but thought it was still noting today, since I wrote about it back in August. At that time I grappled with the problem of the Federal Reserve being forced to release the names of banks that come to it for emergency loans. While it seems like this information should be made public in theory, in practice it threatens bank stability. The Fed lost a district court lawsuit, consequently requiring it to release those names. But this week a circuit court of appeals granted its request to temporarily postpone that release pending it losing the appeal.
Here's what the Fed argued, via Real Time Economics:
In its original request for a stay, the Fed argued that disclosing lending information would undermine confidence in the banks borrowing through its programs.
"Public disclosure is likely to cause substantial competitive injury to these financial institutions including the loss of public confidence in the institution, runs on banks, and possible failure of some institutions," Associate General Counsel Yvonne Mizusawa wrote.
I think that's true, but that doesn't mean the Fed shouldn't be required to release those names for the sake of transparency. Yet, I do think it's logical that these names not be released until the ruling is final. In the end, if the Fed loses, then that's too bad for those banks.
As I said before, I have mixed feelings on what the ultimate outcome should be. But I'm also a little unsure if this is a question really best answered by the courts. I'd like to see Congress weigh in and force the Fed's hand, if that's the appropriate outcome.