Fed's Data Dump Leaves Investors in the Dark

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The Federal Reserve released an avalanche of files Thursday detailing—for the first time ever—its loans to banks under its emergency funding facility known as the “discount window.”

But investors and bank customers won’t find it very useful.

The disclosure came in the form of computer disks handed to reporters in Washington, DC. Those disks contained nearly 900 PDF files that must be individually opened and read. The files include tables with loans made by the Fed, as well as emails between Federal Reserve officials. The disks aren’t searchable and the Fed didn’t include an index.

The release of the data in such a user-unfriendly manner is reminiscent of the way Goldman Sachs dumped tens of thousands of documents on the Financial Crisis Inquiry Commission. The commissioners publicly scolded the investment bank for the document “dump.”

The Fed has long kept the identities of borrowers a closely guarded secret. The Fed argued that naming borrowers would discourage banks from borrowing under the window—which the Fed believes is an important source of stability for banks during periods of financial stress.

Thursday’s release was ordered by the federal courts after Bloomberg and Fox News brought the Fed to court over the issue of disclosure.

Going forward, Dodd-Frank requires the Fed to release the names of discount-window borrowers—but only after a two-year delay. That means the information will always be old. Investors and customers of banks will not know which institutions borrowed from the discount window until long after the fact.

We’ll have a more complete historical record—but investors hoping for more transparency about the health of banks will have to look elsewhere.


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