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HonotiSU Abraham R i b i c o f f

Washington,

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D. c .

20510

-^e3f Mr. Chairman : v^|§fet^ SubcocaaitCee nn - j
le
e
Efficiency and Open Government
T Federal SP
Operations Committee S 5 t h*»
r e P ° r t to
Title II of this b i l l ' d e i i ^
i» the S u ^ Act
| requires that m e e t i n g s - Print No. 2
person be open to the
* aSencies headed by mor*»i-h
provisions- of Title n
i hi* ^ ter a careful consideration

- a t would seriouslyinterfere
t0 Si6
. j ment of the Federal Reserve's statutor^f**** -**”

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achiev.-

” KiTS 2 S ttuI““' 1- «-2c«TSS‘»?ti*sru a u
S tem fro m t h e F e d e r l T R e s e L v ^ r o l e
and m o n e ta r y a u t h o r i t y . E f f e c t i v e e x . ™ ?

N« i o n

a ssig n e d to th e F e d e ra l R eserve by t h T r ^ ,
s t r e n g t h and v i t a l i t y o f t h e u
s
econm m
in clu d e:

(1)

m a in ta in in g

th e ^

(2) providing for the e/n^nein

needed

to

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c

p rom ote

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r« p o n sib ilitia i
t o eh*
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. national currency* -i
«

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s o u r c e s , a s t a b l e g e n e r a l Pr i « l e v e l
a^
°
o r p a y m e n ts ; and ( 3 ) a s s u r i n g t h e so u n d n e s s
sy stem , p re se rv in g o rd e r ^ d o m e s t i c a n d i n ^ l , ^

markets, and promoting develcptnerts in f-f-, '
~
t r i b u t e t o an e f f i c i e n t u s e o f r e s o u r c e ^

B° * r d b^ 5
s c e n t r a l bank

» » P p tP W i

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are

* * “ f 1 **1 * *® Che b a l a n c e
COf a e " i a l b a n k i n g

f tlonal financial

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th a t con*

rceets regularly to*discM *“ JIdi“ ^ r^ P^ 1^ it1*8* the Board ‘
in international markets, and to'corsid!L hT °“?scic economy and
policy actions in these a-eas
Th-corf
theeffects of monetary ;
highly sensitive materials T -la tin ^ to '“ C
?*slons inevitably involve
tutions, and foreign centml'bankwn^ f i o v e ™ ^ / i“ t i R

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'-fri*- P :
flight f|
busines s e s . Again, actions by -the
pal icy .o f ter. rcqui re coord ina e lore wi "
le •i
*s
foreign ;c;entral l^nks :da satfcers?ptf
sea«
closure of such information coaid be a source
nscnt to other governments as well as our own.
m

oS embarrass-

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The functions of monetary policy cann
effectively in an open forum, as i s evidenced b
is no precedent among the world’ s c e n tra l banks
constraints such as would be imposed by s. 5.

armed
that there
Loa

un<

| H p R p m
___
vw M
The bill appears to have two
o f which has
any relevance to a central banpl One aim, growing out of the evoiu-il
tion of this legislation at the; l o c a l a n d S t a t e l e v e l , i s to providaO
access jior the press and public to meetings where de cisions are to 3
be made- on contracting for expenditure of public funds. In thi s
S
regard, it is an anti-corruption proposal. The mere thought that
*
an anti-corruption bill need apply to the Federal Reserve would cast!
douot on the integrity of our N a t i o n ’ central bank and would under£*
s
“■ c oniider.ee in tne collar and the ruture of our econociy.
‘ne
"
^
iiie second aim oi the legislation appears to be to improve
decision-making by exposing the deliberative process in agencies headed
mere than one individual. Open meetings osay b e healthy for the
business of a county board of supervisors, a local board of education
or even ^or certain Federal regulatory agencies; But such govern­
mental functions are not analogous to the workings of a central
bar.i-cing agency such as the Board of Governors whose deliberations
frequently involve highly sensitive financial and econbmic informa­
tion. It would be just as logical to require open meetings of *he
President s Cabinet, or meetings of the Secretary or State with his
i-c-p Giues, or on the Secretary of the Treasury with foreign finance
ministers. Fortunately, the bill does not reach this absurd result*
3 y - including the Federal Reserve within the definition of an agency"
Lov,ever, tne bill seems .to assume that the functions of the Board
l e similar to the administrative tas&s of regulatory agencies
charged with, say, setting interstate freight rates or work safety
standards. This ignores the unique role of a central bank in a
nation s economy and could co serious, perhaps- irreparable, damage
to our financial system.
1

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r^s^ie Ab rahasu
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Pages.' r^we^v' •
iJrli|i
*j|fa w H k J S

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j . r ‘ .rfy!r>
,
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vacsob
iaps--but far iron ali--to oe closed.
I would subrjLt 'tha
puolic interest is served by such aa exercise; in f
.
or many ^meetings uneer £ p u p 4 c; .access s.tatute coul»
.1
questions in the tiinds
*or the public tt3.
motives of the Board of Governor j , even though we were j
meticulously within the bounds of the law.

■ Moreover, the clo sed neeting procedures thensel
present an almost insuperable ad m in is tra tiv e hurdie. ]
these procedures (described*nore f u l l y in the enclosed
require that a s e p ara te voe^e be taken each time a meet*
cion Oi a meeting i s to be (closed. Even preliminary me*
require an o f f i c i a l vote f o r c l o s u r e . A record of such
r u s t be made .pi^blie within one cay. The s u b je c t matter
meetings with limited e xc eptions, whether open or closec
be announced at l e a s t one week In advance. A f u l l writt,
plai.civ_A.on, with c e r t a i n exc eptions , must be issue d as to
mee.mg i s to be c l o s e d . , P ro spective attend ees must lie
.................
and listed, together with their affil i a t i o n s . ‘ A
lecoicins must be made of every closed meeting and retained by the

agency ror at least two years. * Such transcripts or recordings niust
also be furnished to any person requesting them. Any.portion of
suer, recordings or transcripts tnat i s determined b ^ ^ j i agency to
be e^ctr.pw j.iom public disclosure apparently re qu ires a recorded
vote evidencing such determination.
■ -

In m judgment, tne complexity of these procedural require
y
. v ^ . -s cO taLly incompatible with tne effective accomplishment o£
.i . v o
trie Bearers responsibilities which often require quick and decisive
^.c-i^n. i.n sum, x see^no alternative to a Complete exclusion from
t.:^ r - m ’ provisions for the Federal Reserve's central banking and
s
-a-uiatory functions.
u U S s include the formulation and irqplft. .
Jr‘
r-°aei_ary policy, discussions and decisions relating to
le..v_ej. or -«■s ■ -^?cr;, bank and bank holding ccmoany
i-.:p^visi>n, internal administrative and budgetary decisions necesJ,li;
~r- OLi“ -l'cse runctions (including the Board's oversight
responsibilities with respect tc the operations of the Federal,
lanks), and related legislative l e t t e r s .
4

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1 nope a n a t t h e s e c c r a e n t s w i l l be h e l p f u l to you and the
C0 r_n.1 t t e e i n tne a u r t n e r c o n s i d e r a t i o n o f t h i s l e g i s l a t i o n .
Sin cerely yours,

A r t h u r F . Burns
Enclosure

Photocopy fro Gerald R. Ford Library
m




I t T;av, or c o a r s c . be c 1aimed -ha-: c r e t a i n of the C o a r i ' s
r a a p o n s a j i l l t i e s an cne a r e a j : c o n s u l a r p r c a c . i o a —T r u th in Lending
-■air v^rauit B i l l i n g , a q u a i C r e d i t O p p o r t u n i t y ,. u n f a i r t r a d e o r a c t i c e s ,
a na tn e i i . < e - - c o u _ a c o r e u n a e r the .arabit o f 4 h i s l^gjLs law ion w it ho ut ! ;
t
i n v o k i n g t he k i n d o f a d v e r s e c o n s e q u e n c e s I ;have o u t l i n e d . f o r the ;
c e n t r a l oan-.cmg r u n a t i e n s .
lly n n d i s open on to i s q u e s t i o n , and the
Committee may w i s h to c o n s i d e r wh et he r the consumer f u n c t i o n s might
be a p p r o p r i a t e l y i m l u d e u .
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Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102