New information related to the Federal Reserve’s emergency loans to banks that took place during the financial crisis in 2008 will soon come to light, following a decision on Monday from the U.S. Supreme Court.
The Supreme Court decided to uphold a ruling by the federal court of appeals that ordered the Fed to disclose details about the central bank’s emergency lending during the crisis.
"The Board will fully comply with the courts' decisions and is preparing to make the information available," the Federal Reserve Board said in a statement sent to FOX Business via email. "Some of the information relating to emergency credit facilities was already released on December 1 by the Board under the Dodd-Frank Act."
The justices' ruling rejects an appeal filed by the Clearing House Association, which represents major commercial banks, intended to prevent the information from becoming public.
Banks that are members of the Clearing House include Bank of America Corp. (NYSE:BAC), JPMorgan Chase & Co. (NYSE:JPM), Citigroup Inc (NYSE:C), UBS AG (NYSE:UBS), Wells Fargo (NYSE:WFC), and Bank of New York Mellon Corp (NYSE:BK).
The initial lawsuit, brought by both the FOX Business Network and Bloomberg News under the Freedom of Information Act, had argued that the Federal Reserve, as the central bank of the United States, was obligated to release information related to its lending policies.
“We were asking who went to the Fed to borrow during that crisis period, and how much did they borrow,” said Steve Mintz, outside legal counsel for FOX Business Network.
In an interview with FOXBusiness.com, Mintz explained that banks have argued that releasing information about which banks went to borrow money during the discount window could incite a run on the banks and impose a collapse of the system.
“Our position is that an informed citizenry is better than an uninformed citizenry,” Mintz said. “The American people deserve to know what the Fed is doing with its money — our money.”
This is the second legal victory filed under FOIA for FOX Business. Last summer the network filed suit to block a provision of the Dodd-Frank Act, which would have exempted the Securities and Exchange Commission from some FOIA statutes, allowing the agency to keep some of the information derived from its dealings a secret.
The U.S. Federal Reserve Board told Dow Jones on Monday that it plans to comply with the court’s decision, but did not disclose when it will release the data.
In response to a question as to how well the system and FOIA worked in this case, Mintz noted that it had taken too long for the information to be made public.
“It works,” Mintz said. “It takes too long, but it does work, and we should be thankful we live under a system that has a Freedom of Information Act.”
In a statement issued following the announcement, the Clearing House said it was "disappointed" with the Court's decision.
"We are disappointed that the Court has declined our petitions, which deal with the protection of highly confidential bank information provided to the Federal Reserve. Fortunately, Congress was well aware of the sensitivity of disclosing this information. As part of the Dodd-Frank Act, Congress adopted a specific rule to ensure that in the future this confidential information will not be disclosed prematurely to the detriment of our financial system."
The Dodd-Frank Act makes it mandatory for the Fed to release information about which banks borrow from its discount window and how much the central bank lends, but the law required those details remain private until nearly two years have passed from the time of borrowing.