Alert March 23, 2010

Second Circuit Holds that FRB Must Release Information Relating to Loans to Financial Institutions

The U.S. Court of Appeals for the Second Circuit (the “Second Circuit”) held that the FRB must disclose the identity of borrowers, amount borrowed, loan origination and maturity dates and collateral given for loans made at the discount window or other financial assistance to financial institutions.  The decision affirmed a district court ruling that had ordered the FRB to grant Bloomberg News’ Freedom of Information Act (“FOIA”) request seeking the release of documents disclosing such information.  The FRB had denied the FOIA requests, asserting that the information was privileged and confidential and therefore exempt from disclosure.  The Second Circuit held that the FOIA “sets forth no basis for the exemption the [FRB] asks us to read into it.”  The Second Circuit further stated that “[i]f the [FRB] believes such an exemption would better serve the national interest, it should ask Congress to amend the statute.”  Notably, the financial reform legislation that has passed the House and the financial reform bill pending in the Senate both would require the FRB to disclose such information.  In a related decision, the Second Circuit held that the FRB must search the records of its Reserve Bank to comply with a separate FOIA request by Fox News LLC seeking information on loans to financial institutions.  The FRB has indicated that it is considering its options for reconsideration or appeal of these decisions.