Bernanke Versus The First Amendment

The Federal Reserve understandably does not want to give up the secrets of which banks were most in need of rescue as the credit markets melted down in late 2008. It might lead customers, shareholders, and customers to doubt the stability of those institutions. But, those firms are stable now or they are gone, so why should it make a difference what detail about what is, in the financial world, ancient history?

United States Court of Appeals for the Second Circuit said that Bloomberg, which sued in November 2008 under the Freedom of Information Act, to get the details of the Fed’s loans to banks, could have access to the documents.

The suit and its resolution raise a sticky subject which is that ultimately the federal court system can decide which government information should stay confidential and which should not. It is unlikely that a District Court judge would allow the media access to nuclear missile launch codes or the identity of CIA workers overseas. The information that the Fed has about which banks needed aid and which did not is clearly a less sensitive matter.

But, what would have happened if Bloomberg could have gained access to the Fed information in November 2008 and the initial suit and appeal process had not dragged the issue out for well over a year? There would have been a run on the most damaged banks, and the credit crisis would have been much worse. It is hard to make the case otherwise.

Douglas A. McIntyre