Knowledge Is Good

The Senate has voted 96-0 to compel the Federal Reserve Bank to disclose the recipients and conditions of its emergency zero or near-zero loans from December 1, 2007 through 2008:

WASHINGTON — The Senate on Tuesday voted unanimously to require a one-time audit of the Federal Reserve’s emergency actions during and after the 2008 financial crisis as part of broad legislation overhauling the nation’s financial regulatory system.

The amendment, proposed by Senator Bernard Sanders, independent of Vermont, would require the Government Accountability Office to scrutinize some $2 trillion in emergency lending that the Fed provided to the nation’s biggest banks.

The vote was 96 to 0.

“At a time when the Federal Reserve has provided the largest taxpayer bailout in the history of the world, the largest financial institutions in this country, trillion-dollar institutions,” Mr. Sanders said in a floor speech, “the Sanders amendment makes it clear that the Fed can no longer operate in the kind of secrecy that it has operated in forever.”

I’m not entirely sure what to make of this. As I see it there could be several possible outcomes.

• The results could shake confidence in the Fed.
• The results could bolster confidence in the Fed.
• The Fed could circle the wagons and be so little forthcoming that the Senate would take it as a lèse majesté and turn the one-time disclosure into a permanent thing.
• The Fed could deluge the Senate with so much information that it would be impossible to digest. The senator, too embarrassed to admit that they didn’t understand the Fed’s report, would shut up.

Any other thoughts.

There are subtle differences among data, information, and knowledge. Knowledge is good but it requires a level of organization, preparation, experience, and sophistication that I’d be surprised to see from the Senate.