Bloomberg News is trying to force disclosure of what the Fed has accepted for loan collateral:
The Fed is obviously fighting revelation because the assets are garbage. If they were worth something, the Fed wouldn't be so afraid of disclosure. I wouldn't be surprised if banks dumped their worst assets on the Fed and kept the best assets to shore up their own balance sheets. The relevant question to ask now is what the Fed plans to do if the collateral it has accepted becomes completely worthless. Will it call in its TARP loans, or just write them off? (Hint: Write offs would be a stealth means of running Helicopter Ben's printing press.)
Meanwhile, I'll be hanging on to my gold, thank you very much.
The Fed staff planned to recommend that Bloomberg's request be denied under an exemption protecting ``confidential commercial information,'' according to Alison Thro, the Fed's FOIA Service Center senior counsel. The Fed in Washington has about 30 pages pertaining to the request, Thro said today before the filing of the suit. The bulk of the documents Bloomberg sought are at the Federal Reserve Bank of New York, which she said isn't subject to the freedom of information law.Since I'm not an attorney, it's hard for me to say whether the Fed has legal grounds to deny an FOIA request. The Fed may be able to delay a response indefinitely or, in the finest traditions of government service, simply issue heavily redacted pages from its balance sheet. The assets could thus be revealed while banks' account numbers are blacked out. That in itself may be fairly revealing; assets named according to certain SIVs or mortgage pools would be easily traceable to their parent institution anyway.
The Fed is obviously fighting revelation because the assets are garbage. If they were worth something, the Fed wouldn't be so afraid of disclosure. I wouldn't be surprised if banks dumped their worst assets on the Fed and kept the best assets to shore up their own balance sheets. The relevant question to ask now is what the Fed plans to do if the collateral it has accepted becomes completely worthless. Will it call in its TARP loans, or just write them off? (Hint: Write offs would be a stealth means of running Helicopter Ben's printing press.)
Meanwhile, I'll be hanging on to my gold, thank you very much.
