Federal Reserve Chairman Ben Bernanke's testimony before Congress shows the central bank, and by extension the US government, will only go so far to provide investors with transparency.

Nineteen days elapsed between the Fed's decision to lend financial support to Bear Stearns Cos, the country's fifth-largest securities firm, and Bernanke's disclosure on Wednesday that the firm warned about having to file for Chapter 11 bankruptcy before receiving the emergency funding.

That's about as long as it takes the Fed's policy-making arm, the Federal Open Market Committee, to release the minutes of its meetings these days.

The delay time was cut in half, to three weeks, in 2005.

Before then, people couldn't learn what policymakers discussed before their next get-together.

When it comes to Bear Stearns, though, the stretch of time was more like an eternity.

In between, the New York-based firm was wedded to JPMorgan Chase & Co, which initially offered a mere $2 a share in stock and then raised the bid to $10.

Bear Stearns' chairman, James Cayne, and a director, Paul Novelly, sold stakes after the increase.

It's much easier to put all this in perspective now that Bernanke, in appearing before the Joint Economic Committee of Congress, made the Chapter 11 reference.

Yet it's too late to help those who bought Bear Stearns shares on March 14, the day that the Fed's arrangement was announced.

While the stock declined by 47 percent that day, Bear Stearns closed at $30, giving the firm a market value of $3.9 billion.

Investors presumably would have paid far less, as JPMorgan did, if they had been explicitly told the Fed was seeking to avert a bankruptcy filing.

Some may have figured that out, of course. Speculation that the firm was headed for a Chapter 11 filing surfaced in the days before the Fed acted.

Then again, the move was unprecedented in the central bank's 95-year history. So it's understandable that its significance might have been lost in the early going.

The lack of clarity was compounded because much of what happens at Bear Stearns, and throughout its industry, is opaque by design.

Richard X. Bove, an analyst at Punk, Ziegel & Co in Lutz, Florida, routinely cites this information void as a risk factor in his reports on financial stocks.

"These companies do not provide adequate data concerning their holdings of loans and securities," writes the analyst.

"In this sense they are blind pools and investors become aware of problems only after they have occurred."

Bear Stearns' collapse provides a gripping example of how this can work to investors' disadvantage.

Unfortunately, so does Bernanke's decision not to disclose the firm's Chapter 11 threat until Wednesday.

David Wilson is a Bloomberg News columnist. The opinions expressed are his own.

(China Daily 04/04/2008 page17)