The biggest U.S. commercial banks will take their fight against disclosure of Federal Reserve lending in 2008 to the Supreme Court if necessary, an industry-owned group's top lawyer said.
Continued legal appeals will delay or even block the first public look at details of the central bank's $2 trillion in emergency lending during the 2008 financial crisis. The Clearing House Association LLC, a group that includes Bank of America Corp. and JPMorgan Chase & Co., joined the Fed in defending a lawsuit brought by Bloomberg LP, the parent company of Bloomberg News, seeking release of records related to four Fed lending programs.
The Second U.S. Circuit Court of Appeals ruled March 19 that the central bank must release the documents. A three-judge panel of the appellate court rejected the Fed's argument that disclosure would stigmatize borrowers and discourage banks from seeking emergency help.
"Our member banks are very concerned about real-time disclosure of information that could cause a run on the banks," said Paul Saltzman, the group's general counsel, in an interview Tuesday. "We're not going to let the Second Circuit opinion stand without seeking a review."
Regardless of whether the Fed appeals, the Clearing House will seek a review by the full appellate court, Saltzman, 49, said at his office in New York.
If the ruling is unfavorable, the bank group would petition for a Supreme Court review, he said.
The 157-year-old, New York-based Clearing House Payments Co., which processes transactions among banks, is owned by its 20 members.
They include Citigroup Inc., Bank of New York Mellon Corp., Deutsche Bank AG, HSBC Holdings PLC, PNC Financial Services Group Inc., UBS AG, U.S. Bancorp and Wells Fargo & Co.
The Clearing House Association, a lobbying group with the same members, joined the lawsuit last September after an initial ruling against the central bank in a federal court in Manhattan.
The Fed is "reviewing the decision and considering our options," said Fed spokesman David Skidmore in Washington. He had no comment on Saltzman's plans.
Parties have until May 3 to file appeals.
"We'll wait to see the motion papers," said Thomas Golden, an attorney for Bloomberg who is a partner in Willkie Farr & Gallagher LLP in New York.
"The judges' decision was well-reasoned, and we doubt further appeals will yield a different result."
Bloomberg sued in November 2008 under the Freedom of Information Act after the Fed denied access to records of its four lending programs as well as of a loan the central bank made in connection with JPMorgan Chase's purchase of Bear Stearns Cos. in March 2008.
The central bank contends that 231 pages of daily reports summarizing lending activity, prepared by the Federal Reserve Bank of New York for the Fed's board of governors in Washington, are not covered by the information act, which obliges federal agencies to make government documents available to the press and the public. The suit does not seek money damages.
The Fed released lists on March 31 of assets it acquired in the 2008 rescue of Bear Stearns.
The New York Times Co., the Associated Press and Dow Jones & Co., publisher of the News Corp.-owned Wall Street Journal, are among media companies that have signed up as friends of the court in support of Bloomberg.
The Fed governors' "refusal to disclose the names of borrowers renders public oversight of its actions impossible — it prevents any assessment of the effectiveness of the board's actions and conceals any collusion, corruption, fraud or abuse that might have occurred," the news organizations said in a letter to the appeals panel.