WASHINGTON, July 31 – With the Federal Reserve committing trillions of dollars of taxpayer-backed funds to bail out Wall Street, a bipartisan group of U.S. Senators today asked Federal Reserve Chairman Ben Bernanke to release the names of the financial institutions that have received emergency assistance from the Federal Reserve and the amount of that assistance.
Senators Bernie Sanders (I-VT), Byron Dorgan (D-N.D.), Chuck Grassley (R-IA). Senators Saxby Chambliss (R-GA), Russ Feingold (D-WI), Tom Harkin (D-IA), Orrin Hatch (R-UT), James Inhofe (R-OK), Johnny Isakson (R-GA), Bill Nelson (D-FL), and Jeanne Shaheen (D-NH) signed the letter.
The Federal Reserve has not released details about the companies being helped because officials claim that releasing identities could cause a run on the banks that asked for help. The Senators disputed this claim, writing that in light of the recent record profit announcements by some of Wall Street’s investment firms, the Fed has no reason to refuse sharing their lending information.
“We now urge you to release the names of financial institutions that have received the emergency assistance and how much each has received. The American taxpayers’ funds have been placed at risk, and we believe the American people deserve a thorough examination of the Federal Reserve Board’s Wall Street bailout activities to determine how these funds were used,” the Senators wrote in the letter.
A copy of the letter is pasted here:
The Honorable Ben S. Bernanke
The Federal Reserve Board
20th & C St., NW.
Washington, DC 20551
Dear Chairman Bernanke:
We are writing today to urge you and your colleagues on the Federal Reserve Board to publicly release the names of the financial institutions that have received emergency assistance from the Federal Reserve during this financial crisis as well as the amount of assistance given to each institution.
We are writing because we are concerned about the lack of transparency of actions the Federal Reserve Board has undertaken using a rarely-used section of the Federal Reserve Act (Section 13(3)) to help out certain Wall Street firms. Specifically, Section 13(3) gives the Fed broad emergency authority to take actions during “unusual and exigent circumstances” to address the problems threatening our financial system.
During the past year, the Federal Reserve Board took action to allow all of the major investment banks in the U.S. to effectively access direct lending from the Federal Reserve. It was the first time such action had been taken by the Fed. In addition to taking this unprecedented action, the Fed has decided that it cannot release information about which firms received the benefits of these emergency actions. Federal Reserve officials said that releasing this information could further destabilize our financial system and potentially cause a run on the banks that had asked for help.
In light of recent announcements by Goldman Sachs, J. P. Morgan Chase, and others that are reporting very large profits after paying back the TARP funds to the U.S. government, we don’t believe there is now any reason for the Federal Reserve Board to refuse to share information about the companies that were helped by its activities as well as the specific amount of such help for each company.
It is not justifiable to have the Federal Reserve Board fail to provide this information. Recently Lawrence Summers, President Obama’s Director of the National Economic Council said, “extraordinary public support provided by the government” made the latest profits of some of the largest financial institutions possible.
We now urge you to release the names of financial institutions that have received the emergency assistance and how much each has received. The American taxpayers’ funds have been placed at risk, and we believe the American people deserve a thorough examination of the Federal Reserve Board’s Wall Street bailout activities to determine how these funds were used.
Thank you for your consideration of this request.