Backed by The Clearing House Association, a consortium of banks (and was there ever a better name?), the Federal Reserve has asked an appeals court to shield the names of participants in the federal emergency financial system bailout program from the press and the public.

In response to a lawsuit brought by Bloomberg News and Fox News Network under the Freedom of Information Act, which requires government agencies to make documents available to the public, the Fed said that the release of information on the details of the federal bailout program, including which banks were participating, would inflict further harm on the U.S. financial system.

(Cut to courtroom image of Jack Nicholson: “You want the truth? You can’t handle the truth!”)

During its argument before the U.S. Second Circuit Court of Appeals, the Fed said that if potential participants knew they might be named, they might choose not to borrow rather than face the “stigma” associated with appearing to be in trouble.

Which is apparently worse than the “stigma” associated with driving the economy off a cliff.

The appeals court will take another few weeks before ruling. If the court rules for the news organizations, you can bet it will be appealed to the full court or to the Supreme Court.

And in the dark, the feast continues….

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