Fed won't reveal names of recipients of $2 trillion
The Federal Reserve refused a request from Bloomberg News to reveal the recipient of $2 trillion in emergency loans paid for by U.S. taxpayers.
After Bloomberg filed an open records request through the Freedom of Information Act, the fed answered by arguing that it's allowed to withhold information, including memos and trade secrets.
Bloomberg has filed a lawsuit against the Federal Reserve system as of Friday, demanding the documents be disclosed.
Representative David Scott, a Georgia Democrat, said Americans had "been bamboozled."
"If they told us what they held, we would know the potential losses that the government may take and thatís what they donít want us to know," said Carlos Mendez, a senior managing director at New York-based ICP Capital LLC, which oversees $22 billion in assets.
It's possible the Federal Reserve is refusing to name the recipients out of concern that it would have a negative impact on sales in the market.
Some of the borrowers included Lehmann Bros, Citigroup, and JP Morgan Chase. The following is an excerpt from a Digital Journal article:
"The banks definitely donít like it. Theyíre worried about a negative sales effect, which could aggravate the existing situation and maybe cause a run on the banks.
"Shades of 1929 in that one, and if nobodyís too happy about this situation, itís because thereís an unholy smell of frying fat coming from places itís not supposed to be coming from."