This transcript has been produced from the original raw The Secretariat has transcript in the FOMC Secretariat's files. lightly edited the original to facilitate the reader's understanding. Where one or more words were missed or garbled in the transcription, In some instances, has been inserted. the notation "unintelligible" words have been added in brackets to complete a speaker's thought or to correct an obvious transcription error or misstatement. The raw transcript was not fully Errors undoubtedly remain. edited for accuracy at the time it was produced because it was intended only as an aid to the Secretariat in preparing the record of The edited transcript has not been the Committee's policy actions. reviewed by present or past members of the Committee. Aside from the editing to facilitate the reader's the only deletions involve a very small amount of understanding, confidential information regarding foreign central banks, businesses, Deleted passages are and persons that are identified or identifiable. All information deleted in this manner indicated by gaps in the text. is exempt from disclosure under applicable provisions of the Freedom of Information Act.



to the Transcript

Memorandum distributed to the FOMC conveying copies of a letter to Chairman Greenspan from Congressman Gonzalez and a related press release issued by the Congressman




Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Ms. Mr.

Greenspan, Chairman Corrigan, Vice Chairman Angel1 Boehne Keehn Kelley LaWare Lindsey McTeer Mullins Phillips Stern

Messrs. Broaddus, Jordan, and Forrestal, Alternate Members of the Federal Open Market Committee Messrs. Hoenig, Melzer, and Syron, Presidents Kansas City, St. Louis, and Boston Mr. Mr. Mr. Mr. Mr. Kohn, Secretary and Economist Bernard, Deputy Secretary Coyne, Assistant Secretary Prell, Economist Truman, Economist of the Federal Reserve Banks of

Messrs. J. Davis, R. Davis, T. Davis, Dewald, Promisel, Siegman, Simpson, and Slifman, Associate Economists Mr. McDonough, Manager of the System Open Market Account

Mr. Wiles, Secretary of the Board, Office of the Secretary, Board of Governors Mr. Winn, Assistant to the Board, Office of Board Members,, Board of Governors Mr. Allison, Assistant to the Board for Federal Reserve System Affairs, Office of Board Members, Board of Governors Mr. Stockton, Associate Director, Division of Research and Statistics, Board of Governors Mr. Moore and Ms. Wemeke, Special Assistants to the Board, Office of Board Members, Board of Governors Mr. Sic&no, Special Assistant to the General Counsel, Legal Division, Board of Governors

-2Ms. Low, Open Market Secretariat Assistant, Division of Monetary Affairs, Board of Governors Messrs. Beebe, Lang, Rolnick, Rosenblum, Scheld, and Ms. Tschinkel, Senior Vice Presidents, Federal Reserve Banks of San Francisco, Philadelphia, Minneapolis, Dallas, Chicago, and Atlanta respectively


of Federal

Open Market Committee January 6, 1993



Good afternoon and a happy New Year to CHAIRMAN GREENSPAN. The basic purpose of this telephone conference is to respond you all. to a letter from Henry B. Gonzalez, and I will ask the Secretary of this Committee, Don Kohn, to lead off the discussion. The Committee has gotten MR. KOHN. Thank you, Mr. Chairman. copies of the letter to Chairman Greenspan and of the press release In addition, Chairman [See Appendix.] issued by Chairman Gonzalez. Gonzalez introduced some legislation yesterday which has a bearing on this, and in a second I'll ask Don Winn to summarize that particular part of the legislation. I have a couple of things to put on the table Mr. Chairman, for discussion. My suggestion is, first, that you respond to Chairman Gonzalez with a letter noting that the letter you [previously] sent him did reflect the discussions and views of the Committee and in fact was reviewed by members of the Committee and incorporated their The letter would go on to say comments before being sent to him. you've forwarded Chairman Gonzalez's letter to the that, nonetheless, presidents and governors and asked them to make their own views known In responding to Chairman Gonzalez, the to him if they wish to do so. situation is a bit confusing--I find it is anyhow--from a couple One is that the letter to you, Chairman Greenspan, perspectives. simply talked about detailed minutes and didn't say anything about press release However, the accompanying when they would be released_ sticks with the [proposal that they be released after] 60 days. I think we can probably logically view the letter and the press release as a unit and assume that he meant there would be detailed minutes and So in some sense that he intended to have them released in 60 days. that's the proposal he has on the table now. MR. FORRESTAL. on, Don? MR. MR. KOHN. BOEHNE. Yes. So have we in Philadelphia. Dallas Well, too. I'll go back you a few steps, then. This is Atlanta, we've lost something. Are




I'm sorry.


We were up to you when MR. FORRESTAL. confused by the [situation].

said you were

MR. KOHN. Well, I think there are a couple of confusing One is that the letter talks about the memorandum of aspects here. But the discussion but does not mention a timing for its release. press release does talk about a 60-day release timing. So, my suggestion was to treat the letter and the press release as a unit and assume that the Gonzalez proposal on the table is for a memorandum of Secondly, we have the discussion to be released in 60 days. I legislative proposal, which Don Winn will summarize in a second. don't think we need to respond to that directly in the letter although implicitly, of course, whatever you say would have a bearing on the



Fed's position on that and you ought to keep that in mind as you are responding. Another aspect is that Chairman Greenspan's response to Chairman Gonzalez did not explicitly say anything about our concerns about protecting the confidentiality of any memorandum of discussion for a sufficient period of time. To the extent you object to putting together a memorandum of discussion and certainly if you object to releasing it early and have qualms about the degree to which it could be protected for a number of years--if that is your view--I think you probably ought to say that. We ducked that issue in our letter partly because we were concerned about the implication that maybe a law could be passed to deal with that and we didn't want to give him that opening. But if this is an important issue as you consider whether you're in favor of something or not, without necessarily suggesting a law be passed you ought to say that you have problems under the Freedom of Information Act if this memorandum is produced and can't be protected for an appropriate period of time. Perhaps Don Winn can summariz'e the bill. MR. WINN. The bill Chairman Gonzalez introduced yesterday does address this issue very explicitly_ There are two provisions that deal with the issue of disclosure_ One says that there should be minutes, a transcript, and a videotape--all three--of the meeting that would be made publicly available within 60 days. Secondly, there is a provision that says that any determination, decision, directive, or other conclusions by the FOMC must be made available to the public within a week of the meeting. So, this one-week provision is a new angle that had not been mentioned in his earlier correspondence or press releases but is now a part of this new legislation. Let me also say that I have just finished a written detailed summary of what is in this bill, and I will be putting that in the Pouch to you tonight along with the text of the legislation and a section-by-section summary that his staff did. I don't know if the disclosure provisions that I've just described shed much light in terms of how we should deal with the letter. It does show what is on his mind. MR. KOHN. My view, Mr. Chairman, would be that it's not necessary or even desirable to respond to that legislation through these letters. You weren't asked to do so; you were asked to respond to the previous letters. But this would be valuable background information for the Committee to have. CHAIRMAN GREENSPAN. Yes, I would basically suggest that you limit your responses to the nature of the questions that were asked unless you want to engage in extended future correspondence because the issue here is that we have a bill before the Congress and we don't have to testify. And while it is useful to be fully responsive to Chairman Gonzalez's questions, I don't think it is appropriate to go beyond them. Should you do so, I think you merely extend the general [scope of the] letter [and of] the various elements of agreement and disagreement. I think that [the issues raised in] the legislation Chairman Gonzalez has introduced probably should best be left to our [future] response to the specific [provisions] of the legislation_ MR. SYRON. Mr. Chairman, I very much agree with what you said. I just want to ask a question. If one were to say that he is sympathetic to the idea of reintroducing the memorandum of discussion, provided it is released after a long, long period and then indicated that we would need [legislative] protection, that does seem to me to



raise the [broader] issue that some legislation is necessary. And We would be saying that we might that is a fairly important issue. want some form of legislation. CHAIRMAN GREENSPAN. Well, I would suggest that we have two You can either say that you're basically supportive of choices. verbatim transcripts released after a protracted period but are concerned that the existing statutes do not protect that position. That is a much weaker statement than [the other choice, which is] legislation. saying that we need, and indeed are recommending, These are comparable responses to the question, but one need not go forward and basically advocate such a statute, unless in fact one does. It is true I agree with what you are saying. MR. SYRON. But the that getting into it is the basic problem; I understand. existing statutes aren't there and that would be their natural I think we're right back to that burden of having them say: response. "Well, what would you need in the way of statutes?" CHAIRMAN GREENSPAN. Well, in that respect I think we have very little choice. A decade ago, in fact, we as an organization were And unless we as supportive of legislation that would indeed do that. a group are against the release of minutes in any form, then the How do we all respond to that question? The question essentially is: thing we want to do least of all is to be evasive, as Don Kohn essentially said. There are certain things that [follow] when pressed on this. Once you say that you are not against detailed minutes, as any individual might--and some of you did say you were not against detailed minutes provided there was a sufficient time lag before they were released--then there is a set of logical questions which And once you take that position, I think of necessarily follow. The only thing I'm necessity you are obligated to respond to that. suggesting is that there is a difference--not a great difference, but a difference--between stipulating that you are actively supportive of producing minutes and you need legislation to protect them, which is against them, but if position one, or that you are not necessarily they should be forthcoming you think a protective statute is required, which is position two. Now, you may say there's no substantive I tell you that there is, difference between those positions; politically. Mr. Chairman, do you think that we're all going MR. BOEHNE. to have to reply individually sooner or later or do you think that there are any advantages to not replying individually at all? CHAIRMAN GREENSPAN. I think that it would be appropriate But if, having reviewed [my] original letter, you happen respond. agree with it, one response is that you have reviewed the original letter and that it reflects your views or something like that. MR. BOEHNE. It totally reflects my views. to to

I want to ask MR. HOENIG. Mr. Chairman, this is Tom Hoenig. Don if there was consideration given merely to responding once again that the Committee as a whole thought it best to respond as one body and not get into [a position where] some of us were responding and [Individual responses could result some of us were not responding.



in] having introduced

different views legislation.


out now as Chairman



I guess I was reacting MR. KOHN. That's clearly an option. to his letter and assuming that if we did [respond as a group], we'd But that may get another letter back and we'd be in an endless loop. be better than the alternatives. So, I wouldn't rule that out, Mr. Chairman. I think CHAIRMAN GREENSPAN. No, I would disagree with that. until that issue is resolved, until we actually respond all we are doing is creating problems for ourselves. [unintelligible], My only concern about our answering individually in the beginning was that we did not have the occasion to interact amongst ourselves, with to in fact [reach] a System our different degrees of knowledge, But having done understanding of what the particular issues are. that, I think we should respond. If we chose not to respond, we would merely be throwing fuel into a fire of dispute, which I don't think really gets us very far or serves any particular purpose. MR. MULLINS. But in Don's recommended response we would point out that the earlier letter did reflect the deliberations and consensus of the Committee. CHAIRMAN MR. KOHN. GREENSPAN. Yes, Oh, indeed. Yes, certainly_

absolutely. is correct.



MR. KELLEY. One other thing that might be a good idea would be to set a time when we would all try to send a response so that they It might be a mistake if they arrive more or less at the same time. all were sent in one packet, but they should arrive more or less at the same time rather than be strung out over a couple of weeks. I agree with that and I would suggest CHAIRMAN GREENSPAN. that we should all have our letters in by next Friday unless somebody sees some problems in doing so. MR. KELLEY. Friday a week, Friday or Friday a week. the day after tomorrow?




MR. KOHN. May I also suggest, Mr. Chairman, that each of you a copy to Norm Bernard when you send one to Chairman Gonzalez? CHAIRMAN GREENSPAN. Indeed.

The transmission MR. KEEBN. Mr. Chairman, this is Si Keehn. There are those of us is a bit rugged so I may have missed something_ who are just opposed to taking verbatim minutes; if so, I assume that ought to be our position. MR. ANGELL. CHAIRMAN I didn't hear you. you repeat what you just said?


Si, would



MR. KEEHN. This is Si Keehn. The telephone hookup is bad, and I missed part of what you said earlier. But if there are some who are just opposed to taking verbatim minutes and prefer to say so, I assume that's a reasonable position to take. Certainly, just say so. CHAIRMAN GREENSPAN. I was basically saying that I concluded from the earlier discussion that there was a difference of opinion on this particular question. I think some of the members were against taking verbatim minutes under any conditions. The remaining members were perhaps in favor of it provided that there was statutory protection such that premature release was not available. Now, my impression at the meeting--and I think we suggested that in the letter [to Mr. Gonzalez]--was that those two positions included every member of the Board and all the presidents; we all took one of those two positions. And there's nothing that I can see which suggests that those of you who are in fact against it in principle should not say so. MR. ANGELL. The original letter for individual replies from the Board CHAIRMAN GREENSPAN. That's to you, as I recall, of Governors. did not



MR. ANGELL. And, as I recall, since I've been a member of the Board there has never been a time when we've been requested as members of the Board to give an individual reply. Now for me this is somewhat problematic because I've never been involved in as serious a discussion on this issue with members of the FOMC, whereas in the Board meetings I clearly have been involved as one who is not a middle-of-the-roader on this question of openness and Government in the Sunshine. So I just want the members of the FOMC to know that I recognize that my position is not in the consensus; it is not in the majority at the Board. I did not bother to argue the issue because there are so few who hold the position that I hold that I thought it would be a waste of my breath to do so. But I do want to make this warning that my view is not mainstream. CHAIRMAN GREENSPAN. Well, why don't you just say that. you can confirm the fact that the consensus of the Board is quite different_ MR. ANGELL. Yes, I will do that. And

MR. KOHN. Mr. Chairman, may I clarify a point of nomenclature? You used the term "verbatim minutes." I'm not sure about Governor Angell's position, but I don't think anybody was in favor of absolute verbatim minutes released at any time. In fact, the responses that Mr. Neal got in 1977 indicated that [only] a very small minority of those respondents were in favor of verbatim transcripts of any sort. There were, however, more people in favor of something called the "Memorandum of Discussion," which is not verbatim but is a summary. So, there may be Committee members who are in favor of a memorandum of discussion type document but not the verbatim minutes. That's an important qualification. To CHAIRMAN GREENSPAN. read actual verbatim minutes would convey far less than a summary memorandum. Indeed, I would suggest to you that it would convey far We are interpreting what it is we say and less than what we do now.



believe in a manner which I think would a transcript to figure out.

be difficult

for someone


MR. LAWARE. I was going to ask the same question about whether it was necessary for each of us to answer this letter. But I think the suggestion was that one could answer simply by saying that you had shared with us the text of the letter that you wrote to him and that one is in concurrence with that letter. That's a satisfactory answer? CHAIRMAN GREENSPAN. Perfectly satisfactory. that everyone needs to say


MR. MULLINS. or something?

Is there

a feeling

CHAIRMAN GREENSPAN. I think you have to send a piece of paper to Mr. Gonzalez or he will send you another letter, and you can keep down the postage cost-MR. LAWARE. Suppose you mark it right back! [Laughter] it "Not known at this address"




CHAIRMAN GREENSPAN. I bet you'd get his attention. Anything that anyone wishes to raise relevant to this question?

MR. PARRY. Not to beat a dead horse, Mr. Chairman, but if we send those in and different views come forward, even if they are modestly different, will we not also be adding fuel to the fire in the sense of generating letters that say: So-and-so thinks that's a good idea and so-and-so thinks this is a good idea. Now explain to me why you have these differences among you given these other views? CHAIRMAN MR. GREENSPAN.

The answer thank you.




CHAIRMAN GREENSPAN. In fact, the purpose of the whole exercise. MR. PARRY. I agree. Okay. Anything

it is not


"yes" but that's





VICE CHAIRMAN CORRIGAN. Alan, this is Jerry. We talked about this whole set of questions a couple of months ago. My recollection is that you were putting together an ad hoc committee to be chaired by Dave Mullins that was supposed to be looking at other Is that correct or is it now moot? Or aspects of this question. where does that stand? MR. MULLINS. Don, would you like on our subcommittee deliberations? to give an update on where



MR. KOHN. The subcommittee met and I'm in the process of summarizing its deliberations. It met for a couple of hours, actually, went through a number of these alternatives, and listed the pros and cons and whatnot. So, the subcommittee is definitely in



existence and intends to give at least a preliminary conclusions at the February FOMC meeting. Part of the objective MR. MULLINS. for the Humphrey-Hawkins hearings.


of its

of the timing




VICE CHAIRMAN CORRIGAN. I clearly understand that. Is there anything that could be said, particularly in response to the concerns that Tom Hoenig and others have raised, apropos that you could have the record somehow or other [unintelligible] this subcommittee, [unintelligible] outflanked by events between now and February? MR. up. KOHN. What was that last phrase, Jerry? Your words are


is terrible VICE CHAIRMAN CORRIGAN. Actually, the connection I was asking whether there is anything at all to be for everybody. said for getting on the record right now, prior to that Committee so that events don't completely pass us by in meeting in February, terms of an ability to think about what the subcommittee has to say-We thought about that, Jerry, when we were MR. KOHN. Our concern about saying something formulating the initial response. One, we directly about the subcommittee at that time was twofold. transcript anticipated that Mr. Gonzalez would ask us for a verbatim of everything the subcommittee was talking about and had done and all One of the the background papers and we'd get caught up in that. notions--if Governor Mullins wants to talk about this--was that we should do this on our schedule and try to do what was right by this issue and not necessarily be driven by Mr. Gonzalez and his time And telling him about the subcommittee simply would invite schedule. him to insist on decisions, on background memos, and things like that [prepared] for the subcommittee. So, we tried to hint at it indirectly by saying in the December 24 letter to Mr. Gonzalez that the subject is under continuing review; but it was very indirect. That was our thinking when we drafted the original letter; it was not to tell him about the subcommittee. VICE CHAIRMAN CORRIGAN. I agreed with that thinking time. But I guess now that I'm facing the question I wonder: thinking, however right it was then, still right today? at the Is that

I think Jerry has a point. If we respond MR. SYRON. collectively on the 15th--and if one were to assume for a moment that all our responses are not absolutely identical--he may well have called someone up to testify between the time he gets our responses It may not be and the time of the Humphrey-Hawkins [testimony]. likely, but anything is possible. CHAIRMAN GREENSPAN. Well, you know there is an out for this sort of thing. I think we're all aware that the risk involved here is whether we have an objective evaluation of the Federal Reserve System, While each of and its particular means of functioning. its structure, us may have differing views with respect to how the System should function, I would venture to say that if any of us were called up that would be detrimental to the there, we would not argue a position In a sense I think if any of us goes up there we should try System. to represent the views not only of ourselves but of our colleagues.



And then, rather than divide and conquer--which purpose and which you're suggesting, Dick-MR. SYRON. I think that is the purpose.

I think

is the basic

CHAIRMAN GREENSPAN. Of course it's the purpose. And, frankly, I don't think that serves the public interest. So I would suggest to you, should such a situation arise, that it is incumbent upon each of us to make certain that we don't allow ourselves to be divided [given that] our fundamental views of the nature of the System are as close to identical as one can imagine for a group as diverse as this group is. One need not worry about that issue if in fact we basically recognize what the purpose of such a divide and conquer procedure is. One could very readily work against it. MR. SYRON. Thank you.

MR. KOHN. Having reviewed what was said at the meeting and received your comments on the letters, I guess I'd be surprised if a letter sent by any of you directly contradicted the letter that Chairman Greenspan sent. Governor Angel1 may be excepted here, but taking account of what was said at that FOMC meeting I'd say there may be nuances [in the views] about when a memorandum of discussion might be released, though I don't think anyone is going to have a view which is greatly at odds. There was remarkable consensus on the broad issues among members of the Committee, although there were some disagreements about whether a memorandum of discussion, for example, should ever be done. But I don't think anybody advocated releasing it very quickly, which is what he's advocating. MR. ANGELL. And even I, Don, I am to Representative Gonzalez. CHAIRMAN MR. GREENSPAN. We need Any am much closer to the Committee



questions system! say?

or observations?


a new phone What

CHAIRMAN all very much.


did you











Il. C. 20551


Federal Open Market Committee Normand Berna


December 30.



Attached are copies of the response from Mr. Gonzalez to Chairman Greenspan's letter regarding detailed minutes and a related press release issued by the Congressman. Chairman Greenspan plans to

discuss this matter in a telephone conference call during the first part of next week. A specific time for the call has not yet been set.


“ENR.’ *













DC 205 154050

December 29, 1992
(202) 2.25-4247



The Honorable Alan Greenspan Chairman The Board of Governors of the Federal Reserve System 20th and Constitution Avenue, N.W. Washington, D.C. 20551 Dear Chairman Greenspan: I am disappointed by your December 24, 1992 response to my request for tlyour views and those of the other October 8, 1992 members of the Board of Governors with regard to taking minutes at the Federal Open Market Committee (FOMC) meetings". I was also disappointed that this reply is being used to answer my 12 separate requests to each of the twelve Federal Reserve Bank presidents asking, "Do you have any reluctance to take personal responsibility for your actions at Federal Open Market Committee meetings by having your comments and votes recorded in minutes? Do you think such minutes of the FOMC should promptly be made public? Please explain?lV I wanted individual replies stating individual views of these decision-makers who sit on the FOMC and manage the nation's money supply. As you may recall, on May 18, 1976 the FOMC terminated taking detailed minutes of its meetings which it had called ItMemoranda of Discussionl*. In an attempt to evade the Government in Sunshine Act the FOMC closed the curtain to accountability to the public for Domestic Monetary Policy discussion at FOMC meetings. The Subcommittee of the House Banking Committee solicited opinions on this FOMC action from 122 persons including Federal Reserve officials. Among those who replied 55 opposed the termination of minute taking, 15 favor, and 11 were undecided or had no comment. Among the individuals who did not approve of the FOMC action to terminate minutes were six top-level officials of the Federal Reserve; four former members of the Board of Governors, and two former presidents of the Federal Reserve Bank of New York.

One letter was from Jerry Jordan, president of the Cleveland Federal Reserve Bank, who currently serves on t:.e FOMC. Jerry Jordan of the Cleveland Federal Reserve Bank is a distinguished economist with a long history of service at the Federal Reserve, including serving as the head of research at the St. Louis Federal Reserve. In 1976 when he was vice president and chief economist of the Pittsburgh National Bank he wrote the following to the Banking Committee on October 21, 1977: "As years, I useful. reviewed the next an economist in the Federal Reserve for over eight found the 'memoranda of discussion' to be extremely Even when I attended the FOMC meetings I always the memoranda of previous meetings in preparation for meetings.

"The President of the St. Louis Federal Reserve Bank was definitely influenced in a very positive way by the existence of a permanent record that would eventually be made public. It helped him and his staff to maintain intellectual honesty, sometimes in the face of great pressures to bend. He knew that even when his views fell on deaf e;:rs in a meeting, consistent analysis of the problem and recommendations of solutions would be in the record to be viewed with historical perspective." Former Federal September 27, 1976: Reserve Governor Sherman J. Maisel wrote in

"The specific record is helpful in preparing for future meetings. If you know you will have a record to review before the next meeting, you can listen more completely to the debate and need not take complete notes on others' points of view. A review of others' opinions is most helpful in preparation for future meetings. Frequently I have found good points in the minutes I had missed in the debate." These are compelling arguments in support of taking minutes. Taking minutes helps insure intellectual honesty. The record is not only essential for accountability, it is also vital to FOMC discussions which should be carefully recorded so that members will know exactly how the discussions have developed in the past. Running the FOMC without this careful record reduces the continuity of discussions and the efficiency with which monetary policy is formed. This decision-making process is too important to the country to be left to informal notes and the memories of the members. I simply cannot believe the views of all seven members of the Board of Governors and the 12 regional Federal Reserve presidents are contained in the evasive answer you have sent. Do they each want to continue to remove their discussion at FOMC meetings form What specific evidence do you or they have public accountability? that the previous record of minutes up to 1976 produced harmful effects? I ask that you obtain the individual views of each of these 19 individuals on these matters.

Please supply me with this material by the close of business Friday, January 8, 1992.








3:20i%: fiOUSE &!!l&E~s-,

v, D.C., Maunber 29, 1992 -Chairman tianr)r 0. Gonzalcrzof the Hourcr Banking Committee tuday criticbed Fsd+ral Rclreimm Chairman Alan Greenrrpan for refusingtxb provide the public wAth the aamplete minutes of ttm Federnl open Ma&&t Committea releweb by the (IWHC) rauetings,%inutes which were rauk:inely FMecraX Rm8mxe prior to Hay 1976 With no upparent ill O~fWt~"


Hc. Gonzalez also reiteratatihis request s?or individual re8poneerr From eaah of tha 12 Federal Rtl8~1rve Bank pres$&anta as to their view on relsaaing a full ~p~blic lreoorUof the FObX meet:;Ings. Chaixmm Gonzalez had previously asked eituhof the 12 8ank preeLdent8 for their opinion and raitavatedhis raquea~ in an Ootabcr):letter to Chaiman Greensgan, 8
"1 want to know whether all the Dank preaiasnte concurrsd in or whether some of them held d~ffMX!ng opinion8 which they ware afraid to express for -fearof Q~ocki~g the boatY, Mr. Gonzalez anid.

C~aimtm Oreensga~Ps de&don,

uXf thrrFederalReserve is as de-moczdtic,an organisa~ion 861 Chairacln Greenslpan claimrr hi~ Deoe~&mr 24 l&bar to me, then the in 12 Bank; preridents rhould have nothing to worry abmat when it GOIBQP to 8tal;hg their opinion on thIa issu~,)~ ChairnanGOnzBl@z safd. ljMmn in May 1976 the Federal Reserve t~rminateU ita policy Of! r(orlM9ing detailed minutes of the FONC bwking8, a nUPlber Of former drndthrn current Federal Rdsmve afficials wrote to tha Hauere!JankLngCammf~tea to 0 pose the termtnation, Thislcrlearly indlcat:es diversity of opinPon at the Fudawal Remrve,~~ he said, a T!h&e letter writers indkated that: they found the FOHC minutatfi useful for purposes 02 preparing 9or tie next FOMC weeting (matings are held eight times a year), mcl for weirbiting point8 that had been meda In the meatings," said a!~?. Gonzalsz.



DEC--29-92 By:


?2:2%$2 : 3:'LlPM; HOUSE B.4NKiNGF'ESS-'

Vtore im ortantly, as one former F4lderal RMNZW affioiaL wrote, releas ng the cornplate minutes inssurod those attending thr aeetingw t;hat their view8 would eventually be aired wfien the minutoe ware mds p~.Ufo,~* said Mx. CRmmlez. *'For example, one 18tttik' aftad th@ Qaee of We President of 0116 the Re8Bf7F8 of Bankil wha vuZuad then ublished minutaa because *it helped him and hia honesty, l netimes in the ‘ face of ertaff nralntan intellectual to P hia views fell on great gusrsurerp to bend. Re knew that even where


deaf e~ttr33 &n




analy;sis of


proklem and

rocomsndationa sf solutions would bo irtChe record to be viawed with hf6toricalperspactive.'m

mRoleasing the completeFOMCmaeting minutecr daye after the. 60 ~et%g took place would a180 serve to qusl.1 the rumor-mongers who thrive -- and som&imrr profit financialby -- when InConnation 1s leaked about the ciiscusafons the FaIKI st xheetinga. With all the informdon out in the publlu, the finar\c!lal markets would more effiUieIitly adjusrt the correot information,a rrafd 23~~.Ganzalaz. to such itprofound $wpact on
*'Finally, becaurrethe FOMCms mons+&qr poliay decdsionm have the econoaty, it is eerpauially importa& that:Llm public know whether the Federal Iteaeuvr is making wonetar?y

dcscishono its beat inter&bt,~~ U~~znler: in Hr. said,


_-___.. ___ .._








Il. C. 20551

December 24. 1992

The Honorable Henry B. Gonzalez Chairman Committee on Banking, Finance and Urban Affairs House of Representatives Washington, D.C. 20515 Dear Mr. Chairman: My letter to with my colleagues on ing to your questions presidents concerning meetings are reported you of October 22 noted that I wanted to consult the Federal Open Market Committee before replyand suggestions to me and to the Reserve Bank how proceedings at Federal Open Market Committee to the public.

Our discussions revealed broad agreement on the issues raised by your letters. We believe these issues should be considered against First, in a demothe background of three important observations. cratic society such as ours. a public body like the Federal Reserve must operate under a presumption of full release of information. unless there is a compelling reason not to do so. Second, the FOMC already makes available a good deal of information about its deliberations and votes in the "record of policy actions", which is released to the public shortly after the following meeting--a lag of about six or seven weeks. This document contains not only the directive, but also an extended summary of the Committee's discussion of economic developments and monetary policy, including the major points of agreeThird, the overriding ment and disagreement among Committee members. objective of the FOMC is to arrive at the best policy for our nation's economic welfare. and anything that might impair our ability to take actions to further progress toward this objective must be avoided. Against this background, the members of the FOMC--Reserve Bank presidents and Board members alike--see serious drawbacks to releasing at any time a literal record of FOMC deliberations--through They videotaping or other means such as word-for-word transcripts. also perceive important disadvantages from publishing a nonliteral. but very detailed accounting of FOMC discussions, along the lines of the "memorandum of discussion" that was produced in earlier years, especially if such a record were released sooner than several years The major concern in assessing these after the meetings had occurred. proposals is their effect on the deliberative process--the free flow of information and ideas essential to policymaking. Members need to feel free to trade ideas, question assumptions, advance hypotheses, make projections, speculate on alternative policies and possible outcomes, and especially to change their views in response to the arguments of others. Discussions would be circumscribed and constrained


by the prospect that the details of individual arguments would be published when the issues and positions still had the potential to influence markets. Moreover, in the course of their policy discussions, FOMC members use a wide array of information, some of it supplied on a confidential basis, for example by individual firms or foreign central banks. Uncertainty about whether such information could be kept confidential would reduce the willingness of outside sources to provide it to us and would inhibit members from sharing the information they are able to obtain. Members felt that making a tape or literal transcript public would have an especially restrictive effect in discussions: members would need to be even more circumspect since each statement would appear as uttered in the spontaneous interGenerally, publication of a literal record of play of discussion. Committee discussions or prompt release of detailed minutes would not engender a meeting environment conducive to a full airing of all sides of an issue and to bringing all available information to bear on decisionmaking. With regard to accountability, members noted that the record of policy actions already gives a comprehensive summary of the main points made in the course of Committee discussions. This record is reviewed for accuracy by Committee members before it is released to the public. Affirmative votes are reported, and it is a reasonable presumption that those voting with the majority generally share the basic analysis in favor of that decision. To be sure, nuances may exist among members in the majority, but if they are important such nuances are reported in the policy record. Members who dissent file FOMC decisions statements giving the major reasons for their votes. are collaborative efforts, and the Committee is fully accountable for its actions. Those actions, their rationale, and their effects are reviewed regularly by the Congress when I report on behalf of the Federal Reserve. You have raised issues important to the conduct of monetary policy and to the understanding of that policy by the public and its The Federal Reserve will continue to review elected representatives. these and other closely related issues.