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Fed’s FOIA Release Provides Lots of Documents, Headaches

April 12, 2011

Photo by mandiberg. Some rights reserved.

Still trying to make sense of the recently released documents disclosing the Federal Reserve’s discount lending activity during the height of the financial crisis? Well get in line, and don’t expect too many answers anytime soon.

The documents, released on March 31st as a result of FOIA (Freedom of Information Act) requests by Bloomberg and Fox News, were delivered via 894 PDFs on CD-ROM discs to only a handful of media outlets. They were supposedly meant to provide some insight into who was borrowing how much from the Fed’s oldest lending program of last resort. The only things they seem to provide in abundance however, are headaches and questions.

While some news sources, The New York Times, Bloomberg and The Wall Street Journal to name a few, have published stories using data harvested from these documents, it remains largely unclear how much “juicy” information or telling facts they contain. One could reasonably assume that the Fed prefers a lack of clarity, judging by the cumbersome method in which it released the materials.

There are more than a few theories why it took a lengthy court battle and a rejection by the Supreme Court to hear the case before the Fed complied with these FOIA requests. One is that the potential disclosure of a bank’s use of the discount window would make it harder for organizations to utilize the program without facing questions about their solvency.  This was the sentiment voiced by Jamie Dimon, chairman and chief executive of JPMorgan Chase & Co, and Donald Kohn, a senior fellow at the Brookings Institution and a former Fed vice-chairman. These documents reveal the identities of discount window borrowers for the first time since the program’s creation 97 years ago. The fear of releasing these documents could be partially attributed to this unprecedented disclosure.

There are others who feel having this information out in the open is a good thing. Among them is Marvin Goodfriend, an economist at Carnegie Mellon University and former policy adviser at the Richmond Fed. “It is in the interest of a central bank to put a premium on protecting its reputation, and in the modern world, that means it should do everything to be as transparent as possible,” Goodfriend said in a March 31st Bloomberg article by Craig Torres.

If you don’t want to wait to see what other stories come out as people delve further into the data, or if you just want to check them out for yourself,  Pro Publica has 886 of the PDFs available on their website.

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