Oct. 6 (Bloomberg) -- The Federal Reserve won’t have to identify companies that got loans from the central bank until a U.S. appeals court reviews a federal judge’s disclosure order, according to a lawyer involved in the case.

A federal appeals court in New York today granted the Fed’s motion to keep the borrower information confidential while it seeks to overturn the lower court ruling, according to Scott Rose, a lawyer at New York-based Willkie Farr & Gallagher LLP, who won a Freedom of Information Act suit.

Rose represents Bloomberg News, a unit of Bloomberg LP, the New York-based company majority-owned by New York City Mayor Michael Bloomberg. The company won a ruling in Manhattan federal court Aug. 24 affirming the right of U.S. taxpayers to know about the financial firms that borrowed money.

The information sought may provide a window on the central bank’s tactics in its unprecedented bailout of the U.S. banking system. The Fed last year began extending credit directly to companies that aren’t banks for the first time since it was created in 1913. Total lending by the agency was $2.12 trillion on Sept. 30, the last available figure.

Divulging specifics about the loan program might touch off a run by depositors, unsettle shareholders and hurt the central bank’s “ability to perform important statutory functions at a time of economic upheaval,” Fed lawyers have said in legal filings.

Today’s Filing

Today’s filing couldn’t be immediately confirmed in court records. A hearing in the appeal was tentatively scheduled for the week of Jan. 4, Rose said. Fed spokesman David Skidmore and Rose declined to comment on the court ruling.

“What would they freak out about now?” asked Simon Johnson, a professor at the Massachusetts Institute of Technology and a former chief economist for the International Monetary Fund. “In the depth of the crisis, maybe something that would frighten people, but now? I don’t think that there is anything that would upset people particularly.”

Details about the borrowers and their collateral are “central to understanding and assessing the government’s response to the most cataclysmic financial crisis in America since the Great Depression,” attorneys for Bloomberg said in the suit.

The central bank contends that 231 pages of daily reports summarizing lending activity, which were prepared by the Federal Reserve Bank of New York for the Board of Governors in Washington, aren’t covered by FOIA. The statute obliges federal agencies to make government documents available to the press and public. The suit, filed in New York, doesn’t seek money damages.

Joined in Suit

The Fed was joined in the litigation by a banking cooperative, The Clearing House Association LLC, which also opposes disclosure. U.S. District Judge Loretta Preska in Manhattan ruled Sept. 21 that the organization may assist in the Fed appeal, clearing the way for the banks to pay lawyers to argue against disclosure.

The members of the Clearing House are ABN Amro Bank NV; Bank of America Corp.; The Bank of New York Mellon Corp.; Citigroup Inc.; Deutsche Bank AG; HSBC Holdings Plc; JPMorgan Chase & Co.; US Bancorp and Wells Fargo & Co.

Hearst Corp. is leading an effort by media organizations to file amicus, or “friend of the court,” briefs in support of Bloomberg’s lawsuit, assisted by David Schulz of New York-based Levine Sullivan Koch & Schulz LLP. Schulz said seven media companies have signed up in support of disclosure, including The New York Times Co., the Associated Press and Dow Jones & Co. Inc., publisher of the Wall Street Journal.

‘Rare Defeat’

“Preska’s grant of summary judgment to Bloomberg was a rare defeat for the Fed, which historically has succeeded in resisting virtually all FOIA requests for materials relating to its internal operations,” said Jonathan Donnellan, Hearst’s counsel, in an e-mail soliciting other media organizations.

The case is Bloomberg LP v. Board of Governors of the Federal Reserve System, 08-CV-9595, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Mark Pittman in New York at mpittman@bloomberg.net

Last Updated: October 6, 2009 11:32 EDT