Bloomberg has won another victory in its battle to force the Federal Reserve to reveal details of its multi-trillion-dollar bailouts—ones it is scrambling to keep secret.

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 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.”

This is the “Mark Pittman lawsuit” (this post has links to our past coverage here) the company filed in late 2008 after the Federal Reserve, as if to prove its unaccountability, refused even to acknowledge Pittman’s Freedom of Information Act request for documents on who it was bailing out with loans and what kind of collateral it was taking in exchange. It’s not over yet: The Fed will probably appeal to the full Appeals Court and then to the Supreme Court if for no other reason than to try to delay and hope the public loses interest.

As to why the Fed doesn’t want the information out there in the first place, there’s not much doubt, and if you somehow have any, you didn’t read this excellent New York Times story on Saturday about the Freedom CLO, toxic debt Lehman Brothers securitized specifically to dump on the Fed through the Primary Dealer Credit Facility (see Zero Hedge for further analysis). And, Lehman was hardly alone, as the Financial Times pointed out this week on its Alphaville blog, noting a similar JP Morgan effort.

While Alphaville is doing a great job pulling on the Freedom CLO thread, but I’m afraid it’s missing the forest for the trees right here:

The controversy over Lehman’s Freedom deal should focus on the bank’s concealment of the CLO’s purpose — you can’t fault the company for taking advantage of a Fed facility. Reports that the bank had sold about $2.2bn of the senior notes in the securitisation suggested Lehman was finding genuine demand for its assets — something which, we know now, simply wasn’t true in the spring of 2008.

Fortunately, I don’t think Bloomberg as an institution thinks such nonsense. That Lehman concealed the CLO’s purpose from shareholders is indeed a good story, but a relatively narrow one compared to the one about the Fed enabling it—and refusing to tell us the details.

This is one of those things that’s so obvious that it’s hard to see when you’ve been in the weeds on a story for so long, and prompts you to say things like “the PDCF itself is a pretty transparent thing,” as Alphaville does here. The savvy reporter says “Well, duh,” while Bloomberg goes and sues the Fed.

Here’s what Pittman told me last February on this:

The thing that people don’t realize is that the Fed is now the “bad bank.” That’s just something that people don’t understand. They’ve taken collateral, and they refuse to tell us how they valued it…

We have numerous banks—dozens, maybe hundreds that are insolvent. And they become more insolvent every day because more people quit paying their mortgage loans, and more guys move out of the shopping center, and more people quit paying their credit cards. But nobody wants to have the adult conversation…We need to be honest about what the problem is here, how big it is, and how we’re going forward to clean it up, and who’s going to pay for it.

The Audit: Basically the charade that’s going on here is that they haven’t marked these assets down yet because that would show they’re insolvent.

MP: But a lot of [the assets] have gone to the Fed, though, as collateral for loans. They’re still on their balance sheet, but you borrowed against them. We don’t know if those are cracked CDO’s or prime RMBS…

Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu.