Bloomberg is not happy.  They've added up the numbers, really big numbers, and want to know what the US is getting in return.  The Treasury and the Fed have not been forthcoming, Bernanke thinks it would be 'counterproductive' so Bloomberg has filed a Freedom of Information suit against the Fed to find out who is borrowing and what collateral they are offering. 

Nov. 24 (Bloomberg) -- The U.S. government is prepared to lend more than $7.4 trillion on behalf of American taxpayers, or half the value of everything produced in the nation last year, to rescue the financial system since the credit markets seized up 15 months ago.

[...]

Bloomberg has requested details of Fed lending under the U.S. Freedom of Information Act and filed a federal lawsuit against the central bank Nov. 7 seeking to force disclosure of borrower banks and their collateral.

Collateral is an asset pledged to a lender in the event a loan payment isn't made.

"Some have asked us to reveal the names of the banks that are borrowing, how much they are borrowing, what collateral they are posting," Bernanke said Nov. 18 to the House Financial Services Committee. "We think that's counterproductive."

The Fed should account for the collateral it takes in exchange for loans to banks, said Paul Kasriel, chief economist at Chicago-based Northern Trust Co. and a former research economist at the Federal Reserve Bank of Chicago.

"There is a lack of transparency here and, given that the Fed is taking on a huge amount of credit risk now, it would seem to me as a taxpayer there should be more transparency," Kasriel said.

Interesting times when even the business press cannot figure out what is going on in the financial industry.  The situation is not going to improve until confidence is restored and that is not going to happen while there is so much uncertainty.  HIding unpleasant facts only increases it.  Instead of the feared run on a few banks and brokers we now worry about all of them.  Heck of a job, Hank.

Read more »