[Congressional Record Volume 140, Number 7 (Wednesday, February 2, 1994)]
[House]
[Page H]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: February 2, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
                   THE FEDERAL OPEN MARKET COMMITTEE

  The SPEAKER pro tempore (Mr. Strickland). Under a previous order of 
the House, the gentleman from Texas [Mr. Gonzalez] is recognized for 60 
minutes.
  Mr. GONZALEZ. Mr. Speaker, if there is one thing that affects all of 
us it is monetary policy--but we know next to nothing about how it is 
made. That is why it is critical that we hold the powerful Federal Open 
Market Committee, comprised of 12 Federal Reserve officials, 
accountable for their individual decisions which affect our employment, 
inflation, and the value of our currency.
  In 1976, the Federal Reserve severed its ties to public 
accountability when it told the Banking Committee and the world that it 
had stopped taking detailed minutes of its FOMC meetings. Before 1976, 
these minutes had been released to the public, albeit with a 5-year 
lag.
  It came as quite a surprise to learn that the Federal Reserve has 
continued to take detailed minutes and maintains neatly typed 
transcripts of every FOMC meeting.
  Were it not for the Banking Committee's persistent questioning, the 
existence of the transcripts might have remained a secret. For example, 
when the Banking Committee held a hearing on October 19, 1993, to 
address that very important question, the Federal Reserve, as is its 
habit, tried to sidestep the issue.
  Congressman Maurice Hinchey asked Federal Reserve Chairman Greenspan 
at that hearing about a permanent record of FOMC hearings, Chairman 
Greenspan replied:

       There is no permanent electronic record, that is correct. 
     We obviously have rough notes----

  But lo and behold--he shaded the truth and none of the other Federal 
Reserve witnesses offered a correction. At Federal Reserve headquarters 
there are 17 years' worth of verbatim transcripts. One week later, 
Federal Reserve Chairman Alan Greenspan admitted as much in a letter to 
me.
  The Federal Reserve also said it would begin issuing transcripts from 
1976 to 1988, starting sometime this year with 1988 transcripts. The 
Federal Reserve said it would take several years to release the 1976 
minutes. Still, the public will have to wait 5 years before the Federal 
Reserve releases its current FOMC meeting transcripts.
  I find this offer wholly unacceptable for a number of reasons. One is 
the long-time lag. Another reason is that the Federal Reserve cannot be 
trusted to provide reasonable or even accurate editing.
  Recently, a news organization requested under the Freedom of 
Information Act, some of the FOMC transcripts. It received 
approximately 84 mostly blank pages. Is that the kind of editing we can 
respect?
  I have obtained nearly 3,000 pages of edited Federal Open Market 
Committee transcripts from the Arthur Burns collection at the Gerald R. 
Ford Presidential Library in Ann Arbor, MI. These transcripts were 
edited according to national security guidelines with very few 
deletions. Arthur Burns was Chairman of the Federal Reserve from 
February 1970 to January 1978.
  However, like today's Federal Reserve, these old transcripts clearly 
show disdain for disclosure rather than the kind of accountability 
needed in a democracy. Some things never change.
  Citizens who request FOMC transcripts under the Freedom of 
Information Act will now be able to see how the Burns-era FOMC 
transcripts, edited by the National Archives and Records 
Administration, compare with the Federal Reserve's heavy-handed 
editing.
  ``The Federal Reserve's 17-Year Secret,'' a committee staff report I 
recently issued, describes the methods the Federal Reserve has employed 
over the years in hiding its inventory of FOMC transcripts.
  Mr. Speaker, today I submit for the Record part of the FOMC 
transcript of the May 18, 1976, FOMC meeting in which Federal Reserve 
Chairman Arthur Burns directs that the summary issued 45 days after 
each FOMC meeting be made to look a little thicker so the public would 
not object to the loss of the detailed minutes, which were 
unceremoniously dropped in 1976. Chairman Burns said to the FOMC:

       I think you credit individuals who follow the Federal 
     Reserve with more knowledge than I think many of them really 
     have. [. . .] I'm not going to say that we should do anything 
     that remotely resembles padded, but produce several 
     additional pages.

  These transcripts will clearly show why we need individual records of 
the actions taken by those who determine the Nation's money supply.

       CB. Gentlemen, we'll get our meeting under way. During the 
     past 2 or 3 meetings, we have deliberated on the desirability 
     of continuing the memorandum of discussion or discontinuing 
     it, and also the desirability of changing the character of 
     the policy record, in front of me. The desirability of 
     reducing the lag in the release of our policy record. Now at 
     our intermeeting, the Committee agreed in principle with the 
     following: (1) the memorandum of discussion should be 
     discontinued; (2) the policy record should be expanded to 
     include more information on the factors of considerations 
     underlying the Committee's policy decision; and (3) that the 
     lag in the release of the policy records should be reduced by 
     some 10 or 15 days from the present lag of approximately 45 
     days. This was an agreement in principle, and the Committee 
     did not act formally at the intermeeting. The Committee did 
     not act formally in part in order to enable the staff to 
     consult with the Justice Department without these actions in 
     the light of the law suit, that the Committee is presently 
     involved in. And Mr. Broida informs me that members of the 
     Committee have been advised that representative of the 
     Justice Department has concurred in the reasonableness of our 
     proposals--in other words, he sees no objection or difficulty 
     from the viewpoint of the law suit. Is that correct?
       Broida. That's correct.
       CB. To go on with the review of where we were, and what has 
     taken place since the meeting, at the April meeting the 
     Committee also left open the question of the specific 
     duration of the lag in releasing he policy record. And our 
     staff has studied various possible schedules and on the basis 
     of its studies, our staff has concluded, and I'm inclined to 
     agree, that the best procedure, all things considered, would 
     be to release the record for each meeting on the Friday 
     following the next meeting. In other words, we hold the 
     meeting--this is the May meeting, some four or five weeks 
     from now we'd be meeting in June, the policy record for the 
     May meeting would be released on the Friday following our 
     June meeting held on a Tuesday. Now, to you the Committee 
     some insight into the new procedure, and if we choose to 
     adopt it, the Committee drafted a preliminary version of an 
     expanded policy record covering the meeting. And this was 
     done in order to test the feasibility of the new procedure if 
     we finally decide to take that road. And I understand from 
     Mr. Broida that the process of clearing, getting comments 
     from members of the Committee went well, and Mr. Broida may 
     want to say something about that later on. Now, we've agreed 
     to, privately, formal and final action today. And if the 
     Committee decides to adopt the new procedures, namely, to 
     drop the memorandum of discussion, to have an expanded policy 
     record, and to release it some 30 or 35 days after our 
     meeting. If the Committee decides to adopt the new 
     procedures, I think it would be desirable to hold a press 
     conference to explain these procedures at the time when the 
     first policy record is released on the new schedule. 
     Regrettably, I will be out of the city on Friday, and such a 
     press conference, if we proceed in this way would have to be 
     delayed until next Monday. But the plan would be to make the 
     release, henceforth, on a Friday following the Tuesday 
     meeting. Now 2 elements of the proposal of this new approach 
     were left open at the time of our April meeting. One was the 
     suggestion that the Secretary place in the files memoranda 
     that would summarize informal Committee decisions and 
     understandings; and the second item that was left open was 
     that the minutes of the Committee's deliberations be expanded 
     to include explanations of procedural actions. Now we could 
     hold a long debate on these outstanding items; I would 
     suggest that we not do so. I would suggest that occasions may 
     arise when such procedures would be appropriate, and that a 
     Committee or a Subcommittee--special Subcommittee--be 
     appointed to deal with these unresolved technical issues. 
     That Subcommittee might have a great deal to do, and again 
     that Subcommittee might have literally nothing to so. Now 
     that is summary of where we are or where we might want to go, 
     and before we proceed to an informal voting, we might want to 
     address specific questions that members of the Committee may 
     have. The questions may be directed to Mr. Broida, to Mr. 
     O'Connell, or to me. Is there any questions?
       CB. Yes, Mr. MacLaury.
       MacLauary. Thank you Mr. Chairman. I've been thinking about 
     Sunshine in Government today and in that context my wonder is 
     that were the bill pass as it presently is being proposed, am 
     I correct in thinking that we would be required to keep a 
     verbatim transcript and if so, wouldn't that make moot this 
     question of whether we drop the memorandum of discussion? 
     That's my question.
       CB. I'm going to turn this over to Mr. O'Connell.
       TJOC. Mr. Chairman, in the present wording of the bill, we 
     hope to be able by liberal interpretation of that language, 
     if it isn't changed from present wording of both Senate and 
     House version of the Sunshine Bill, President MacLaury, to 
     assert that the Sunshine Legislation is not applicable to the 
     FOMC.
       CB. Let me just interrupt. I think this is a statement that 
     literally should be kept to ourselves. We should not--no 
     member of the Committee should discuss that with any of his 
     aids or anyone else at any time because we run the risk or 
     amendment that might make life a good deal more difficult for 
     us.
       TJOC. Yes sir. At this time it has not been discussed by 
     anyone.
       There had been many allusions, I think perhaps loosely 
     used, Mr. MacLaury to applicable to the FOMC. Some in defense 
     of our position that it should not be covered. We haven't 
     asserted applicability to the FOMC. Our position has always 
     been the Board's trouble with this bill. Others have 
     converted that to use of the term FOMC. Assume for a moment 
     though, that it is held to be applicable either by an 
     amendment in the language if that occurs or by Court 
     decision, and if thus this Committee is subjected to the 
     provisions of the FOMC Sunshine Bill has finally passed, if 
     it is in any form paralleling that of its present language, 
     meetings the Committee would be subject to the transcript 
     requirements of verbatim transcript with the requirement that 
     the portion that is not exempt under one of the ten 
     exemptions now in the bill, if they follow through, be made 
     immediately available to the public. The balance, if it fits 
     any of the exemptions can be deleted and withheld by the 
     Committee, but the verbatim transcript would be required.
       Broida. May I add. The memorandum of discussion, of course, 
     is a rather different document from a verbatim transcript 
     that's condensed and written in the third person and 
     presumably a more efficient record of the meeting. But, and 
     also the verbatim transcript under the bill as I understand 
     it, the parts that are not made public need be held only for 
     2 years and need never be made public. Whereas, the 
     memorandum of discussion under present practices made public 
     after 5 years. But if there is a verbatim transcript made 
     public, in part or in whole under the Government in the 
     Sunshine Act, I think the Committee would certainly not want 
     to have a competitive report of the meeting in being at the 
     same time.
       TJOC. May I add Mr. Chairman too, in reference to Art's 
     point that a certain portion need not be published in the 2nd 
     year. We have great question of the certitude with which that 
     could be asserted for the reasons that we anticipate law 
     suits being filed of many agencies demanding that a Court 
     determine that a certain closed meeting was improperly closed 
     and that the transcript should not have been withheld, and 
     thus, they will ask that the Court examine and make public 
     even withheld portions of the transcript. I think this is a 
     reasonable anticipation.
       CB. All right, any other question or comment?
       Wallich. I have a question with regard to the general style 
     of the expanded policy record. I don't know whether it's 
     appropriate at this time to bring that time.
       CB. Yes, yes, it certainly is.
       Wallich. I think this is what we saw an extremely well done 
     piece, and what I'm going to say is in no way critical of the 
     fine work that's gone into it. It does seem to me that it 
     kind of aims a great deal of the material that is familiar to 
     every reader of the newspapers who know GNP was such, 
     employment was such and so forth, now it's interesting to 
     somebody who studies these matters carefully to know what 
     information the Committee had, that could easily be 
     accomplished by saying information was available up to such 
     and such a date on particular . . .
       CB. That wouldn't help a historian very much. It would make 
     his task much more difficult.
       Wallich. Yes, but the general reader of this ------, such a 
     reader is really very familiar with all the data that are in 
     that record besides their release with a delay of 30 days or 
     what ever, so that they are not even a useful way for him to 
     recapitulate this information. The interesting information 
     for the reader, I think, is what the projections were of the 
     staff ------, that's new information. My suggestion is that 
     we emphasize the latter and deemphasize the former.
       CB. I follow the trend of thinking and I don't think I 
     wholly agree for 2 reasons. One is purely formal. We're 
     describing this document as an expanded policy record. We're 
     providing more information than in the past. And that is 
     partly the justification for eliminating the memorandum of 
     discussion. Now on the basis of this concept the document 
     should be longer, you see, must be longer, and this is a 
     formal consideration that cannot be neglected, and we need 
     some additional pages. Now as for the information that is 
     contained about the economy, well, I think you credit 
     individuals who follow the Federal Reserve with more 
     knowledge than I think many of them really have. I think 
     it's a useful summary. Those who feel that it merely 
     repeats that which they already know will have no 
     difficulty skipping paragraphs or pages. Those on the 
     other hand, who may find such a recapitulation useful, or 
     it find that they derive new knowledge--knowledge for the 
     first time will have an opportunity to be instructed 
     fully. And therefore, while I understand these criticisms, 
     I think that if anything this document maybe criticized on 
     the ground, coming back to my first formal point, that it 
     is not long enough. Now when this document was first shown 
     to me, it was hardly longer, or just about a page or two 
     longer--2 pages longer than a policy record was in the 
     past. And I told members of the staff, well that will not 
     do. I'm not going to tell you how to add additional pages, 
     and I'm certainly not going to say that we should do 
     anything that remotely resembles padded, but produce 
     several additional pages.
       Mayo. Mr. Chairman, I might say too that to elaborate on 
     your point, even the more sophisticated readers of our 
     document, 3 or 4 weeks later, may be hard put to remember 
     whether or directive came out the day before or the day after 
     the appearance of new GNP figures and this sort of thing. The 
     timing can be sensitive and I think it does make a more 
     complete background information quite apart from the formal 
     requirement here to have the facts as we knew them on that 
     day and not have people wondering why sure, but did this new 
     figure come out before or after that date.
       MacLaury. But perhaps Henry's point could be put a 
     different way which would serve both of your principles and 
     that is, that the interpretation of the existing facts by the 
     staff and by the members is what is now information to anyone 
     outside of this group and the question is whether that 
     information should be supplemented, not to say padded.
       CB. I think that's a good comment, and I think our staff 
     should strive toward somewhat fuller statements in the 
     future. Now they will vary from time to time.
       Coldwell. May I raise a question Mr. Chairman. I'm not 
     going to reiterate all my reasons for objection to this------
     last time, so I'm not going to reiterate. I would.* * *
       Phil we can't hear you down here.
       Coldwell. I would like to know whether the informal 
     understanding memo was planning to be released at any time?
       CB. Now to------on the basis of discussions that I've held 
     with the staff thus far, and on the basis of the discussion 
     that we've had at this table last month, I would say that the 
     present answer probably is no. Now that may not be a good 
     answer, and therefore, we might well want to minimize the 
     occasions where they are simply informal understandings, and 
     seek a maximum of formal explicit understandings which would 
     be included in the policy record. Now Mr. Broida you thought 
     more about these questions than I have and you Mr. O'Connell 
     have, and would each of you to answer Mr. Coldwell's 
     question.
       Broida. I would say I agree with you Mr. Chairman that 
     there's no present plan to release them, but this is fully 
     within the domain of the Committee, and the Committee at any 
     time could decide to make any package of these public. The 
     occasions may well arise in the form of requests under the 
     Freedom of Information Act, presumably the response would be 
     on an ad hoc basis.
       CB. I think that it might be beneficial to indicate 
     explicit just what it is that we're talking about when we 
     discuss informal understandings. If we just talk about 
     informal understandings in the abstract, we may create a 
     conspiratorial mood within this Committee or convey a 
     suggestion. Now, you're the author of the concept of informal 
     understandings, Mr. Broida, would you be good enough to 
     enlighten us just what it is that we might have informal 
     understandings about.
       Broida. There are a category of matters--there is a 
     category of matters with respect to which the Committee 
     reaches conclusions that do not constitute formal policy 
     actions or formal procedural action. A case in point is the 
     agreement in principle reached at the last meeting with 
     respect to the matters under discussion now. This was 
     deliberately not a formal action, but it seemed to the staff 
     worthwhile that some record be made of that discussion and we 
     would simply propose to note it in the memorandum to files. 
     Now, at the March 29 meeting, a special meeting, there was an 
     understanding that RPD's would be dropped from the 
     specifications. The specifications themselves, for reasons 
     that have been discussed earlier, are not formal actions and 
     so a change in the variables for which the Committee makes 
     specifications could not be a formal action, but in the 
     staff's view should be some internal record of considerations 
     underlying that action.
       CB. Let me ask you a question. You have a technical reason 
     here, but suppose we had decided to have a sentence in the 
     policy record that we're dropping the RPD's, suppose we had 
     decided
       Broida. We do * * *
       CB. We do, what?
       Partee. Have such a sentence.
       Broida. In this draft policy record for April there is such 
     a sentence.
       CB. Then I missed the point that you just made.
       Broida. The point is that there is simply a sentence 
     stating that the Committee decided to drop RPD's without any 
     record whatsoever of the discussion * * *
       CB. All right, suppose that we not only decided to do that; 
     well, suppose that the policy record contained, reported not 
     only the decision, but some of the major considerations that 
     led to that decision. Would we be violating some statute that 
     should concern us?
       Broida. No sir.
       CB. All right, therefore, I'd say this is something that 
     is------.
       Coldwell. Unless you can        upward the level of the 
     policy record.
       CB. Yea, have an extra paragraph, and another half page.
       Coldwell. How about the zone of indifference, is that 
     another point in which you put as an informal understanding?
       Broida. I would recommend that the Committee not have any 
     record of a decision with respect to the policy. I take it 
     the zone of indifference is part of the policy decision 
     beyond what's in the policy record. I think it might be 
     dangerous and inappropriate to have it--a secret record of a 
     policy decision that goes beyond the public record of policy 
     decisions. So anything having to do with the Committee's 
     policy decision, I think the full account should be in the 
     policy record and no other record maintained.
       Coldwell. I may have missed it, but is it in this one?
       CB. You see, our difficulty
       Broida. There was no decision on that point.
       CB. Our difficulty is that our--Mr. Broida and Mr. 
     O'Connell have a very clear concept of what is a policy 
     decision and what is not a policy decision. I've never shared 
     that knowledge of that understanding, you see. Now I'm 
     willing to be guided by them and when they explain their 
     reasons, at the moment I do understand them or have the 
     allusion of understanding them, then I forget immediately.
       Balles. I share that problem.
       CB. Let me say just one word. Therefore, I think that 
     responding not to the precise question, but I think to the 
     thought that was at the basis of Mr. Coldwell's question. 
     What we ought to do really is to seek to minimize his formal 
     understandings, and the examples that you've cited I think 
     are matters that could very well--I see no reason why myself, 
     we should not be included in the policy record. And therefore 
     the problem of informal understandings in these instances 
     wouldn't arise. Now, now and then something may arise, but 
     the committee could then determine whether or not that some 
     specific item should be omitted from the policy record and if 
     so, whether a minute should not be retained within our files. 
     So we handle this I think on an ad hoc basis, but I would 
     like to think we'd handle it with the understanding now that 
     we would maximize inclusion of items in the policy record and 
     thereby largely eliminate the need for so-called informal 
     understandings.
       Coldwell. I would certainly hope we would Mr. Chairman, 
     because I think what we're doing is actually reducing the 
     amount of information to venture in the public's domain. If 
     we do this informal * * *
       CB. No I don't think that's true because the items that Mr. 
     Broida is referring to are items that have not gotten into 
     the memorandum of discussion. Is that correct?
       Broida. It has not gotten into the policy record.
       Coldwell. Well, they've been in the memorandum of 
     discussion.
       TJOC. But the term openly is the further point. In 5 years 
     they would be made available.
       CB. But I think that the question that Mr. Coldwell has 
     raised is a good one and I think the proper answer is let's 
     proceed on the principle that there will rarely be informal 
     understandings. Now and then there may be, and that's 
     something we'll act on, on the ad hoc, not have basis. Mr. 
     Balles?
       Balles. Excuse the interruption, Mr. Chairman.
       CB. Not at all.
       Balles. But I was going to say I shared your lack of 
     understanding of certain issues. In my case, I must say I 
     fully support the proposal you made, but I just am mystified 
     by why the specifications are not a part of the policy 
     decision. I know that was explained once--I didn't understand 
     it then and I'd like to be educated.
       CB. Do you really want to be educated on this distinction 
     now?
       Balles. Well, I'd like an executive summary education in 
     two minutes..
       CB. All right.
       Balles. This is not an idle question. It seems to me that 
     with respect to the specs, the specs are such an integral 
     part of what we've talked about here, I am in doubt as to why 
     it shouldn't be in the policy record.
       Broida. They are in the policy record, President Balles. 
     The situation briefly is this. That if a matter is agreed by 
     the Committee to be a policy decision or part of a policy 
     decision, certain consequences follow. In particular, the 
     information must be published in the Federal Register, it 
     must be made available in the policy record.
       CB. It must be made.
       Broida. It must be included in the policy record. Now, 
     subject to the lags and if the Court rules, if the appalete 
     court upholds the District Court these factors, the facts 
     will have to be made available on the day of the meeting. The 
     Committee in the past has not been willing to publish the 
     full specs on the same basis as it has published the 
     directive. For a long time, it was disinclined to publish the 
     long-run or the short-run targets, but then agreed to publish 
     the short-run but not the long-run. It now has agreed to 
     publish full but not immediately to defer publication of the 
     long-run until the Chairman testifies in one of the quarterly 
     hearings. So long as the committee is not willing to accept 
     the consequences of having the specs as part of the policy 
     decision, it cannot appropriately treat them as part of 
     the policy decision. If the Committee can accept all of 
     the consequences then it can't treat them as part of the 
     policy decision.
       Balles. Art, what are those consequences--immediately 
     reached, is that the problem.
       Broida. At present since the district court order has been 
     stayed, they would be released in the policy record on 
     whatever schedule that might        is released, whatever the 
     lag that is released. If the district court is upheld then it 
     would be immediate release.
       Balles. OK. Thank you. I'll try to remember that.
       CB. All right any--yes Mr. Willes.
       Willes. Some time ago I spent many hours in the library at 
     Columbia going through in detail the memorandum of 
     discussion, but on prior        to this Committee and 
     contrary to my expectations they were very happy hours, 
     because I found the memorandum rich in detail and insight 
     into the workings of monetary policy in the Federal Open 
     Market Committee. In recognizing that I'm just a guest here 
     today and I have just a note on that basis some sadness in 
     seeing these particular documents * * *
       CB. Well, I think you would find that a good many members 
     of this Committee carry your sentiments. It's the recent turn 
     of events, within the Congress, within the courts, within the 
     environment in which we dwell that has moved members of this 
     Committee towards the kind of decision that we may be taking 
     today; but it's done, it will be done with, but a feeling 
     sadness by certainly by me and by a good many members of this 
     Committee. Any other question or comment? Well if not, I 
     think we're ready for a formal vote and there are 3 steps 
     that we need to go through or       , that is to say, if we 
     decide to move in the directions that have been now going, I 
     would proceed systematically. First we need a motion that the 
     memorandum of discussion be discontinued after the memorandum 
     of the meeting--of the March meeting.
       So moved.
       Seconded.
       CB. Motion has been made and seconded. Any further 
     discussion of the motion? If not, we'll take a formal vote 
     now.
       CB. Yes.
       Volcker. Yes.
       Balles. Yes.
       Black. Yes.
       Coldwell. No.
       Gardner. Yes.
       Jackson. Yes.
       Kimbrel. Yes.
       Partee. Yes.
       Wallich. Yes.
       Winn. Yes.
       Broida. 10 to 1, Mr. Chairman.
       CB. All right. Now, next we need a motion that the record 
     of policy actions for each meeting of the Committee is to be 
     released to the public shortly after the next regularly 
     scheduled meeting of the Committee--meaning by that, on the 
     Friday normally, normally on the Friday following the Tuesday 
     meetings.
       Mr. Chairman, clarification, I'm assuming you mean Friday 
     afternoon after the markets are closed?
       CB. Yes, that is correct.
       Partee. I have a question too. What would be the treatment 
     of interim votes of the Committee or interim telephone 
     meetings of the Committee, would they be included in that 
     release?
       CB. I would interpret it if I may, that is, let's say, 
     let's take today's meeting. The release would be 3 days after 
     our June meeting and if there are any decisions taken between 
     now and the June meeting by way of telegram or telephone 
     conversation or a special, physical meeting of the Committee, 
     all that would be included in the record of policy actions. 
     Now that's my interepretation, is that correct?
       TJOC. That's correct Mr. Chairman. You recall that was one 
     of the factors you mentioned in arriving at times of our 
     closed interval. You would include those.
       Jackson. If you didn't, you might distort the information 
     that you give to the pbulic which would mislead them rather 
     than inform them.
       Winn. Supposing we'd had a phone meeting last Friday, then 
     would that be included this Friday in your release.
       CB. It would.
       Volcker. Well the information of any sense is distorted 
     anyway. You would have always had another meeting before this 
     is released. That's the object of delaying.
       Partee. Suppose the subject at the Friday telephone 
     conference call had been the bankruptcy of New York, then the 
     discussion on that would be reported very promptly.
       CB. Now there is a question there in my own mind. When 
     members of this Committee have held telephone meetings or 
     conversations via telegram, we announced the decision. We 
     would not have gone beyond that. And I would assume that if 
     members of this Committee chose to talk about something and 
     no decision was reached, then there would be no clear reason 
     for including that in the policy record. And I would leave 
     that to our lawyers.
       Broida. I might add Mr. Chairman that we do not make a 
     policy record for every meeting, only those for which there 
     are policy actions and if as the Chairman suggests, if there 
     is a discussion with no formal policy action that it need not 
     be       
       Partee.        reflective in the policy record.
       CB. But I would say, but I would say that again is a 
     question that this is a procedural questions that members of 
     the Committee may choose to decide one way or another in the 
     future. What I've discribed and what Messrs. Broida and 
     O'Connell have described is the procedure that we have worked 
     with or under up to the present time. This Committee makes 
     its own procedures. For me to change any time that we as a 
     Committee decide to do so.
       Volcker. The fact that there is a meeting is always 
     reported? And if we had a telephone meeting and we have 
     reached now a decision in your terms, you just note that 
     there's been a meeting with no discussion at all?
       Broida. We have in the past included in the following 
     policy record an in dication that there had been an 
     intermeeting and the subject is--there's a case in point in 
     this draft April record, there's a footnote with respect to 
     the March 29 meeting.
       Coldwell. but no action was or in you lights(?) no decision 
     may actually be a decision, would be no action.
       Jackson. How would you say no decision is a decision?
       CB. I don't think this is a matter that should really 
     trouble us because it's only a matter that we should be 
     sensitive to--we should be alert to our own thinking. We 
     wanted--if we have a meeting and no decision is reached, and 
     if we want that recorded, I see no difficulty with recording 
     it? Why not?
       On the other hand, I might see a difficulty if we held a 
     meeting to discuss a specific sensitive issue, than we've 
     reached no decision. Then I would seriously doubt the wisdom 
     of disclosing the sensitive issue on which we met and then 
     decided to take no action.
       Coldwell. My point is you decide to take no action, that in 
     effect is a decision. Suppose we had a situation we were 
     discussing New York and they had applied to us for a loan and 
     we took no action, we neither approve nor disapprove, will 
     that be * * *.
       CB. That's different because then an action would be taken 
     you see. Here is an application that we are ------. We would 
     assemble for the purpose of action on ------. But the--I see 
     no difficulty really.
       Jackson. It strikes me Mr. Chairman that we could well 
     establish the custom to the extent that those meetings were 
     held. That the public record would show that the Committee 
     held either a ------ or other type of meeting for the purpose 
     of debating a discussion of recent events which have 
     transpired since the last meeting. I ------ just be a comment 
     and that no policy actions were taken. And if you establish 
     custom then the nature of the discussion, and I've never seen 
     one of these yet where we didn't discuss more than the day we 
     convened for. So I think that would be an accurate statement.
       Partee. Well, ordinarily there would be some action, that 
     is, in the case, the hypothetical case.
       CB. I can't think of a case where we did not have * * *.
       Partee. It would be a decision to constrain the Federal 
     funds limit or something like that. And I take it then the 
     entry would be that the Committee had had a telephone 
     conference or call to discuss the emerging problems of 
     financial markets, particularly with regard to New York and 
     had decided for the time being to constrain the funds rate. 
     That is, without any discussion of the ins and outs of the 
     thing. It would be a simple reference to the thing. Well, I 
     don't see that that does much damage, because of the public--
     something the public would know, I guess and it would even 
     come out in 3, or 4 or 5 days, or after the ------.
       Black. Point of clarification, question to Art and Tom. 
     Isn't it true that if we get the Government in the Sunshine 
     that we will have to publish the fact that we had a meeting 
     and secondly the general nature of that meeting that the 
     latter discussed.
       CB. Tom has indicated something that we are to keep in our 
     own bosoms and not communicate to anyone that the present 
     best legal interpretation to Tom and our other attorneys is 
     that this Committee will not be subject to Sunshine 
     legislation. And to keep this, never to discuss this in the 
     sensitive days, I cannot emphasize the importance of that too 
     much because it would be so easy to amend the Sunshine 
     legislation, to make sure that we are covered. Any other 
     question? Yes.
       Volcker. Just to return to the same question of the 
     intermeeting. It seems to me the general source one has is 
     one either reports the interim meetings before the next full 
     meeting in the policy record--is that the right term--which 
     comes out immediately after the next full meeting or almost 
     immediate after, or you wait a month and report it with that 
     second meeting. You report the intermeetings that took place 
     prior to the regular meeting. We can go one way or the other. 
     I feel a little bit uncomfortable, although I think it would 
     arise very rarely if we did have a intermeeting just before 
     our regular meeting, what's the point of delaying the report 
     on the regular meetings since it probably pretty much 
     validated what you did at the intermeeting, why delay that a 
     whole month. It seems a little inconsistent if we feel that 
     there is some point in delaying the report basically a month. 
     I suppose you could split the difference by saying you're 
     going to report in any intermeeting that takes place 20 
     days before the release or something like that. So once it 
     got near the next meeting would be the following report 
     then.
       CB. May I say a word. We've had interim meetings during the 
     past several years and we have reported those within the 
     interval of 45 days.
       Broida. 90.
       CB. Oh well, yes 90 days, and then.
       Broida. The lag period.
       CB. And, I'm not aware of any difficulty that has arisen as 
     a result of reporting these special meetings and all that is 
     involved now is shortening not a change in--if a change in 
     one respect and one respect only--shortening the period from 
     45 to some 30 or 35 days.
       Broida. Mr. Chairman, in announcing this change and its 3 
     publicly will the rationale behind the change be explained or 
     what will that rationale be--I mean in other words, why does 
     the public think we're doing this?
       CB. Well, that's the purpose of--instead of having a mere 
     press release, it seemed wise to hold a press conference to 
     explain the reasons for these changes, and to give newspaper 
     men financial writers, an opportunity to ask such a question.
       Coldwell. Why are we reducing from 45 to 30.
       CB. We want to provide the public with maximum of 
     information in the shortest possible time. Yes, Mr. Broida 
     wants to comment on Mr. Volcker's * * *.
       Broida. Mr. Chairman, most of the intermeeting 
     consultations that we have had, they have generally been by 
     telegram rather than telephone, have involved modifications 
     of the instructions issued at the previous meeting and apply 
     to the remaining period until the next meeting. If they were 
     not reported at the same time as the decision which they 
     modify, the public might well conclude that the Manager is 
     violating his instructions where in fact he's been acting 
     under modified instructions.
       CB. Well, not only that but by that time the market will 
     have validated the Committee's special decision.
       Jackson. This is really a lewd discussion because the 
     procedural issues are subject to change by the Committee at 
     any time. I think we haven't had any occurrence whether delay 
     of release of information would be appropriate, all we do is 
     change our procedures.
       Volcker. I think that's right, it would arise very rarely.
       Jackson. ------, but if that ------. Then we've got that 
     alternative is open to us so we really don't have any 
     problems.
       CB. That's true, but I want to modify a statement I made 
     previously. I think that if we do have a special meeting, 
     telephonically or otherwise, and if no decision, no policy 
     decision is reached, the fact that such a meeting had 
     occurred I think should be made a part of the record. Should 
     be made a part of the record even though no action was 
     reached. I think it's a better ------ and I think I spoke 
     hastily at the outset.
       Volcker. I make the motion if that's what you're waiting 
     on.
       CB. All right the motion has been made, should the motion 
     be repeated. The motion is simply that the record of policy 
     actions for each meeting of the Committee is to be released 
     to the public shortly after the next regularly scheduled 
     meeting of the Committee. Now the reason for saying shortly 
     after is, there may be special circumstances for making the 
     release not on the Friday following the meeting of the 
     Committee, but a day or two later and it's to take care of 
     contingencies of that sort. One such contingency is arising 
     immediately. That is, we want to make this release at the 
     time of the press conference or the press conference cannot 
     be held on Friday. Well, we're ready for the vote.
       CB. Yes.
       Volcker. Yes.
       Balles. Yes.
       Black. Yes.
       Coldwell. Abstained.
       Gardner. Yes.
       Jackson. Yes.
       Kimbrel. Yes.
       Partee. Yes.
       Wallich. Yes.
       Winn. Yes.
       Broida. 10 for and one abstaintion.
       CB. All right, now we have a 3rd item that we have to vote 
     on and this is an item that I'm going to ask Mr. Broida to 
     explain. I shall vote for it, then I hope I shall understand 
     it.
       Broida. Mr. Chairman, in the Committee's rules regarding 
     the availability of information as noted in the memorandum 
     from Mr. O'Connell and myself to the Committee, section 
     271.5(a) sites as an example of the policy of deferred 
     availability of information that the Committee releases its 
     directive and information pertaining thereto 45 days after 
     the meeting. We recommend simply that the Committee amend the 
     rules to delete that language. As an example it is not 
     essential to an understanding or the thrust--it does not 
     modify the thrust of the rules and it would obviously be in 
     conflict with the action the Committee had just taken to 
     release the record shortly after the next meeting.
       CB. Any question or discussion? Well we're ready for a 
     vote.
       Partee. You are not substituting anything, you're just 
     deleting it.
       TJOC. Just today.
       CB. Yes.
       Volcker. Yes.
       Balles. Yes.
       Black. Yes.
       Coldwell. Yes.
       Gardner. Yes.
       Jackson. Yes.
       Kimbrel. Yes.
       Partee. Yes.
       Wallich. Yes.
       Winn. Yes.
       Broida. Unanimous, Mr. Chairman.
       CB. Well, I think we've disposed of the--oh, I'm terribly 
     sorry. Well, Mr. Broida is calling my attention to a note 
     that he prepared in my behalf--I'm not sure that it is 
     necessary to take this up, but I also see no harm in doing 
     so. And therefore, I will read the note that Mr. Broida 
     prepared for me. The suggestion is that we arrive at an 
     informal consensus--we may already be in trouble--that it 
     would be desirable to expand the record of policy actions to 
     include more detailed information on members views concerning 
     longer-run and currency policy. I think we've decided all 
     that. We ought to have an expanded policy record. Do you have 
     anything else in mind?
       Broida. No.
       CB. Well, let's leave this quickly then. Now there is a 5th 
     item. I am advised that it need not be covered because it 
     already had been covered. Let's leave this quickly. All 
     right? Are we legal?
       TJOC. Yes sir, I think you've in substance have covered 
     both of these points and subsequent questions.
       CB. Let me appoint a Subcommittee that I refer to but the 
     intention would be to give this Subcommittee nothing to do. 
     This is, you see we talked about informal understandings to 
     be put away in our, to be recorded in our files. I think 
     we've reached a decision, a consensus, that we will minimize 
     such occasions and strive for, and try to proceed in such a 
     fashion that there will be no need for informal 
     understandings and yet we have to be pragmatic and recognize 
     that such a need may arise. And to help our secretary 
     discharge his duties, and to take care of troubles that may 
     arise, and which I hope will not arise, let me appoint a 
     Committee consisting of Mr. Gardner as Chairman, Mr. Volcker 
     and Mr. Partee, who are to be consulted by the secretary. But 
     now let me ask you, you know I've been away and since getting 
     back I've had to prepare a speech and cover a lot of ground, 
     and I'm less well prepared for this meeting than I'd like to 
     be or ought to be. But I seem to recall that we felt a need 
     for a Committee not only for this purpose but for a wider 
     purpose. The secretary may need assistance and some guidance. 
     There will be comments from Committee members that he may 
     find it difficult to resolve. Didn't we discuss that? Or is 
     it my imagination?
       Broida. I don't recall the discussion.
       CB. Well, can we not do this, consider this a Committee 
     that the secretary may find it useful to consult in 
     connection with difficult questions that arise in the 
     preparation of the policy record. All right? Well I think 
     we're ready for our regular meeting. Let's take a recess for 
     2 or 3 minutes. To stretch our legs.

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