A federal appeals court ruled on Friday that the Federal Reserve Board must hand over records about its $2 trillion emergency lending program that were requested by Bloomberg LP in a Freedom of Information Act lawsuit.
A three-judge panel of the U.S. Court of Appeals in New York City (2nd Cir.) upheld a lower court’s decision to release the documents, rejecting the Fed’s argument that the records could be withheld due to a FOIA exemption that protects trade secrets. 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 — they detailed institutions that accepted funds in the unprecedented government bailout of the banking industry — 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.
Bloomberg waged a two-year battle for the records’ release after the Fed denied the news organization’s request for documents about institutions that accepted funds from the $2 trillion lending program. The Fed said revealing the bailed-out institutions could cause investors to lose confidence in the banks’ financial security.
It is unclear whether the Fed will appeal Friday’s decision.