Fed Refuses to Disclose Recipients of $2 Trillion in Emergency Loans of Taxpayer Dollars [Can Somebody Please Take the Damn Economy Away from Paulson? Part 3]

by Damozel | What else is new?  I for one have grown use to the Bush administration making bad decisions on my behalf and on being able to do sweet F.A. about it.  The bastards really are grinding us down and there's nothing we can do about it because Congress and the Bush administration decided for us that we must put our trust in Paulson.

Bloomberg has the story.  I'm so used to this sort of thing by now that I had to work to scrape up any really satisfying sense of outrage.  But I got there finally.   That's $2 trillion contributed to the treasury by you, me and the UAW members whom the GOP is so determined to demonize that none of us will ever see returned to the public in any form, I'm guessing. 

Meanwhile, in the words of Georgia Democrat David Scott, we taxpayers have been well and truly bamboozled.  

The government doesn't want to cough up this information, according to an expert quoted in the piece, because then "we would know the potential losses that the government may take and that’s what they don’t want us to know.”"  Bloomberg reminds us:

Total Fed lending exceeded $2 trillion for the first time Nov. 6. It rose by 138 percent, or $1.23 trillion, in the 12 weeks since Sept. 14, when central bank governors relaxed collateral standards to accept securities that weren’t rated AAA.

And at Blogging Stocks, Jonathan Berr---a former Bloomberg employee--adds:

The government wants taxpayers to take its word for how it's spending an ungodly amount of money. How gullible does the Fed think the American people are?

Oh, man.  We know the answer to that one.  Really really REALLY gullible.  But of course that is not really the right question.  The right question is this:  How powerless does the Fed think the American people are?  And we know the answer to that as well.

Berr points out what their unwillingness to tell us how they are spending our money might imply.

How do we know that the Brooklyn Bridge is not part of the collateral being offered? Maybe there are strip clubs. Don't laugh. The government has wound up in the gentleman's club business before.

Chances are that asset-back securities and other paper tied to leveraged buyouts, consumer debt and lord knows what other kinds of garbage lies on the banks balance sheets. Yet the Fed still wants to protect the the identities of the banks who are essentially living on the government dole. That's outrageous. (Blogging Stocks)

Outrageous is right. Bloomberg requested the names of the recipients of the $2 trillion and the assets that are being accepted as collateral.  So...

Bloomberg filed suit Nov. 7 under the U.S. Freedom of Information Act requesting details about the terms of 11 Fed lending programs, most created during the deepest financial crisis since the Great Depression.

The Fed responded Dec. 8, saying it’s allowed to withhold internal memos as well as information about trade secrets and commercial information. The institution confirmed that a records search found 231 pages of documents pertaining to some of the requests....

In response to Bloomberg’s request, the Fed said the U.S. is facing “an unprecedented crisis” in which “loss in confidence in and between financial institutions can occur with lightning speed and devastating effects.”(Bloomberg)

In other words, the Fed is protecting us from ourselves. Oh, I see.  Bernanke and Paulson might have promised increased transparency in September, but increased transparency might not be good for, um, us.

You know what, I am resigned to the Fed's secrecy and sleight of hand, but it really galls me to have its spokespeople INSULT MY INTELLIGENCE.  As one of my co-bloggers expresses it, "They're pissing on our heads and telling us it's just a natural and inevitable effect of global recession."

“Notwithstanding calls for enhanced transparency, the Board must protect against the substantial, multiple harms that might result from disclosure,” Jennifer J. Johnson, the secretary for the Fed’s Board of Governors, said in a letter e-mailed to Bloomberg News.

“In its considered judgment and in view of current circumstances, it would be a dangerous step to release this otherwise confidential information,” she wrote.(Bloomberg)

Oh really?  Maybe the people who provide the cash should get to be the judge of that.  And in any case, who, exactly, will be endangered?  Specificity please!

Devastating effects for whom? And like what?

You mean, like some people might lose their jobs or their homes? Or some bankers might have to pay more dues for security in their gated communities?  (Corrente)

Carlos Mendez, "a senior managing director at New York-based ICP Capital LLC," begs to differ on the question of what is, and is not, good for taxpayers. 

“Americans don’t want to get blindsided anymore,” Mendez said in an interview. “They don’t want it sugarcoated or whitewashed. They want the complete truth. The truth is we can’t take all the pain right now.”  (Bloomberg)

Amen to that.  Because there's this as well:

Just to underline the mindboggling insanity of all this: We -- and by "we," I mean "they" -- have put two trillion dollars, about 1/20 of world GDP, under the control of one man, with no checks and no accountability, and we don't know where the money went, or to whom. What we do know is that there has been no visible effect, and what we can assume is that it's going to the very same people who caused the problem. Does this sound like Constitutional government to you? To me, it sounds like a financial dictatorship.(Corrente)

As for the Fed's interpretation of the FOIA, there are those who beg to differ on that issue as well.

The Bloomberg lawsuit said the collateral lists “are central to understanding and assessing the government’s response to the most cataclysmic financial crisis in America since the Great Depression.”

In response, the Fed argued that the trade-secret exemption could be expanded to include potential harm to any of the central bank’s customers, said Bruce Johnson, a lawyer at Davis Wright Tremaine LLP in Seattle. That expansion is not contained in the freedom-of-information law, Johnson said.

“I understand where they are coming from bureaucratically, but that means it’s all the more necessary for taxpayers to know what exactly is going on because of all the money that is being hurled at the banking system,” Johnson said. (Bloomberg)

Lambert at Corrente translates the Fed's response, in case you still haven't got there on your own: 

"Financial dictator Paulson to American people: We're not saying who got your two trillion, so fuck yourself."

Jill from Brilliant at Breakfast further explains in case you still can't quite believe WHAT IS HAPPENING RIGHT IN FRONT OF YOUR--AND MY--VERY EYES:

[T]his bunch has been lying to and stealing from the American people for eight years; why should they stop now? The problem now is that they have absolutely no problem with leaving a second Great Depression in their wake. After all, they got theirs, so the hell with everyone else.

Memeorandum has other reactions.

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