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A federal appellate court has declined the Federal Reserve's request to reconsider its decision ordering the release of records reflecting bank loans extended by the Fed during the unprecedented taxpayer-funded financial bailout.
On August 20, the full bench of the U.S. Court of Appeals in New York City (2nd Cir.) refused the Fed’s request to reconsider a unanimous three-judge panel’s March 19 ruling in Bloomberg LP's Freedom of Information Act suit for access to records relating to the its $2 trillion emergency lending program.
The March 2010 appellate panel ruling upheld a lower court's decision to release the documents, rejecting the Fed's arguments that the records should be withheld due to a FOIA exemption that protects trade secrets, and that revealing the bailed-out institutions could cause investors to lose confidence in the banks' financial security.
To qualify for a trade-secret exemption, information must satisfy a three-part test that requires it to be confidential, commercial or financial in nature and obtained from an organization or person.
"The court really focused on the requirement in FOIA that the information in question has to be obtained by the government from a private party [to qualify for an exemption]," said Wilkie Farr & Gallagher partner Thomas Golden, who represented Bloomberg in the lawsuit.
Though the requested records were financial in nature, the court said they were considered records of the Fed because Bloomberg requested information on loans that were actually made, not on applications that were received and therefore obtained from a private banking institution.
"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.
The Fed has seven days to hand over the records to Bloomberg unless the court stays its decision, which would give the Fed 90 days to ask the nation’s high court to review the case.
The Clearing House Association LLC — the nation’s oldest banking association that represents Bank of America, Citigroup, J.P. Morgan Chase and Wells Fargo, among others — joined the suit in September of last year alongside the Fed, and has reportedly told Bloomberg it plans to ask the U.S. Supreme Court to hear the case.
The Reporters Committee for Freedom of the Press joined 12 other media organizations in filing a friend-of-the-court brief in support of Bloomberg’s effort to access the documents.