Crocodile Tears are flowing at the Federal Reserve and US Treasury after Manhattans district judge Loretta Preska’s August 24 decision to allow an audit of the Fed’s ballooning balance sheet. Under the freedom of information act, this would allow taxpayers who are unwilling investors in this racketeering game to see who has borrowed their money under the Fed’s new lending programs to enable zombie banks a new lease on a life they didn’t earn and don’t deserve.
In a WSJ interview Timmy Geithner moaned yesterday that an audit of the Fed, would be problematic for the country. Now the Federal Reserve board of governors filed a motion to delay Loretta Preska’s decision that the identities of borrowers under the Feds 11 lending programes be made public by Aug 31.
From Bloomberg:
“The immediate release of these documents will destroy the board’s claims of exemption and right of appellate review,” the motion said. “The institutions whose names and information would be disclosed will also suffer irreparable harm.”
The Fed’s “ability to effectively manage the current, and any future, financial crisis” would be impaired, according to the motion. It said “significant harms” could befall the U.S. economy as well.
The central bank didn’t say when it would file its appeal.
Fed lawyer Kit Wheatley told Preska in a conference call today that she did not know how long it would take for the Fed board to search the New York Fed for records. “We really don’t know what’s in New York,” Wheatley said. “We don’t control the system of record-keeping in New York.”
The Fed’s lawyer went on to say that she did not know what records would fall under a “delegated function,” which would be a task assigned to the New York Fed.
Preska interrupted Wheatley, saying that “Ms. Wheatley, I held that’s not the standard. You didn’t search under the regulation. You’re supposed to search under the regulation.”
Preska scheduled another conference call for 2:30 p.m. today to discuss the schedule for a search of the New York Fed.
“Nobody is going to deny you your right to an appeal,” Preska said on the call, “We’re going to do it expeditiously, not in a piecemeal fashion and hand it all off to the Second Circuit.”
The Fed has refused to name the financial firms it lent to or disclose the amounts or the assets put up as collateral under the emergency programs, saying disclosure might set off a run by depositors and unsettle shareholders.
