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.
The problem, critics say, is that it's unclear exactly how much money AIG actually needs because there is no certainty about how much the insurance giant will ultimately lose as a result of its credit default swaps -- insurance contracts that kick in when investments such as mortgage-backed securities fail.
"Not only do people not understand what's on the books, it's impossible to put a fair valuation on them," said Barry Ritholtz, the author of "Bailout Nation: How Easy Money Corrupted Wall Street and Shook the World Economy" and the CEO of the institutional research firm Fusion IQ.
Critics question whether the government will have to provide even more money to AIG.
Brookly McLaughlin, a spokeswoman for the Treasury Department, said she wouldn't speculate on whether the recently-restructured AIG package was enough.
But, she said, "we think that the steps taken today are important to giving them a more sustainable capital structure and helping them to be better able to execute their asset disposition."
Under the government's $700 billion rescue package, $250 billion is supposed to be allocated directly to banks.
By infusing banks with capital, the program aims "to increase the flow of financing to businesses and consumers to support our economy," Kashkari said at the securities summit.
The Treasury last month named nine big banks that would receive funding through the program –- known as the Capital Purchase Program –- and how much money each would receive. (A list is available here.) Kashkari said Monday that hundreds of other financial institutions have applied for the funds and that "a number of them" had been granted preliminary approval.