Introduction to The Federal Reserve Cases

Responding to the financial meltdown of last fall, the Federal Reserve initiated a wide array of financial “bailout” programs, in which undisclosed amounts of assets were handed out to failing companies throughout the United States and abroad. Following these bailouts, outrage took hold of the American people at large. From Congressmen to taxi-cab drivers, all of a sudden people had become acutely aware of the man Ben Bernanke and his unwillingness to answer those questions that most concerned the American people, namely, who were the beneficiaries of the new corporate welfare state being run by the Fed? Thus, a political movement took hold demanding transparency from the Fed – in Congress this came in the form of an “Audit the Fed Bill” - in the Courts it took the form of two separate law suits requesting disclosure of the Fed’s loan programs under The Freedom of Information Act.

The first suit was brought by Fox news and was an utter failure - more on this in a later article.
-Fox News Network, LLC v. Board of Governors of the Federal Reserve System.

Luckily, however, the second suit was an enormous success which resulted in a court order requiring the Fed to disclose information regarding who the beneficiaries of the emergencies loan programs were and what the terms of these programs were.

-Bloomberg LP v. Board of Governors of the Federal Reserve System.

But despite this success, it must be noted that the Bloomberg decision did not stem from any judicial or legal policy that was anti-Fed secrecy or authority. Instead, the Court’s decision hinged on a technicality concerning whether the Fed fell under the definition of “agency” as set forth by the Freedom of Information Act. Therefore, though the District Court decision was a victory for those who wish to shine light on the inner workings of the Federal Reserve, it would be erroneous to consider the N.Y. District Court’s decision as any kind of moral or political victory for the liberty and sound money movement. Simply put, the decision was one of statutory interpretation and not policy consideration. In fact, where the court did consider policy, the court held secrecy and non-disclosure to be well within the law - such was the nature of the Fox decision.

What this all means is that although Bloomberg’s victory presents a very real possibility that both the Fed and those who profit from its corporate welfare system may end up being held accountable for their actions, recent developments indicate a roughly equivalent possibility that Bloomberg will be reversed by the 2nd Circuit Court of Appeals. To evaluate the validity of the Fed’s appeal the legal arguments included within the Fed’s assignment of error must be closely analyzed. This analysis will be featured in the next Federal Reserve entry.