The U.S. Supreme Court should reject a banking industry appeal aimed at stopping release of details about the Federal Reserve’s emergency 2008 bank loans, the Obama administration said as it changed course on the corporate secrecy case.
A group representing the largest U.S. commercial banks is seeking review of a federal appeals court decision requiring disclosure of the lending records. Government lawyers yesterday urged the justices to leave that ruling intact, even while criticizing it as improperly forcing release of commercially sensitive information.
The opposition of the government, which until now had fought alongside the banking industry against disclosure, reduces the likelihood that the justices will agree to hear the case. The government said the underlying issues lacked enough practical significance to warrant Supreme Court scrutiny in part because Congress last year laid out new rules for disclosing Fed loans.
“Congress has resolved the question of whether and when the type of information at issue in this case must be disclosed” in the future, the administration said in a brief filed by acting Solicitor General Neal Katyal, President Barack Obama’s top Supreme Court lawyer.
The Fed at one point had sought to join the banking industry in seeking high court review, only to be overruled by Katyal, according to court documents.
Bloomberg LP, the parent company of Bloomberg News, sued the Fed for the release of the information under the Freedom of Information Act, known as FOIA. Bloomberg is seeking to learn the names of the banks that received loans from the Fed’s Discount Window in April and May 2008, along with the amounts they received and the collateral they promised.
The company initially requested similar information for aid recipients under three other Fed emergency programs. The central bank released details for those facilities and others in December, under legislation Congress adopted last year. Lawmakers exempted Discount Window lending from those December disclosures.
Bloomberg yesterday urged the Supreme Court not to hear the appeal, saying the appeals court reached the right conclusion that FOIA requires the Fed to release the loan data.
“Disclosure of the remaining information encompassed by Bloomberg’s request has been delayed for far too long,” the company argued. “This court ought not to allow the Clearing House’s petition to extend that delay even longer.”
Trial Court Ruling
A federal trial judge ruled in 2009 that the Fed had to disclose the records, and a New York-based appeals court upheld that ruling.
In its appeal, the Clearing House Association LLC said the appeals court ruling “would impair numerous agency programs that depend on assuring third parties that details of their commercial transactions with the government will remain confidential.”
The trade group said the Fed has never disclosed the identities of borrowers since the creation in 1914 of its Discount Window lending program, which provides short-term funding to financial institutions.
The New York-based Clearing House, which has processed payments among banks since 1853, includes Bank of America NA, Bank of New York Mellon, Citibank NA, Deutsche Bank Trust Co. Americas, HSBC Bank USA NA, JPMorgan Chase Bank NA, U.S. Bank NA and Wells Fargo Bank NA.
In trying to shield the documents from disclosure, the Clearing House is invoking a FOIA exemption that covers “trade secrets and commercial or financial information obtained from a person and privileged or confidential.”
That provision has since been superseded for the purposes of Discount Window lending. Under the Wall Street Reform and Consumer Protection Act, known as Dodd-Frank, Discount Window loans made after July 21, 2010, would have to be released following a two-year lag.
The case is Clearing House Association v. Bloomberg, 10-543.