Commercial Banks Worried Audit of The Federal Reserve Will Result in Bank Runs

In news relating to the case of Bloomberg LP v. Board of Governors of the Federal Reserve, it appears that appeals might possibly take this case all the way to the U.S. Supreme Court. On March 19, 2010 the U.S. Court of appeals in Manhattan ruled that the Federal Reserve must produce documents outlining the 2008 emergency lending to major U.S. banks. At this point, the Fed has not started the appeal process against this ruling. They are going to let the banks do the dirty work for them.

Banks that received 2008 bailouts are represented collectively as The Clearing House Association. This lobbying group includes banks such as Bank of America and JP Morgan Chase. Paul Saltzman, who speaks for this group, publicly stated that they believe disclosure by the Federal Reserve will result in a possible run on the banks involved. The Clearing House Association is not concerned whether the Fed themselves pursue appeals to stop the audit. They have stated that they are determined to take this matter all the way to the Supreme Court, if necessary.

The Clearing House Payments Company has also joined the fight to keep these documents secret from the public. Clearing House Payments Company is a transaction processor owned by and comprised of banks such as Citigroup, Bank of New York Mellon, Deutsche Bank AG, HSBC Holdings, PNC, USB AG, U.S. Bancorp, and Wells Fargo. The Fed has until May 3 to make an appeal along side Clearing House Payments and Clearing House Association, but it looks like the banks are more than happy to take care of this matter themselves.  

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