The big Fed news

A federal judge’s ruling that the mighty Federal Reserve must release information about some $2 trillion in “emergency” loans made during the financial crisis is a big blow to the central bank’s self-styled image as an impenetrable shrine.

US District Judge Loretta Preska should be applauded for not taking the Fed’s bait that to release information about the banks and financial institutions that received those loans would imperil the financial system. Preska rightfully concludes that the Fed’s fear is based on mere speculation and “conjecture.”

A big tip of the hat also goes to Bloomberg News for pursuing this lawsuit, after the Fed denied the media outlet’s Freedom of Information Act request seeking the loan information. Thanks to Bloomberg, the public’s right to know all the ins-and-outs of the federal government’s effort to bailout the banks has been preserved.

Of course, I fully expect the Fed to appeal this decision. So I don’t expect these loan documents to be released anytime soon. And that’s a shame because throughout the financial crisis the Fed has shown it is tone deaf when it comes to the issue of accountablity and public disclosure.

Remember, the Fed fought against releasing the names of the banks that got an indirect bailout from the federal government’s rescue of American International Group. And the Fed has been less then forthcoming in providing information about the $30 billion in ailing assets it took on from Bear Stearns as part of the forced sale of the failing investment bank to JPMorgan Chase.

The Fed’s arrogance only has emboldened its critics and given ammunition to those on Capitol Hill who oppose the Obama administration’s plan to turn the Fed into some sort of uber-regulator.

Now that President Obama has rewarded Fed Chairman Bernanke with a new term (subject to Congressional approval), maybe the nation’s top money-man will move to breakdown the Fed’s historic wall of silence.

A first step in that direction would be for Bernanke to order the Fed to turn over the loan documents and not appeal the court ruling