US Fed won’t join banks in appeal to Supreme Court

* Appeals court had ordered disclosure of bailout details

* Group of U.S. and foreign banks appealing March ruling

* Bloomberg, Fox News won in lower court

By Jonathan Stempel

NEW YORK, Oct 26 (BestGrowthStock) – The Federal Reserve has
decided not to join major banks in asking the U.S. Supreme
Court to let the central bank keep secret the details of its
emergency lending programs during the financial crisis.

A group representing U.S. and European commercial banks on
Tuesday appealed to the Supreme Court asking it not to force
the Fed to disclose details of its bailouts, as a federal
appeals court in New York had ordered in March.

The group said forcing disclosure could lead markets and
customers to worry about banks’ health, jeopardizing their
business prospects.

The Fed did not explain why it chose not to join the banks’
appeal. In a statement, it said it “will await a determination
from the courts and will comply fully with any final order. The
Federal Reserve remains committed to timely and responsible
transparency of its operations.”

Bloomberg LP, the parent of Bloomberg News, and News Corp’s
(TWX.N: ) Fox News Network had sought bailout details under the
federal Freedom of Information Act, which requires government
agencies to make documents public.

The Supreme Court is expected in coming weeks to consider
whether to review the unanimous March ruling by the 2nd U.S.
Circuit Court of Appeals in New York ordering the Fed to
release details of programs it adopted starting in late 2007 to
shore up the financial system.

These programs, along with other measures to support the
economy, more than doubled the central bank’s balance sheet to
well over $2 trillion, a process that accelerated after Lehman
Brothers Holdings Inc’s (LEHMQ.PK: ) September 2008 collapse.

“The Fed has historically argued that you could have bank
runs if you had disclosure, and that it did not want to enable
these by having super-timely disclosure of problems,” said
William Ford, a professor at Middle Tennessee State University
and former president of the Federal Reserve bank in Atlanta.
“But we’re already moving in the direction of full and
immediate disclosure, quite aside from the legal battles.”

Walker Todd, research fellow at the American Institute for
Economic Research and a former Fed legal officer in Cleveland
and New York, said the banks group — the Clearing House
Association LLC — might be more likely to have its appeal
heard without the Fed’s involvement.

“Courts might be more sensitive to allegations of
substantive and immediate harm coming from private parties than
from a governmental agency such as the Fed,” he said.

In its March ruling, the Second Circuit had ordered the
disclosure of borrowers’ names, loan amounts and loan dates for
transactions at the Fed’s discount window and from its
emergency lending facilities.

Chief Judge Dennis Jacobs wrote for a three-judge panel
that to let the Fed deny disclosure because it thinks it best
“would undermine the basic policy that disclosure, not secrecy,
is the dominant objective of (FOIA).”

The Clearing House, in its papers filed Tuesday, argued
that this struck an improper balance.

It said disclosure may harm banks “by allowing the public
to observe their borrowing patterns during the recent financial
crisis and draw inferences — whether justified or not — about
their current financial conditions.”

The discount window is the program through which the 12
Federal Reserve Banks made short-term loans.

Clearing House members include Bank of America Corp
(BAC.N: ), Bank of New York Mellon Corp (BK.N: ), Citigroup Inc
(C.N: ), Deutsche Bank AG (DBKGn.DE: ), HSBC Holdings Plc (HSBA.L: ),
JPMorgan Chase & Co (JPM.N: ), UBS AG (UBSN.VX: ), US Bancorp
(USB.N: ) and Wells Fargo & Co (WFC.N: ).

The case is The Clearing House Association LLC v. Bloomberg
LP et al, U.S. Supreme Court.
(Reporting by Jonathan Stempel in New York; Additional
reporting by Pedro Nicolaci da Costa and Jeremy Pelofsky in
Washington, D.C.; Editing by Gary Hill)

US Fed won’t join banks in appeal to Supreme Court