Dec. 12 (Bloomberg) -- The Federal Reserve took advantage of emergency powers to authorize the auctions that officials felt were necessary to ease a credit squeeze, concluding it otherwise lacked legal permission to do so.

The Fed bypassed requirements for prior notice and public comment when writing the regulations to implement today's agreement with the European Central Bank and three other central banks. The Fed's official notice today said any delay caused by following standard procedures would have been ``contrary to the public interest.''

Such actions, while used ``sparingly'' over the years, were justified today because the new rules probably carry few costs, a former Fed attorney said. The action today was part of a coordinated effort with other central banks to alleviate a global growth slowdown, acting after interest-rate cuts failed to allay concerns that banks will reduce lending.

``It's something that they normally don't do,'' said Oliver Ireland, who worked as a Fed counsel for more than two decades and is now a partner at Morrison & Foerster in Washington. ``If you look at doing things to stabilize volatile markets, I don't think it's very hard to find good cause. There's no tangible harm to anybody.''

The Fed uses the bypass powers regularly when changing the rate on direct loans to banks, though rarely when publishing broader rule changes. The Administrative Procedure Act requires federal agencies to give public notice and solicit comments on regulatory changes though with exceptions, Ireland said.

`Good Cause'

Such notice wasn't needed in this case, the Fed said, because the decision relates to ``public loans'' and because there's ``good cause'' to justify no delay. Any wait in adopting the rule changes would be ``impracticable, unnecessary and contrary to the public interest.''

In addition, any advance notice may have spoiled the relative surprise the Fed and its counterparts delivered today.

It's not the first time Fed officials have taken unorthodox steps to prevent word of an upcoming decision from leaking. In August, St. Louis Fed President William Poole skipped an emergency conference call among policy makers and kept dinner plans with university professors and students to avoid any hint the central bank was going to cut the discount rate and revise its economic outlook the next day.

The Fed said that today's changes would be temporary and end on an unspecified date. If officials sought to make them permanent, the central bank would seek public comment.

``In general, we would like for the Fed and other regulatory agencies to solicit comments, but given the circumstances, it was important to move quickly,'' said Keith Leggett, senior economist at the American Bankers Association in Washington.

To contact the reporter on this story: Scott Lanman in Washington at slanman@bloomberg.net

Last Updated: December 12, 2007 16:16 EST