Last week, the U.S. Court of Appeals in Manhattan handed down a ruling ordering the Federal Reserve to give up the names of the financial firms that used the Fed's emergency lending window during the financial meltdown in 2008. Bloomberg News requested the names in November 2008 through a Freedom of Information Act (FOIA) request, which the Fed denied. The Fed argued that releasing this data would discourage companies from using the program, as it would essentially identify which banks were in danger of failing. With its ruling, the Appeals court rejected this argument, and upheld a lower court ruling also ordering the Fed to disclose recipient names.

Unless the Fed appeals the decision to the Supreme Court, thanks to this ruling the Fed will have to name the firms it lent to and disclose how much money it lent them. Having such information will provide Americans with a much clearer picture of how the federal government used almost $2 trillion of their money to stave off financial catastrophe.

In the unanimous decision, U.S. Circuit Chief Judge Dennis Jacobs wrote that the FOIA law "sets forth no basis for the exemption the Board asks us to read into it," meaning that the Fed had no legal basis for withholding the identities of the financial institutions. He continued, "If the Board believes such an exemption would better serve the national interest, it should ask Congress to amend the statute."

Fortuitously, Congress is in fact moving to amend a law, although not the one the Fed would like. Sen. Chris Dodd's (D-CT) financial reform bill, which just passed committee and is now headed to the Senate floor, seeks to amend the Federal Reserve Act to end the Fed's emergency lending power (unfortunately, the final version of the bill isn't online yet, but Dodd has previously promised to remove the lending window power). And seeing as how members on both sides of the aisle seem to dislike the Fed's emergency lending ability and its lack of transparency, the final reform bill will probably retain this provision.

Image by Flickr user laure padgett used under a Creative Commons license.