Senators Urge US Fed To Reveal Firms That Received Aid
July 31 2009 - 12:46PM
Dow Jones News
U.S. congressional calls for the Federal Reserve to shed more
light on its lending programs have yet to ease up.
On Friday, a bipartisan group of U.S. lawmakers sent a letter to
Fed Chairman Ben Bernanke, urging him to release a full list of
Wall Street firms that have received extraordinary aid.
"It is not justifiable to have the Federal Reserve Board fail to
provide this information," said the group, which includes lawmakers
such as Sens. Charles Grassley, R-Iowa, Byron Dorgan, D-N.D., and
Bernard Sanders, I-Vt.
In the letter, the senators argued that with Goldman Sachs Group
Inc. (GS) and other firms reporting large profits, there isn't more
reason for the Fed to keep secret the names of financial firms that
have received emergency assistance from the central bank.
The senators aren't alone in their concerns about transparency
at the Fed. A growing number of lawmakers, frustrated over
central-bank rescues of firms such as American International Group
Inc. (AIG), have criticized the central bank for being shrouded in
secrecy. Earlier this month, a bipartisan group of lawmakers from
the House of Representatives wrote a letter to President Barack
Obama asking for an investigation of the central bank. They
questioned the Fed's role in fostering Bank of America Corp.'s
(BAC) acquisition of Merrill Lynch & Co., as well as the Obama
administration's plans to grant the central bank new powers to
oversee the U.S. financial system.
Senators on Friday said they are specifically concerned about a
lack of transparency surrounding the central bank's use of a
special emergency authority to lend in "unusual and exigent
circumstances" to address problems threatening the financial
system. Amid financial panic last year, the Fed invoked the
authority in an unprecedented decision to allow investment banks to
access direct lending from the central bank.
"In light of recent announcements by Goldman Sachs, J.P. Morgan
Chase (JPM), and others that are reporting very large profits after
paying back the TARP [Troubled Asset Relief Program] 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," the senators
wrote.
They continued in the letter: "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."
-By Maya Jackson Randall, Dow Jones Newswires; 202-862-9255;
maya.jackson-randall@dowjones.com