Fed Reserve Ordered To Reveal Bail Out Companies
Reuters reports that the Federal Reserve was ordered by a federal district court to reveal the companies that received a government bailout. Judge Loretta Preska of the Southern District held that the Federal Reserve did not show that revealing the information would cause the companies to suffer imminent financial harm. Two Bloomberg News reporters filed the lawsuit after the Federal Reserve failed to make the disclosures pursuant to a request under the Freedom Of Information Act. The lawsuit is captioned: Bloomberg LP v. Board of Governors of the Federal Reserve System, U.S. District Court, Southern District of New York (Manhattan), Case No. 08-9595.
If the Federal Reserve discloses this information, we can finally see how healthy our economy really is. The recent rally was predicated on the recovery of the banks. If the truth is that the banks have been propped up by massive government loans, then we may be in for some rough economic weather. A number of economists had proposed nationalization of failed financial services companies to parallel the FDIC seizure of failed banks. This is politically unpalatable, but depending on the extent of the government bailout, it might have happened under another name.