March 19 (Bloomberg) -- The Federal Reserve Board must disclose documents identifying financial firms that might have collapsed without the largest U.S. government bailout ever, a
federal appeals court said.

The U.S. Court of Appeals in Manhattan ruled today that the Fed must release records of the unprecedented $2 trillion U.S. loan program launched primarily after the 2008 collapse of
Lehman Brothers Holdings Inc. The ruling upholds a decision of a
lower-court judge, who in August ordered that the information be
released.

The Fed had argued that it could withhold the information under an exemption that allows federal agencies to refuse disclosure of “trade secrets and commercial or financial
information obtained from a person and privileged or
confidential.”

The U.S. Freedom of Information Act, or FOIA, “sets forth no basis for the exemption the Board asks us to read into it,” U.S. Circuit Chief Judge Dennis Jacobs wrote in the opinion.
“If the Board believes such an exemption would better serve the
national interest, it should ask Congress to amend the
statute.”

The opinion may not be the final word in the bid for the documents, which was launched by Bloomberg LP, the parent of Bloomberg News, with a November 2008 lawsuit. The Fed may seek a
rehearing or appeal to the full appeals court and eventually
petition the U.S. Supreme Court.

Right to Know

If today’s ruling is upheld or not appealed by the Fed, it will have to disclose the requested records.

“We’re obviously pleased with the court’s decision, which is an important affirmation of the public’s right to know what its government is up to,” said Thomas Golden, a partner at New
York-based Willkie Farr & Gallagher LLP and Bloomberg’s outside
counsel.

“We are reviewing the decision and considering our options for reconsideration or appeal,” said Fed spokesman David Skidmore.

The court was asked to decide whether loan records are covered by FOIA. Historically, the type of government documents sought in the case has been protected from public disclosure
because they might reveal competitive trade secrets. The Board
of Governors of the Federal Reserve System had argued that
disclosure of the documents threatens to stigmatize borrowers
and cause them “severe and irreparable competitive injury.”

Payment Processors

The Clearing House Association, which processes payments among banks, joined the case and sided with the Fed. The group includes ABN Amro Bank NV, a unit of Royal Bank of Scotland Plc,
Bank of America Corp., The Bank of New York Mellon Corp.,
Citigroup Inc., Deutsche Bank AG, HSBC Holdings Plc, JPMorgan
Chase & Co., US Bancorp and Wells Fargo & Co.

Oscar Suris, a spokesman for Wells Fargo, JPMorgan spokeswoman Jennifer Zuccarelli and RBS spokeswoman Linda Harper all declined to comment. Deutsche Bank spokesman Ronald Weichert
couldn’t immediately comment.

Bloomberg, majority-owned by New York Mayor Michael Bloomberg, sued after the Fed refused to name the firms it lent to or disclose loan amounts or assets used as collateral under
its lending programs. Most of the loans were made in response to
the deepest financial crisis since the Great Depression.

Lawyers for Bloomberg argued in court that the public has the right to know basic information about the “unprecedented and highly controversial use” of public money.

Wall of Secrecy

“Bloomberg has been trying for almost two years to break down a brick wall of secrecy in order to vindicate the public’s right to learn basic information,” Golden wrote in court
filings.

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