Government Rescue Spending: Clear or Cloudy?

The Fed's Mysterious Borrowers

But questions about transparency at the Federal Reserve, in particular, have prompted a lawsuit: Bloomberg L.P., which operates the news agency Bloomberg News, is suing the Fed for the release of information on its lending to private financial institutions.

The amount of money the Federal Reserve regularly lends to private institutions has increased exponentially since the start of the financial crisis and the creation of new Fed lending programs.

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"We really don't know anything," Matthew Winkler, the editor-in-chief of Bloomberg News, told ABCNews.com. "All we know is something close to 2 trillion is being used and that money is the taxpayers'. ... We don't know whom it's being lent to and for what purpose because we can't see it because it isn't disclosed."

The Bloomberg lawsuit specifically requests information on what assets the Fed is taking as collateral in return for its loans. According to the Federal Reserve Web site, the Fed accepts collateral in the form of mortgage-backed securities along with other assets.

"Taxpayers are entitled to understand and assess the decisions by the Fed on the valuation of the collateral it accepts as security for public money being lent to private institutions," the lawsuit states.

Supporters of the Fed's work counter that it shouldn't reveal the identities of the banks that borrow from it –- and, accordingly, what collateral they use -– because that could attach a stigma to borrowing from the Fed and could discourage the use of Fed lending facilities.

A Federal Reserve spokeswoman declined to offer comment on the suit.

While the Fed faces questions about its lending practices, the government as a whole is facing questions about whether its latest multibillion-dollar attempt to bolster AIG has even a remote chance for success.

Months earlier, the government had announced that the Federal Reserve would lend the troubled insurance company $85 billion. Later it announced it would lend an additional $37.8 billion.

The government said Monday that it was restructuring its AIG plan to include a total of $97.8 billion from the Federal Reserve and a $40 billion infusion from the Treasury Department. The Treasury Department would, in return, receive a stake in AIG in the form of preferred shares. The money for the government's investment would come from the $700 billion financial rescue plan approved last month.