Okay, not to deny there are legitimate issues here, but there is in fact such a thing as a stigma for taking part in any number of the Fed's emergency swap and liquidity programs: the TAF, the TALF, the AMLF, the PDCF, the TSLF, the CPFF, the MMIFF, and soon, if god loves us, the MILF. Someone points this out in the Bloomberg article.By SilentPatriot Saturday Dec 13, 2008 1:01pm
Who could have predicted that the Federal Reserve would abuse its authority by giving away over $2 trillion in "emergency loans" and then refuse to disclose the recipients of those loans when faced with a FOIA request by Bloomberg?
The Federal Reserve refused a request by Bloomberg News to disclose the recipients of more than $2 trillion of emergency loans from U.S. taxpayers and the assets the central bank is accepting as collateral.
Bloomberg filed suit Nov. 7 under the U.S. Freedom of Information Act requesting details about the terms of 11 Fed lending programs, most created during the deepest financial crisis since the Great Depression.
The Fed responded Dec. 8, saying it’s allowed to withhold internal memos as well as information about trade secrets and commercial information. The institution confirmed that a records search found 231 pages of documents pertaining to some of the requests.
“If they told us what they held, we would know the potential losses that the government may take and that’s what they don’t want us to know,” said Carlos Mendez, a senior managing director at New York-based ICP Capital LLC, which oversees $22 billion in assets.
Hmmm... I wonder why they would want to hide from the public who is getting all that money? It's sometimes hard to wrap your head around that huge sum of money, but when all is said and done, that is our money. We deserve to know who's getting it.
The purpose of these is to stop the panic. The Fed has had the entire financial system on life support. Its pretty hard to overstate how insane it is that the Fed has to step in to support commercial paper and money markets which are super short-term. Will it work? Who the fuck knows. The worry though is that if it becomes known a company is backed by one of these programs it will trigger a further credit freeze which will then really piss away taxpayer money, undermining the whole purpose of the program in the first place. Is this true/likely? Super smartypants Willem Buiter actually calls bullshit on the entire stigma argument. But the Fed seems to not want to risk finding out. Central banks everywhere have in fact designed these things to avoid creating a stigma for participants, so at the very least its no idle concern.
It would be nice to acknowledge this stuff instead of doing the snotty "Hmmm... I wonder why they would want to hide?" thing. We can argue over which company accessed the CPFF when we're all hobos dueling over tins of baked beans. Besides, everyone knows they gave the money to Halliburton to renovate Milton Friedman's grave.