How Bad Really Were Bank of America (NYSE:BAC), Citigroup (NYSE:C), Wells Fargo (NYSE:WFC), JPMorgan (NYSE:JPM)? – We are going to find out!

A federal appeals court ruled today that the Federal Reserve must release information concerning which financial institutions may have collapsed if they hadn’t intervened with bailing them out. Bank of America (NYSE:BAC), Citigroup (NYSE:C), Wells Fargo (NYSE:WFC) and  JPMorgan (NYSE:JPM), among others, have been fighting to keep the information secret.

The Federal Reserve now must release the documents which would provide the details sought from a lawsuit filed by Bloomberg News to attain them.

A lower-court judge had made the same decision in August 2009, and this ruling upholds the original decision to make the records available to the public concerning the extraordinary $2 trillion spend on the taxpayers behalf.

In my opinion the argument by the Board of Governors of the Federal Reserve was always weak and lame, saying the reason the information shouldn’t be released would be because it would cast the banks in a negative light, or could “stigmatize” them. But that argument can’t even be taken seriously in the light of public opinion of the banks over the last couple of years. What more could be done to harm the view of Americans concerning the banks operating in this country? All this does is identify and/or confirm what happened specifically to each bank; at least hopefully it will.

Still, the request to view the loan records of banks under the U.S. Freedom of Information Act was an unusual one, and one that normally wouldn’t be agreed to because of concerns over information being leaked over competitive trade secrets of the banks.

In reference to those trade secrets, U.S. District Judge Loretta Preska said there was no proof the banks would suffer any harm, or that trade secrets would be revealed. Trade secrets are protected from being released to the public, and in this case it wasn’t considered a factor, one of the reasons the judge rules as she did.

Most of the battle came from what is called the discount window and whether or not the banks had borrowed from it or not. This is what the concerns over being stigmatized was referring to, as it would reveal which ever bank borrowed from it would have experienced liquidity problems.

Supposedly it raises concerns there could be a run on the banks if the information were to be revealed, but that’s highly unlikely at this point in the process, unless there are ongoing liquidity problems investors or consumers may pursue further to see if they’re still there after borrowing from the discount window in the past.

Other banks arguing to keep things secret besides the four largest banks were ABN Amro Bank NV, Deutsche Bank AG, HSBC Holdings Plc, The Bank of New York Mellon and US Bancorp.