[JURIST] The US Court of Appeals for the Second Circuit [official website] ruled [opinion, PDF] Friday that the Federal Reserve [official website] must release information about loans it made to banks during April and May 2008, a key moment in the financial crisis. The information was sought by Bloomberg News under the Freedom of Information Act (FOIA) [text, PDF]. The Second Circuit affirmed a ruling by the US District Court for the Southern District of New York [official website] and rejected the Federal Reserve's argument that the records fall under FOIA exceptions [text] four and five and that the information was privileged. In rejecting the Federal Reserve's argument, the court said:
The Board and the Clearing House undertake to show that disclosure would harm the banks that borrowed (by disclosing their prior distress) and the banking system as a whole (because banks under stress may hesitate to seek relief or rescue), and that these harms will reduce the effectiveness of measures critical to the banking system. The arguments are plausible, and forcefully made. But a test that permits an agency to deny disclosure because the agency thinks it best to do so (or convinces a court to think so, by logic or deference) would undermine "the basic policy that disclosure, not secrecy, is the dominant objective of [FOIA]."
In a companion case brought by Fox News, the court ruled [opinion, PDF] that the Federal Reserve must disclose loan information between August 2007 and November 2008.
Earlier this week, Senate Democrats introduced a bill [JURIST report] to increase financial regulation in light of the recent crisis. In September, banking industry regulators defended themselves [JURIST report] in front of the US House of Representatives Financial Services Committee [official website]. President Barack Obama has called for greater oversight [JURIST report] of the banking industry. In July, Obama sent draft legislation to Congress that would put the Federal Reserve in charge [JURIST report] of regulating the largest financial firms.