NEW YORK — A federal appeals court ruled Friday that the U.S. Federal Reserve's board of governors must disclose documents related to individual borrowing from its discount window and other "last resort" lending programs.
In separate rulings Friday, the U.S. Second Circuit Court of Appeals upheld a lower court's decision granting a request by Bloomberg LP's Bloomberg News for documents related to usage of the Fed's discount window and other programs and vacated a ruling denying a request for documents by Fox News Network LLC's Fox Business Network.
Both news organizations had sought Fed documents under the Freedom of Information Act and ultimately brought lawsuits after the Fed denied their requests.
The Fed's board of governors and a banking group had argued, in part, that disclosure would harm the banks that borrowed from one of 12 Federal Reserve banks and could impact the banking system as a whole if struggling banks refused to access the "last resort" lending programs because of disclosure requirements.
"The requirement of disclosure under FOIA and its proper limits are matters of congressional policy," U.S. Circuit Judge Dennis Jacobs wrote in the Bloomberg decision. "The statute as written by Congress sets forth no basis for the exemption the Board asks us to read into it. If the Board believes such an exemption would better serve the national interest, it should ask Congress to amend the statute."
In a statement, a Fed spokesman said, "We are reviewing the decision and considering our options for reconsideration or appeal."
Bloomberg sued the Fed's board of governors in 2008 seeking records related to collateral posted in order to access the Fed's Primary Dealer Credit Facility, the discount window, the Term Securities Lending Facility and the Term Auction Facility between April 4, 2008, and May 20, 2008.
Bloomberg also sought information about a portfolio of securities supporting a loan extended by the Fed in connection with JPMorgan Chase & Co.'s acquisition of Bear Stearns.
Fox Business separately sued, seeking access to disclosure about borrowers, their loan amounts and pledged collateral after the Fed temporarily reduced rates and lengthened the loan terms for money lent through the discount window.
In December, several media companies, including Dow Jones & Co., The New York Times Co., the Associated Press and Reuters America LLC, filed an amicus brief with the circuit court backing Bloomberg's request.
News Corp. is the parent company of Dow Jones & Co., the publisher of this newswire and the owner of Fox News. Reuters America LLC is a subsidiary of Thomson Reuters Corp.
Paul Saltzman, general counsel for The Clearing House, an association of major commercial banks that joined the Fed in opposing disclosure in the Bloomberg case, said it was "disappointed" in the decision.
"We are reviewing the court's decision, including considering whether to seek rehearing by the full Second Circuit and ultimately review by the U.S. Supreme Court," Saltzman said. "In its decision, the Second Circuit declined to follow the decisions of other circuit courts recognizing that disclosure of certain confidential information can impair the effectiveness of government programs, such as lending programs."
Matthew M. Collette, a lawyer for the Fed's board of governors, argued in January that banks would be less likely to use the discount window and other lending of last resort programs if they know their usage would be made public.
He said at the time that accessing the window carries a negative connotation if usage was made public, even when a healthy bank suffering a short-term liquidity issue does it.
As part of its ruling, the appeals court ordered further searches of lending records held at the individual Federal Reserve banks that are considered administrative records of the Fed board.
The case was remanded to the district court to determine if the fruits of those additional searches must be disclosed.
