Oversight and Panic

The U.S. Fed­eral Reserve is report­edly refus­ing to dis­close the iden­ti­ties of the recip­i­ents of $2 tril­lion in bailout funds. See here.

This action poses a moral dilemma. One one hand, the Fed­eral Reserve, though offi­cially inde­pen­dent from the gov­ern­ment, should sub­mit to over­sight by Con­gress. After all, the United States is a repub­lic that, in the end, is run by the peo­ple — and the peo­ple should know which finan­cial insti­tu­tions are suf­fer­ing so they can save and invest their money accordingly.

But on the other hand, any iden­ti­fied finan­cial insti­tu­tion would suf­fer greatly. If the Fed­eral Reserve stated that Bank of Amer­ica, for exam­ple, needed $1 tril­lion to remain sol­vent, then every sin­gle depos­i­tor would with­draw his money the next day, and every investor would sell his stock. The bank would perish.

What to do?