Fed Is Better Off Losing Transparency Battle

The Federal Reserve lost more ground on Friday in its ongoing battle over transparency — a battle it may have to lose to gain additional powers over financial markets and consumer protection.

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Several publications and broadcasters joined in an effort spearheaded by Bloomberg to extract such information from the Fed. At the same time, the public has grown more cynical about the government’s use of taxpayer funds, largely due to enormous bank bailouts that haven’t seemed to help the average consumer very much.

A Rasmussen poll last July showed that 75% of Americans support auditing the Fed and publicly disclosing results. The next month, in an online Q&A sponsored by The Wall Street Journal and Digg, the most popular questions among Web users had to do with auditing the Fed.

Months later, House lawmakers passed a bill which would do just that — an auditing effort championed by Rep. Ron Paul (R., Texas). [Read the full article]

In a significant victory for news media, a federal appeals court said the Federal Reserve must disclose records on emergency lending programs to banks bailed out by the government in the financial crisis.

The Second Circuit Court of Appeals on Friday ordered the Fed to release details of programs it adopted starting in late 2007 to shore up the financial system and forestall a complete meltdown of global financial markets.

Bloomberg LP, the parent of Bloomberg News, and News Corp’s Fox News Network sought details of the central bank’s actions under the federal Freedom of Information Act, or FOIA, which requires government agencies to make documents public. [Read the full article]

Interest rates mainly rose in the bond market Friday ahead of Treasury auctions upcoming next week.

The yield on the 10-year Treasury note maturing in February 2020 rose to 3.70 percent from 3.68 percent late Thursday. Its price slipped 3/32 to 99 13/32. The yield of the 10-year note is linked to interest rates on mortgages and other consumer loans.

The price of the 10-year note had been higher earlier in the day as a declining stock market led some investors to pare their risk and park money in Treasurys. But concerns about upcoming auctions next week led to a late-day slump.

Treasurys auctions have mainly gone well this year, but any hints of waning demand among large foreign investors like the Chinese government have sent prices lower and yields higher. The Treasury is set to auction two-, five- and seven-year notes next week.

Bond yields also tend to rise just before auctions as large investors hold back buying ahead of the new supply of bonds hitting the market. [Read the full article]

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