FED STILL REFUSES TO IDENTIFY RECIPIENTS OF OUR MONEY

Bloomberg is reporting that the Fed Refuses to Release Bank Lending Data, Insists on Secrecy.    

The Fed refused yesterday to disclose the names of the borrowers and the loans, alleging that it would cast “a stigma” on recipients of more than $1.9 trillion of emergency credit from U.S. taxpayers and the assets the central bank is accepting as collateral.

Transparency is exactly what is needed to get us out of this mess, yet the government continues to obfuscate the data and hide the private parties that are benefiting from taxpayer dollars.  In January 1932, a couple years into the Great Depression, Herbert Hoover asked Congress to create the Reconstruction Finance Corporation - an entity that lent money to banks and private businesses in order to prop them up during the ordeal.  Like the Fed now, the RFC refused to disclose the identities of the recipients of the taxpayers' money.  It took an act of Congress in July of 1932 to force the RFC to disclose the parties that benefited from the fund.  What was discovered was that the government was playing favorites - picking and choosing the winners and losers.  

The administration claims now that disclosure will undermine confidence in the parties that receive the funds.  What will undermine confidence in the system is the failure of transparency.  If it turns out that the government has been playing favorites, then confidence will be lost in those institutions as well as in government itself.  The only way to restore confidence is full disclosure.  Government is about rules and the equal application of those rules to the people.  Hiding the truth leads to fear and suspicion that the administration of justice and government aid is unequal and unfair.  Hiding the truth undermines our very system of government.

I suspect that most people believe there has been some degree of favoritism already in the administration of the bailout funds, but if we are serious about restoring confidence in the markets, it is imperative that we have faith in our government. That faith can only come about with full disclosure.