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Fed Rejects FBN Request on Federal Loans Information

Posted by tothewire on January 19, 2009

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The Federal Reserve has now officially refused a request from Fox Business Network to release the names of financial institutions that borrow from the Fed’s discount window and other Fed lending facilities, and identify the collateral provided by the borrowing institutions.

Fox Business Network filed a Freedom of Information Act request for this information in November, and recently filed suit to get a response. Today the Secretary of the Federal Reserve Board of Governors, Jennifer Johnson, responded, arguing that the Fed already discloses information about the amounts and types of securities involved, but she declined to release individual transaction data or the names of the institutions involved. Johnson wrote that secrecy is essential to the effectiveness of the Fed’s efforts to address liquidity strains and their “potential adverse effects on the economy now and in the future.”

Johnson says financial institutions may fear the stigma associated with public knowledge of their borrowing from the Fed’s discount window, and that they might “avoid borrowing at virtually any cost.”

“The effectiveness of these facilities depends critically on the willingness of individual borrowers to utilize them,” Johnson wrote in the letter to FBN. “Publishing information about individual borrowers would deter usage of the liquidity facilities.”

Fox Business Network is studying the response.

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