(CN) – A federal judge in Manhattan denied a bid by Fox News Network to glean the details of the Federal Reserve’s loans to companies affected by the financial crisis. U.S. District Judge Alvin K. Hellerstein said publicizing the information would deter borrowers and cause investors to make “panicky withdrawals,” possibly resulting in “great damage to the national economy.”
Fox argued that because taxpayer dollars were being used to prop up troubled institutions, “the public deserves transparency and the Federal Reserve requires increased oversight.”
The network filed a Freedom of Information Act request with the central bank’s Board of Governors in November of last year. It sought details regarding companies and funds that borrowed from August 2007 until November 2008 through the Discount Window, which is used to make overnight loans and is generally seen as a “last resort,” the judge wrote.
To combat the weakening economy in 2007, the Fed reduced the rates for money through the Discount Window and began to lend to additional entities, including primary dealers, in an attempt to provide more liquidity to the financial sector.
The increase was dramatic. The week of Aug. 8, 2007, an average of $1 million was lent through the Discount Window at the 12 Federal Reserve banks. That number ballooned to $188 billion in the last week of 2008, according to the 28-page opinion.
Both parties moved for summary judgment.
Judge Hellerstein ruled that the board had performed an adequate search, but that “Exemption 4 permits the Board not to disclose the documents Fox seeks.”
That exemption protects “trade secrets and commercial or financial information obtained from a person” that is “privileged and confidential.”
The judge said publicly disclosing the loans could lead to the belief that a borrowing company is in financial trouble.
“This would undermine the Board’s mandate to provide stability to markets, especially during a financial crisis,” he wrote.