Fed's Delay on Release of Meeting Transcripts Will Be Scrutinized by Issa
The prospective head of the U.S. House Oversight Committee said he will consider whether the five-year lag time for the release of transcripts of Federal Reserve meetings should be shortened.
“If the Fed’s full transcripts can be released sooner, they should be,” said Representative Darrell Issa, a California Republican who’s set to chair the panel in January, in an interview. “If they’re going to have some definable negative effect on their deliberations or ability to do their job and on markets, then we have to be cautious.”
Issa’s proposal comes amid rising criticism of the central bank by Republicans, who won control of the House in November elections. John Boehner, the presumptive House speaker, and three other Republican leaders have criticized the Fed’s plan, announced a day after the election, to buy $600 billion of assets to boost the economy, saying it risked weakening the dollar and fueling asset bubbles.
Shortening the time before transcripts are disclosed is the first specific Fed issue Issa has indicated he will examine after pledging to intensify scrutiny of the central bank. The Fed in 1995 began its policy of releasing verbatim discussions with the time lag under pressure from Henry Gonzalez, the Democratic chairman of the House Banking Committee in the early 1990s.
Issa, now the senior Republican on the oversight panel, said yesterday that he had discussed the issue in a private meeting with Kansas City Fed President Thomas Hoenig, who was in Washington for a separate meeting with House Republicans.
‘Slightly Shorter Time’
“He didn’t see it as inherently wrong” to shorten the delay, Issa said. “But he obviously thought that the next day was too soon, five years he was comfortable with and that we would work on whether there was a slightly shorter time.”
Diane Raley, a spokeswoman for Hoenig, said Issa’s characterization of Hoenig’s position is accurate.
The five-year delay “eliminates any opportunity to say their decision may have been wrong,” Issa said. He cited interest-rate cuts in 2002 and 2003 that some critics say fueled a U.S. housing bubble that led to the financial crisis that began in 2007.
“If you assume that those kind of timelines are correct, then it begs the question of, ‘Is there enough transparency soon enough?’” Issa said. Fed Chairman Ben S. Bernanke has said the central bank’s monetary policy wasn’t responsible for causing the housing bubble.
Michelle Smith, a spokeswoman for the Fed in Washington, declined to comment.
The central bank releases minutes of meetings, which take place eight times a year, about three weeks afterward. The minutes summarize meetings without giving verbatim quotes or identifying policy makers who make remarks.
The prospect of increased transparency follows this week’s release by the Fed, under orders from Congress, of documents naming recipients of $3.3 trillion of central bank aid during the financial crisis, along with details including the amounts of loans, interest rates and dates. Issa said he wasn’t prepared to comment on that issue.
Federal Reserve officials are considering steps of their own to increase transparency, possibly including regular press conferences by Bernanke. He is the only head of a major central bank who doesn’t give media briefings to explain actions and projections.
“The five-year lag is certainly something we can look at,” St. Louis Fed President James Bullard said today in a taping of C-Span television’s “Newsmakers” program to air Dec. 5. “But I think the feeling has been that you do want to keep those deliberations open and honest and as forthright as possible, and then you want to release the information once it’s not likely to have as much impact on financial markets.”
Over the past two years, Issa’s committee has disclosed internal Fed e-mails that he says showed cover-ups of bailout payments to creditors of American International Group Inc. and details of Bank of America Corp.’s takeover of Merrill Lynch & Co. Fed officials have said they didn’t try to limit public disclosures on Bank of America and that AIG information that was required to be released was disclosed by the company.
Representative Jim Jordan, the Ohio Republican who is likely to chair a subcommittee under Issa, will “have a lot of impact” on the Fed transparency effort, Issa said. The panel may hold hearings and conduct studies of the issue before considering any potential legislation, he said.
“I always prefer if good suggestions were taken and they prevent legislation or if enabling legislation is agreed to in a process,” Issa said.
Republicans are taking chairmanships of House committees in January after winning control of the chamber in the November midterm elections.
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