(CN) – Two Bloomberg reporters won their bid to view records detailing the Federal Reserve’s actions in early 2008, after the nation’s economy took a nosedive. A federal judge in New York ordered the Fed’s board of governors to expand its search and hand over withheld documents.
Bloomberg reporters Mark Pittman and Craig Torres submitted Freedom of Information Act requests to the Washington, D.C.-based governors’ board, seeking information about the Fed’s actions to bail out the financially beleaguered Bear Stearns.
The board withheld the requested documents, citing two FOIA exemptions.
Bloomberg sued to compel disclosure and to force the board to search records at the Federal Reserve Bank of New York, one of the Federal Reserve System’s 12 regional banks.
In March 2008, the Fed authorized its New York bank to loan JPMorgan Chase $12.9 billion to buy Bear Stearns, whose asset portfolio was plagued with subprime mortgage-backed securities. Three days later, JPMorgan Chase and Bear Stearns repaid the New York bank the full loan amount, plus nearly $4 million in interest.
The board told Pittman that the requested documents fell under FOIA Exemptions 4 and 5, which protect financial records and interagency memos.
Similarly, the Fed told Torres that it had “searched Board records and made suitable inquiries, but found no documents that are responsive to your requests.” It added that the financial records he wanted were at the New York bank and were exempt from disclosure.
U.S. District Judge Loretta A. Preska established that the requested documents are “agency records,” because they’re kept in the board’s official files. She said the board should have searched the New York bank’s records.
“In other words, the Board improperly withheld agency records in response to a FOIA request by conducting an inadequate search,” Preska wrote.
She said the remaining reports were improperly withheld, rejecting the board’s claim that disclosure would stigmatize borrowers.
“[T]he risk of looking weak to competitors and shareholders is an inherent risk of market participation; information tending to increase that risk does not make the information privileged or confidential,” Preska wrote.
The judge gave the board five days to release the withheld documents and ordered it to search records at its New York bank.