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Calendar No. 4 5 3
9 6 T H CONGRESS

1st /Session

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SENATE

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REPORT

No. 96-423

AMENDING THE FEDERAL RESERVE ACT

NOVEMBER 20 (legislative day, NOVEMBER 15), 1979—Ordered to be printed

Mr.

PROXMIRE,

from the Committee on Banking, Housing, and Urban
Affairs, submitted the following

REPORT
[To accompany H.R. 4998]

The Committee on Banking, Housing, and Urban Affairs, to which
was referred the bill (H.R. 4998), having considered the same, reports
favorably thereon without amendment and recommends that the bill
as amended do pass.
SUMMARY

This legislation amends the Federal Reserve Act to require that
detailed minutes of all meetings of the Federal Open Market Committee (FOMC) be maintained and published on a deferred basis.
The minutes are to include a transcript of the proceedings of each
meeting which may be edited for style but without changes in substance. The Board may delete from the minutes information regarding
foreign countries and central banks and international institutions
which have a majority of foreign membership. Such deletions must be
noted, and the legislation requires that the information eventually
be published. The minutes themselves would be published by the
Board on, but not before, the first business day of February of the
fourth calendar year following the calendar year in which the meeting
involved occurs.
HISTORY OF THE LEGISLATION

H.R. 4998 passed the House of Representatives by voice vote on September 17,1979, and was referred to the Committee on Banking, Housing, and Urban Affairs. On November 6, lj979, the committee ordered
H.R. 4998 reported without amendment.
The Federal Open Market Committee (FOMC) started keeping detailed minutes of its meetings in 1936. In 1964, the minutes were released for all meetings held prior to 1959, and the FOMC adopted a
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policy of publishing minutes of future meetings with a 5-year lag.
Then in 1976, the FOMC voted to stop keeping detailed minutes.
Since then, the only record of FOMC meetings maintained by the
Federal Reserve is the "Record of Policy Actions" which is a brief
summary of the meeting, and the full text of the domestic policy
directive that is issued to the Federal Reserve Bank of New York.
This record is currently released about 30 days after the meeting is
held, which is usually 3 to 4 days after the next meeting of the FOMC.
H.R. 4998 in no way affects the Record of Policy Actions or its release
to the public.
In 1977, the House Subcommittee on Domestic Monetary Policy held
its first hearing on legislation to reinstate the minutes. Whitten opinions on the value of the minutes were received from 81 economists,
historians, bankers, and former Federal Reserve officials. These opinions overwhelmingly supported the reinstatement of the minutes and
their release on a delayed basis.
In 1979, the Subcommittee on Domestic Monetary Policy again held
hearings on this issue, having before it H.R. 2307, the forerunner of
H.R. 4998. Gov. Philip E. Coldwell testifying on behalf of the Board
of Governors of the Federal System indicated the Board's support of
the principle of reinstatement of the minutes and their release on a
delayed basis. Subsequently, the subcommittee worked out an agreement as to specific language of the legislation with the Federal Reserve. On July 19, 1979, the subcommittee approved an amendment in
the nature of a substitute offered by Mr. Mitchell of Maryland which
was adopted unanimously and ordered reported as a clean bill by a
vote of 7 yeas to 0 nays. The full Committee on Banking, Finance and
Urban Affairs ordered the bill reported on July 31, 1979, by a unanimous voice vote.
EXPLANATION

OF THE

LEGISLATION

This legislation would require the Board of Governors of the Federal Reserve System to maintain detailed minutes of all meetings of
the Federal Open Market Committee. The minutes are to include a
transcript of the proceedings which may be edited for style but not
changed in substance, in accordance with regulations to be prescribed
by the Board. The regulations may authorize the inclusion of staff
reports to the FOMC. It is the committee's understanding that the
staff reports may be included by reference and still satisfy the language of the bill and that such reports would be made available if they
are requested by the public. The minutes must attribute to individual
members of the committee the views they express during the meetings.
The legislation provides that the Board may delete from the minutes
information regarding any foreign country, foreign central bank, or
any international institution with a majority of members who are either
foreign countries or foreign central banks. Such deletions shall be indicated in the minutes. It is the Committee's understanding that the
Board may determine at any time after the publication of the minutes
that the deleted information should be published. The legislation also
explicitly requires the Board to review the deleted information not
previously published not later than 15 years after the date of the
meeting in question to determine whether it should be published. The




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legislation requires that the deleted information be published not later
than 30 years after the date of the meeting. The House committee report indicates that a commitment has been by the Board to provide
members of the congressional committees with oversight jurisdiction
over the Federal Reserve access, on a confidential bais, to any deleted
information one year after the meeting to which it pertains.
The minutes shall be publically released according to a fixed schedule in the language of the legislation which reads, "on, but not before,
the first business day of February of the fourth calendar year following the calendar year in which the meeting occurs."
The legislation stipulates that the requirements to maintain and
release FOMC minutes applies only to meetings held after the legislation has been enacted. It also provides that the minutes of meetings
held prior to April 1,1976, not already published, would be published
within 6 months of the date of enactment of this legislation.
NEED FOR T H E LEGISLATION

The detailed minutes of the FOMC meetings were stopped in 1976
because the members of the FOMC were concerned that a freedom of
information suit might force the disclosure of the details of the FOMC
meetings without delay. The FOMC was concerned that early release
of the minutes could enable some unfair advantage to financial market
participations. There was also concern about premature release of sensitive information pertaining to foreign official institutions.
Many expert witnesses have expressed their opinion that there is
great historical value in maintaining a detailed record of discussions
at the FOMC, including the attribution of views to individual members of the Committee. Former Vice Chairman of the Federal Reserve
Board, J. L. Robertson has indicated that the views of individual members are particularly important, that qualified men prefer not to remain anonymous, and that as competent individuals, members of the
FOMC—
should be willing and anxious to stand on their records and
be held responsible for the way in which they play their respective roles.
Former Reserve Board Governor Sherman Maisel provided the following additional rationale for attribution and disclosure of individual views:
From my experience, I believe that each member of the
FOMC prepares more carefully and makes more considered
statements based on the recognition that he and others are on
the record and will be judged in the future on their individual
contributions to the debate.
Other former members of the Board and academic witnesses have
stressed the absolute importance of the minutes in monetary policy
research.
Members of the FOMC should be on the record for their votes. Historians and monetary experts should have access to the detailed record
of debate on monetary policy issues. This is especially true in an economic environment where monetary policy and decisions made by the
FOMC are of vital importance to the well-being of the Nation.




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REGULATORY

IMPACT

STATEMENT

In accordance with rule 29.5 of the Standing Rules of the Senate,
the committee does not consider that enactment of this legislation
would have any regulatory impact.
COST OF THE

LEGISLATION

Enactment of this legislation will result in a cost of $ 2 5 , 0 0 0 per year
to be borne by the Board of Governors of the Federal Reserve System.
This cost would be reflected in the Federal budget as a reduction in
miscellaneous receipts of the U.S. Treasury.
The Congressional Budget Office has submitted a cost analysis of
this legislation in the following letter:
CONGRESSIONAL

BUDGET

OFFICE,

U.S.

CONGRESS,

Washington, D.C., November 9, 1979.
H o n . W I L L I A M PROXMIRE,

Chairman, Committee on Banking, Housing, and Urban Affairs, U.S.
Senate, DirJcsen Senate Office Building, Washington, B.C.
D E A R M R . C H A I R M A N : Pursuant to Section 4 0 3 of the Congressional
Budget Act of 1974, the Congressional Budget Office has reviewed
H.R. 4 9 9 8 , as ordered reported by the Senate Committee on Banking,
Housing and Urban Affairs, November 6 , 1 9 7 9 . The bill, if enacted into
law, would amend the Federal Reserve Act to require that detailed
minutes of Federal Open Market Committee meetings be kept and
published on a deferred basis. Based on this review, it is estimated that
the cost of implementing, the legislation would be $ 2 5 , 0 0 0 per year.
This cost would be borne by the Board of Governors of the Federal
Reserve System and would be reflected in the Federal budget as a reduction in the miscellaneous receipts of the U.S. Treasury.
Should the committee so desire, we would be pleased to provide further details on this estimate.
Sincerely,
ROBERT D .

REISCHAUER,

(For Alice M. Rivlin, Director).
CORDON RULE

In the opinion of the committee, it is necessary to dispense with the
requirements of subsection 4 of rule X X I X of the Standing Rules of
the Senate in order to expedite the business of the Senate in connection
with this report.
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