Politicians and senior government officials routinely try to hide their backroom dealing from the public, but people have the right to know how their money is being (mis)used. A good example is the Federal Reserve, which has veered away from its proper job of protecting the dollar and now behaves as if should be able to secretly pick winners and losers in the financial system without appropriate oversight and public discussion. A column in the Wall Street Journal discusses the legal effort to force transparency on the Fed:
Facing a banking collapse that was unlike anything it had seen since the Great Depression, the Federal Reserve created $2 trillion of assets and debts during the past year to rescue the nation’s financial institutions. But it did not make clear to taxpayers just where all of this money went. Taxpayers—involuntary investors in this case—have a right to know who received loans, in what amounts, for which collateral, and why specific loans were made. The Fed says taxpayers don’t have the right to know these things. What’s more, it went to court to resist giving an accounting of its actions under the Freedom of Information Act. …Chief U.S. District Judge Loretta A. Preska in Manhattan disagreed with the Fed. In a 47-page ruling, she found that the facts and the law require the central bank to release its lending records. The Fed is now considering whether to appeal her ruling. …Since its creation in 1913, the Fed has been the watchdog over our money. Now it is running interference for banks that borrowed our money, and went so far as to insist to a federal judge that the public shouldn’t worry about what it does with our money. The law doesn’t allow the government to get away with secrecy based on a mere claim that some sort of damage would result if it released the information in question. …So far, there has been far too little accountability at the Fed for how it used taxpayer money to save banks that failed their shareholders and creditors by making bets that didn’t pay off.