Whatever Tim Geithner’s New York Fed was trying to hide in the AIG backdoor bailout was so volatile it was deemed worthy of national-security-like classification, and the Fed reacted to media FOIA requests for information by withholding more information.

Reuters, gets the scoop on emails that detail the discussion between the Fed, AIG, and the SEC.

The SEC, according to an email sent by a New York Fed lawyer on January 13, 2009, agreed to limit the number of SEC employees who would review the document to just two and keep the document locked in a safe while the SEC considered AIG’s confidentiality request.

The SEC had also agreed that if it determined the document should not be made public, it would be stored “in a special area where national security related files are kept,” the lawyer wrote.

Hello! They really didn’t want that information out there. Which, of course, means we really need that information out there.

But what particularly has The Audit’s interest is the media angle. Reporter Matthew Goldstein drops some interesting information in the last paragraph of his story on that:

The emails also discuss that BusinessWeek magazine had submitted a Freedom of Information Act request for the document and the confidential treatment request was a way of dealing with that and other possible requests by the media for the document.

I asked Goldstein for more information on this. It turns out Goldstein himself was the BusinessWeek reporter who filed the FOIA. He passed along some emails showing the Fed reacting to the FOIA request.

They contain a revealing look at your government covering up public information—and in reaction to a request under the law that gives the public access to its information! Stunning.

In one email, the Federal Reserve’s James P. Bergin, an assistant vice president, is caught explaining the extralegal rationale for hiding information about the backdoor bailout (emphasis mine):

Well, I think that Alex (Latorre of the New York Fed) had anticipated the desire at one point to have the whole schedule be confidential. It’s less of a legally motivated worry than a worry that including the column headings could further incite FOIA requests or litigation—that if people know the counterparty names and amounts are indeed on this schedule, they will be all the more likely to want to request it.

This apparently was in reaction to Goldstein’s FOIA request, which was denied. To reiterate, the Geithner New York Fed reacted to a FOIA not by releasing the information, but by making more information secret—in order to prevent other meddlesome reporters (or lawyers) from filing FOIAs!

“Clearly they were concerned about other news organizations doing what we had done at BusinessWeek,” Goldstein tells me.

Which is what reporters should be doing: Digging into the securities filings, sniffing out something amiss, and pressing the government for answers. Goldstein says he and a colleague noticed in December 2008 that an AIG SEC filing mentioned a “Schedule A,” but didn’t include actually include it in the filing. Think this stuff is easy? Why don’t you wade through the 8-K yourself and see if you would have noticed it, much less gone through the trouble of filing a probably fruitless FOIA.

Because of that we now have an utterly revealing look at how the Federal Reserve thinks about transparency. This is something to keep in mind as people like Chris Dodd and the Obama administration try to beef up the Fed’s powers. The bank has always been one of the most unaccountable and undemocratic parts of the government—and one of the most powerful. Why should it have even more power when it acts like this?

The messed-up lesson from this behind-the-scenes look at government secrecy: Reporters, now you know that FOIA you request may do more harm than good. This is not okay.

As if this backdoor bailout and cover-up didn’t already stink to high heaven.


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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. Follow him on Twitter at @ryanchittum.