Bailout records not yet disclosed despite high court denial

The U.S. Supreme Court on Monday declined to hear an appeal by a coalition of banks in their attempt to block the Federal Reserve from releasing to the news media information about emergency federal bailout funds they received.

The U.S. Court of Appeals in New York City (2nd Cir.) previously ordered disclosure of the information under the federal Freedom of Information Act to Bloomberg LP and Fox News Network LLC. As of Tuesday, Bloomberg said it has not yet received the requested documents.

"We have not received the information from the banks, and they are being vague, if not cagey, about complying with the court’s order," said Charles Glasser, global media counsel for Bloomberg News.

The court's denial of review in the case ended more than two years of legal battling for disclosure of the information contained in Federal Reserve documents. The challenge began in 2008 after separate FOIA requests were submitted by Fox News and Bloomberg, both seeking information on the federal bailout. The Federal Reserve refused to disclose information on the names of borrowing banks, the amount of money they received and the dates of the loans, citing FOIA Exemption 4, which protects from mandatory disclosure trade secrets and confidential business information.

The Second Circuit rejected the Federal Reserve's argument that the records could be withheld under Exemption 4. To be exempt, the information must be confidential, commercial or financial, and be obtained by the federal agency from an organization or person.

“Considering the language of FOIA, it’s disgraceful that the administration dragged its heels and fought against disclosure of this highly important information in the public interest,” Glasser said.

The Second Circuit held that, while the requested records were financial in nature because they concerned the receipt of government funding, the records were not obtained from an organization or person outside the government. The records requested by Bloomberg are those of the Federal Reserve itself because they are internal documents describing the loans that were actually made, not information contained in applications that were received by the agency and from private banking institutions, the court held.

"The fact that information about an individual can sometimes be inferred from information generated within an agency does not mean that such information was obtained from that person within the meaning of FOIA," the opinion read.

Unlike Bloomberg, Fox News lost its case at the trial court level. However, the Second Circuit found that Exemption 4 did not apply and ordered the documents released.

Clearing House Association LLC, a coalition of banks that received the funds, was the sole party petitioning for Supreme Court review. Its action was not joined by the Federal Reserve, who had represented its interest in both lower courts. Glasser said that the Federal Reserve probably realized they were fighting a losing battle. “The White House, or . . . the Solicitor General who works for the White House, fought against disclosure all the way up to and including the Second Circuit. Then, I think, they saw the writing on the wall and they voted present,” he said.

Though the Supreme Court's denial to hear the case has not yet resulted in the release of the requested documents, it remains a win for the FOIA, Glasser added. “I think a lot remains to be seen. But the precedential value certainly extends past these particular documents, the fact that in certain circumstances, on certain facts, the Federal Reserve is required to comply with FOIA,” he said. “So this idea that the [Federal Reserve] is this absolutely autonomous, free-floating, sort of semi-private entity outside the realm of FOIA, I think that’s been knocked down.”

The Reporters Committee for Freedom of the Press filed a friend-of-the-court brief in the Bloomberg case before the Second Circuit, which was joined by 13 other media entities. The brief argued that "the public interest in disclosure should trump any demonstrated risk of harm to the borrowers." The brief noted that the public has a right to know "basic information about the [Federal Reserve's] distribution of $2.2 trillion in taxpayer funds."

Phone calls to Fox News were not immediately returned.