One Reporter's Fight With the Fed

I didn’t know Mark Pittman, a reporter at Bloomberg News. We emailed a few times about the landmark lawsuit he instigated challenging Federal Reserve secrecy. I do know that Pittman is a genuine hero in a story which has very few.

He died too young last year, at 52. From what I gather, Pittman combined rumpled style, intellectual firepower and fierce persistence. The fight he waged to get the Fed to open its books serves as a lasting legacy and a strong reminder that one savvy, dogged person can make a real difference.

Earlier this month, Pittman’s employer, Bloomberg News Service, won yet another round in its fight with the Fed.

Bloomberg’s lawyers argue that the Fed’s lending to banks at favorable rates, and the conditions attached to the loans, should be public.

After he was confirmed for a new term as Fed chairman, Ben Bernanke promised greater public transparency for the notoriously opaque Fed. “It is essential that the public have the information it needs to understand and be assured of the integrity of all our operations, including all aspects of our balance sheet and our financial controls,” Bernanke said.

As far as the Bloomberg lawsuit goes, it’s impenetrable business as usual. The Fed and the banks aren’t about to give up, vowing yet another appeal. They insist that Bloomberg is seeking “confidential business information” and that disclosing it could undermine economic recovery. The Fed, along with the Obama administration, is also trying to fend off a congressional effort to audit the Fed.

The failures of the news media before the financial collapse in 2008 have now been well publicized. Too many reporters didn’t understand what was going on inside the bubble economy. Too many didn’t ask the tough questions about predatory lending or the dismantling of regulation, while serving up out worshipful fluff about the wheelers and dealers who were making wild fortunes, and those who helped them do it.

When I started digging into the financial crisis in December 2008 as a newspaper columnist I had many questions and few answers. How could we possibly have gotten into this mess through some bad real estate loans? Where are all of the people who were supposed to ensure that investments were safe and proper? Who was supposed to protect consumers against unscrupulous financial practices?

Pittman was one of the few journalists I found who had been covering the credit markets who really understood the subject and had been sounding alarms before the meltdown. He broke many important stories and won the nation’s highest award for financial journalists in 2008 for a series on the dangers of subprime.

Then came the bailout. As you recall it was pushed through in a frenzy of fear with little debate. If it wasn’t passed immediately, officials warned, the whole system could collapse.

Pittman was one of the few journalists in that overheated atmosphere who seemed to keep his head. He kept asking questions, trying to figure out what the Fed was up to. When the Fed refused to answer his Freedom of Information Act requests, Bloomberg filed suit.

I’ve read a variety of theories of what the Fed has to hide. The banks are supposed to put up “investment grade” collateral for money they borrow from the Fed. Some suspect that the Fed may be accepting junk instead in their never-ending efforts to prop up the banks.  Pittman, in an interview with Columbia Journalism Review’s The Audit, suggested that Fed was becoming “the bad bank.”

And there’s a principle involved as well. It’s one that led Pittman to ask the questions that started Bloomberg’s lawsuit and it’s one that Bernanke still doesn’t get, despite his rhetoric. As Sen. Bernie Sanders, the Vermont Democrat put it: “This money does not belong to the Federal Reserve. It belongs to the American people, and the American people have a right to know where more than $2 trillion of their money has gone.”