Monday, May 08, 2006

A bit of forgotten history...

Evidently Alan Greenspan wasn't exactly open with Congress way back when...

Beginning in 1965, the Fed started to release paraphrased transcripts of Federal Open Market Committee meetings with a five-year lag.
A decade later, Fed Chairman Arthur Burns faced down a threat to Fed secrecy when a Georgetown law student brought a suit under the Government in Sunshine Act, challenging the 45-day delay in releasing the Fed's directive on monetary policy.
Burns devised a poor substitute, the so-called "minutes" of FOMC meetings, which are still issued by the Fed. They are a poor substitute for transcripts because they provide no attribution for opinions expressed in the meetings, except a sentence or two when there is the occasional negative vote.
Burns told the Congress that the transcripts were "routinely disposed of" and unavailable to the public.
For 17 years, this lie stood until Rep. Gonzalez began battling Fed Chairman Alan Greenspan. Gonzalez was chairman of the House Financial Services Committee.

In 1992 and 1993 Gonzalez sent letters to Greenspan, asking whether public transcripts of their FOMC meetings would impair Fed policy making.
Gonzalez sent shock waves into the Greenspan Fed when he suggested legislation requiring videotapes of their FOMC meetings to be released in sixty days.
Although Gonzalez had no knowledge of the transcripts, he could not believe that the central bank of the United States did not keep complete records of its policy-making meetings. He invited Greenspan and the top Fed decision-makers to testify in October 1993.
The Fed bank presidents and governors had specific written inquiries from Gonzalez to describe any records kept of FOMC meetings. They were curiously unresponsive about FOMC records. One president testified about doodles he made at the meetings and later discarded. No one mentioned the 17 years of transcripts.
Rep. Maurice Hinchey, D-N.Y., probed Greenspan for a straight answer.
Greenspan replied: "There is no permanent electronic record that is correct. We obviously have rough notes."
Gonzalez believed the Congress had been misled. He turned on the heat.
One Fed bank broke ranks.
Officials at the Cleveland Fed notified the committee that there had been a FOMC conference call four days before the hearing to plan the strategy of not mentioning the cache of secret transcripts.
The transcript of that phone call reveals deliberate planning by Greenspan and his staff to mislead the Congress.

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