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The Fed refused yesterday to disclose the names of the borrowers and the loans, alleging that it would cast “a stigma” on recipients of more than $1.9 trillion of emergency credit from U.S. taxpayers and the assets the central bank is accepting as collateral.

The bank provides “select members and staff of the Board of Governors with daily and weekly reports” on Primary Dealer Credit Facility borrowing, said Susan E. McLaughlin, a senior vice president in the markets group of the Federal Reserve Bank of New York in a deposition for the Fed. The documents “include the names of the primary dealers that have borrowed from the PDCF, individual loan amounts, composition of securities pledged and rates for specific loans.”

The Board of Governors contends that it’s separate from its member banks, including the Federal Reserve Bank of New York which runs the lending programs. Most documents relevant to the Bloomberg suit are at the Federal Reserve Bank of New York, which the Fed contends isn’t subject to FOIA law. The Board of Governors has 231 pages of documents, which it is denying access to under an exemption under trade secrets.

“I would assume that information would be shared by the Fed and the New York Fed,” said U.S. Representative Scott Garrett, a New Jersey Republican. “At some point, the demand for transparency is paramount to any demand that they have for secrecy.”

Bloomberg sued Nov. 7 under the U.S. Freedom of Information Act requesting details about the terms of 11 Fed lending programs.

‘Financial Crisis’

The Bloomberg lawsuit said the collateral lists “are central to understanding and assessing the government’s response to the most cataclysmic financial crisis in America since the Great Depression.”

The Fed stepped into a rescue role that was the original purpose of the Treasury’s $700 billion Troubled Asset Relief Program. The central bank loans don’t have the oversight safeguards that Congress imposed upon the TARP.

Total Fed lending exceeded $2 trillion for the first time Nov. 6 after rising by 138 percent, or $1.23 trillion, in the 12 weeks since Sept. 14, when central bank governors relaxed collateral standards to accept securities that weren’t rated AAA. Fed lending as of Feb. 25 was $1.92 billion.

Posted Collateral

Bloomberg News, a unit of New York-based Bloomberg LP, on May 21 asked the Fed to provide data on collateral posted from April 4 to May 20. The central bank said June 19 that it needed until July 3 to search documents and determine whether it would make them public. Bloomberg didn’t receive a formal response that would let it file an appeal within the legal time limit.

On Oct. 25, Bloomberg filed another request, expanding the range of when the collateral was posted. It sued Nov. 7.

In response to Bloomberg’s request, the Fed said the U.S. is facing “an unprecedented crisis” in which “loss in confidence in and between financial institutions can occur with lightning speed and devastating effects.”

Fed Chairman Ben S. Bernanke and then Treasury Secretary Henry Paulson said in September they would meet congressional demands for transparency in a $700 billion bailout of the banking system.

The Freedom of Information Act obliges federal agencies to make government documents available to the press and public. The Bloomberg lawsuit, filed in New York, doesn’t seek money damages.

Bank Opposition

Banks oppose any release of information because that might signal weakness and spur short-selling or a run by depositors, the Fed argued in its response.

“You could make everything a trade secret,” said Lucy Dalglish, executive director of the Arlington, Virginia-based Reporters Committee for Freedom of the Press.

VA officials acknowledge further credibility problems based on a new report of a previously undisclosed 2007 incident in which workers at a Detroit regional office turned in 16,000 pieces of unprocessed mail and 717 documents turned up in New York in December during amnesty periods in which workers were promised no one would be penalized.

“Veterans have lost trust in VA,” Michael Walcoff, VA’s under secretary for benefits, said at a hearing Tuesday. “That loss of trust is understandable, and winning back that trust will not be easy.”

Unprocessed and unopened mail was just one problem in VA claims processing mentioned by Belinda Finn, VA’s assistant inspector general for auditing, in testimony before the House Veterans’ Affairs Committee.

Auditors also found that the dates recorded for receiving claims, which in many cases determine the effective date for benefits payments, are wrong in many cases because of intentional and unintentional errors, Finn said.

The worst case uncovered by auditors involved the New York regional office, where employees testified that managers told staff to put later dates on claims to make it appear claims were being processed faster. A review found that 56 percent of claims had incorrect dates, although no evidence was found of incorrect or delayed benefits payments. Finn said workers reported that this practice had been used for years.

The new report comes as VA is trying to resolve an earlier controversy involving documents essential to the claims process that were discovered in bins awaiting shredding at several regional offices, which raised questions about how many past claims had been delayed or denied because of intentional or unintentional destruction of documentation.

‘It is impossible not to be shocked’

Kathryn Witt of Gold Star Wives of America said survivors trying to receive VA benefits have long complained about problems getting accurate information and missing claims. “When they call to check on the status of the claim, they are often told that the VA has no record of their claim and that they should resubmit their paperwork,” she said.

In one case, a woman claimed she had to submit paperwork to VA three times to prove she was married and had three children, Witt said.

And having to resubmit the same claim, she added, does nothing to reduce the backlog that already forces survivors to wait six to nine months for simple claims to be approved.

“It is impossible not to be shocked by the numbers from Detroit,” said Rep. Harry Mitchell, D-Ariz., who chairs the House Veterans’ Affairs Committee’s oversight and investigations panel. “Shredding documents or burying them in the bottom drawer is a breach of trust. Whether that breach of trust comes as a consequence of inadequate training or negligent or deliberate behavior, Congress must not and will not tolerate it.”

It is unclear, however, whether there is any short-term fix.

A permanent solution is to have a fully electronic claims process to establish a record of when documents are received and their status as they move through the process. A fully electronic system will not be in place before 2011, VA officials said.

Kerry Baker of Disabled American Veterans said a short-term answer could be to scan all documents related to claims into computer systems. Baker, DAV’s assistant national legislative director, said this could be done at one or more large-scale imaging centers that would transform paper into electronic records.

“A large section of the veterans community and representatives of the community have long felt that the Veterans Benefits Administration operates in such a way that stalls the claims process until frustrated claimants either give up or die,” Baker said.

He said that although he doesn’t believe that is true, something must be done.

“Denying earned benefits by illegally destroying records should serve as the proverbial wake-up call that signals the urgency of this overdue transformation,” he said.

Geneva Moore, a senior veterans service representative from Winston-Salem, N.C., who testified on behalf of the American Federation of Government Employees, a union that counts about 160,000 VA workers among its members, said backdating claims and document shredding are signs of a claims system under stress.

Pimco Corporate Income Fund, Corporate Opportunity Fund and High Income Fund won’t make payments scheduled for today or for April 2, the Newport Beach, California-based company said today in a statement. High Income shares declined the most since they started trading in April 2003.

Falling debt prices have pushed closed-end funds to reduce borrowing or defer dividends to comply with U.S. securities law. Funds that issue debt are required to maintain net assets of at least 300 percent of leverage, while those that sell preferred shares must maintain a 200 percent ratio.

All three Pimco funds closed trading last week at a premium, with shares in High Income 56 percent above the value of its underlying assets. The fund fell 95 cents, or 17 percent, to $4.60 at 4:15 p.m. in New York Stock Exchange composite trading.

Pimco plans to buy back $342 million in auction-rate preferred shares issued by the three funds, as well as two others, to boost their coverage ratios, according to a statement from Allianz Global Investors. The two additional funds are Floating Rate Income Fund and Floating Rate Strategy.

The Recruitment and Employment Confederation/KPMG report on jobs said the poor economic climate had resulted in a further drop in demand for staff.

The level of vacancies fell at its fastest rate since the survey began in October 1997, recording an index reading of 27.6 down from 27.7 in January.

According to official reports, one of 66 satellites owned by Iridium, a U.S. telecoms company, and the Russian Cosmos-2251 satellite, launched in 1993 and believed to be defunct, collided on February 10 about 800 kilometers (500 miles) above Siberia.

However, Maj. Gen. (Ret.) Leonid Shershnev, a former head of Russia’s military space intelligence, said in an interview published by the Moskovsky Komsomolets newspaper on Tuesday that the U.S. satellite involved in the collision was used by the U.S. military as part of the “dual-purpose” Orbital Express research project, which began in 2007.

Orbital Express was a space mission managed by the United States Defense Advanced Research Projects Agency (DARPA) and a team led by engineers at NASA’s Marshall Space Flight Center (MSFC).

According to the DARPA, the program was “to validate the technical feasibility of robotic, autonomous on-orbit refueling and reconfiguration of satellites to support a broad range of future U.S. national security and commercial space programs.”

Orbital Express was launched in March 2007 as part of the U.S. Air Force Space Test Program’s STP-1 mission. It tested a prototype servicing satellite (ASTRO) and a surrogate next generation serviceable satellite (NextSat). The demonstration program met all the mission success criteria and was officially completed in July 2007.

Shershnev claims the U.S. military decided to continue with the project to “develop technology that would allow monitoring and inspections of orbital spacecraft by fully-automated satellites equipped with robotic devices.”

Panarin might be easy to ignore but for the fact that he is a dean at the Foreign Ministry’s school for future diplomats and a regular on Russia’s state-guided TV channels. And his predictions fit into the anti-American story line of the Kremlin leadership.

“There is a high probability that the collapse of the United States will occur by 2010,” Panarin told dozens of students, professors and diplomats Tuesday at the Diplomatic Academy — a lecture the ministry pointedly invited The Associated Press and other foreign media to attend.

The prediction from Panarin, a former spokesman for Russia’s Federal Space Agency and reportedly an ex-KGB analyst, meshes with the negative view of the U.S. that has been flowing from the Kremlin in recent years, in particular from Vladimir Putin.

Putin, the former president who is now prime minister, has likened the United States to Nazi Germany’s Third Reich and blames Washington for the global financial crisis that has pounded the Russian economy.

“Without these assessments, the deposit insurance fund could become insolvent this year,” Bair wrote in a March 2 letter to the industry. U.S. community banks plan to flood the FDIC with about 5,000 letters in protest of the fees, according to a trade group.

“A large number” of bank failures may occur through 2010 because of “rapidly deteriorating economic conditions,” Bair said in the letter. “Without substantial amounts of additional assessment revenue in the near future, current projections indicate that the fund balance will approach zero or even become negative.”

“I refused to turn off the car until he said please. He didn’t. And he has the gun, I guess, so he sprayed me,” said Desiderio Fortunato, a Coquitlam, B.C., resident who frequently crosses the border to visit his second home in the state of Washington. “Is that illegal in the United States, asking an officer to be polite?”

The incident occurred on Monday at the Aldergrove border crossing, east of Vancouver, shortly after 12 p.m. Mr. Fortunato, a dance studio director, was travelling to his home in Blaine, Wash., to retrieve a wallet his wife had left during their most recent visit.

He said he was questioned by a border officer who demanded he turn off his car and, when asked to make the request more politely, threatened to spray him with his pepper gun if he did not comply.

The Fed will lend up to $200 billion to spur consumer lending — for autos, education, credit cards and other things. The bold program, dubbed the Term Asset-Backed Securities Loan Facility, was first announced late last year and originally scheduled to start in February.

Participants — companies and investors that pledge eligible collateral to back the loan — must request the new government loans by March 17. The Fed will provide the three-year loans on March 25.

The Fed said the program has the potential to generate up to $1 trillion of lending for businesses and households.

“The TALF is designed to catalyze the securitization markets by providing financing to investors to support their purchases of certain AAA-rated asset-backed securities,” the Fed and Treasury Department said in a joint statement. “The TALF will assist lenders in meeting the borrowing needs of consumers and small businesses, helping to stimulate the broader economy.”

Under the program, the Fed will buy securities backed by different types of debt including credit card, auto, student and small business loans. The credit crunch — the worst since the 1930s — has made it much more difficult for people to obtain such financing , and those that do can be socked with high rates.

The Fed plans to keep the program running through December, but said it could be extended.

Treasury Secretary Timothy Geithner announced an expansion of the Fed’s program on Feb. 10, saying it also will include support for commercial mortgage-backed securities. The central bank said teams from Treasury and the Fed are now analyzing the right terms for the commercial real-estate component.