NOVEMBER 10, 2008
In a blatant disregard for government transparency, the nation’s central banking system is refusing to disclose the recipients of nearly $2 trillion in emergency loans from U.S. taxpayers.
Although the Federal Reserve vowed to comply with congressional demands for transparency in the $700 billion bailout of the nation’s financial system, it has secretly lent almost $2 trillion in separate rescue programs that didn’t require approval by Congress and therefore have allowed the agency to keep the beneficiaries private.
This week an internationally known media outlet specializing in financial news announced a lawsuit against the Federal Reserve to obtain the information. In an effort to disclose where the exorbitant amounts of tax dollars are going and what securities banks are pledging in return, the news organization requested the identities of the loan recipients under the Freedom of Information Act (FOIA). The government has blown off the request, making litigation necessary.
The Federal Reserve made the mystery loans under the terms of 11 relatively obscure programs, eight of them created in the last year and a half. They have pushed federal lending to over $2 trillion for the fir the first time ever, an increase of 14% in a period of only seven weeks since the Federal Reserve relaxed collateral standards.
The abrupt decision to accept troubled assets as collateral for public loans was made in mid September by the agency’s board of governors, which is appointed by the president. Before that, the Federal Reserve accepted mostly top-rated government and asset-backed securities as collateral.
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