Judge declines to support Fed’s denial to provide information to Bloomberg

Efforts of the US Federal Reserve to prevent disclosure of companies that participated in and securities covered by a series of emergency funding programs as the global credit crisis began to intensify were halted by the ruling of a federal judge on Monday.

Chief District Judge Loretta Preska of the federal court in Manhattan said that the central bank hasn’t provided sufficient arguments to prove that disclosure would cause borrowers in the Federal Reserve System to suffer "imminent competitive harm," by stigmatizing them for using Fed lending programs.

"The board essentially speculates on how a borrower might enter a downward spiral of financial instability if its participation in the Federal Reserve lending programs were to be disclosed," she wrote. "Conjecture, without evidence of imminent harm, simply fails to meet the board's burden."

The case arose when two Bloomberg News reporters submitted requests under the federal Freedom of Information Act (FOIA) about actions the Fed took to shore up the financial system in 2007 and early 2008, including an expansion of lending programs and the sale of Bear Stearns Cos to JPMorgan Chase & Co (JPM.N).

After the Fed resisted the request, Bloomberg sued to compel disclosure.

Preska concluded the Fed "improperly withheld agency records in response to a FOIA request by conducting an inadequate search," she wrote.

FOIA obliges federal agencies to make government documents available to the public, subject to various exemptions.