Send to friend
PDF versionsource: http://www.bloomberg.com/apps/news?pid=20601103&sid=adB2HN_jgpuE
Nov. 7 (Bloomberg) -- The Federal Reserve said a U.S. judge erred in ruling that the central bank should identify companies that received emergency loans last year, according to court papers filed to overturn the decision.
U.S. District Judge Loretta Preska improperly used the standard of “imminent harm” to a borrower’s competitive position rather than a lesser standard of “likely harm,” according to papers filed yesterday by Fed lawyers led by Senior Counsel Yvonne Mizusawa.
Bloomberg News, a unit of Bloomberg LP, the New York-based company majority-owned by New York City Mayor Michael Bloomberg, won a ruling in Manhattan federal court on Aug. 24 affirming the right of U.S. taxpayers to know about the financial firms that borrowed money. Bloomberg’s response to the Fed’s appeal to the U.S. Court of Appeals in Manhattan is due Dec. 7 and a hearing is expected to be held the week of Jan. 4.
The information sought by Bloomberg would demonstrate the central bank’s tactics in its bailout of the U.S. banking system. The Fed last year began extending credit directly to companies that weren’t banks for the first time since the Great Depression in the 1930s.
Divulging specifics about the loan program might touch off a run by depositors, unsettle shareholders and hurt the central bank’s “ability to perform important statutory functions at a time of economic upheaval,” Fed lawyers have said in legal filings.
Harm to Board
The Fed, in its court papers, also said Preska erred in refusing to recognize that harm to the board’s ability to administer the program should be grounds for not disclosing the information. The Fed’s lawyers also said customers’ names, loan amounts and the terms on which they borrow are all information obtained from the banks and therefore not subject to disclosure under the Freedom of Information Act, or FOIA.
The Court of Appeals on Oct. 6 granted the Fed’s motion to keep borrower information confidential while it seeks to overturn the lower-court ruling, according to Thomas Golden, a lawyer at New York-based Willkie Farr & Gallagher LLP, who represents Bloomberg in the case.
David Skidmore, a Fed spokesman, declined to comment on yesterday’s filing.
The central bank contends that 231 pages of daily reports summarizing lending activity, which were prepared by the Federal Reserve Bank of New York for the Board of Governors in Washington, aren’t covered by FOIA. The statute requires federal agencies to make government documents available to the press and public. The suit doesn’t seek money damages.
Bank Group
The Fed was joined in the litigation by a banking cooperative, The Clearing House Association LLC, which also opposes disclosure. Preska on Sept. 21 ruled that the organization may intervene in the action so that it could participate in the appeal, clearing the way for the group to pay lawyers to argue against disclosure. The Clearing House also filed a brief.
The case is Bloomberg LP v. Board of Governors of the Federal Reserve System, 08-CV-09595, U.S. District Court, Southern District of New York (Manhattan).
By Mark Pittman
To contact the reporter on this story: Mark Pittman in New York at mpittman@bloomberg.net.