The Federal Reserve Board must disclose documents identifying financial firms that might have collapsed without the largest U.S. government bailout ever, a federal appeals court said.
The U.S. Court of Appeals in Manhattan ruled today that the Fed must release records of the unprecedented $2 trillion U.S. loan program launched primarily after the 2008 collapse of Lehman Brothers Holdings Inc. The ruling upholds a decision of a lower-court judge, who in August ordered that the information be released.
The Fed had argued that disclosure of the documents threatens to stigmatize borrowers and cause them “severe and irreparable competitive injury,” discouraging banks in distress from seeking help. A three-judge panel of the appeals court rejected that argument in a unanimous decision.
Looks like we’ll finally be able to find out who was naughty and who was nice and who really did and didn’t need bailout money when this whole thing turned ugly in the fall of 2008. Recall back in October of 2008, 9 of the largest banking institutions in the nation were summoned to a closed-door with then-Treasury Secretary Henry Paulson and Fed chief Ben Bernanke and were told to sign on the dotted line accepting bailout money whether they needed it or not.
And with respect to the Fed not wanting to stigmatize borrowers? Umm…. Isn’t this the sort of information you would want to make public in an effort to prevent it from happening again? As an investor, would you not want to know who were the bad actors and shouldn’t those bad actors be punished as a result in an open and transparent free market.
Well, of course, but that’s not how things work in Bailout Nation where bad behavior both on Wall St. and Main St. (see: Homeowner’s assistance programs) are rewarded and good behavior is punished in the form of higher fees and taxes to fund Bailout Nation.
In what is probably a first, we are in concurrence with Socialist Bernie Sanders of Vermont who called the decision a “major victory” for U.S. taxpayers.
We’ll savor this victory while we can as the governing trend of our “deem and pass” government is away from transparency and accountability and where our lives and everyday decisions are thought to be too important to be left to our own devices.