Full text of The Federal Reserve's 17-Year Secret : With Examples of Federal Open Market Committee Transcripts

View original document

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

THE FEDERAL RESERVE’S
17-YEAR
SECRET

WITH EXAMPLES OF
FEDERAL OPEN MARKET COMMITTEE
TRANSCRIPTS

PREPARED BY THE STAFF
OF THE
COMMITTEE ON BANKING, FINANCE
AND URBAN AFFAIRS
UNITED STATES HOUSE OF REPRESENTATIVES
Henry B. Gonzalez, Chairman
January 27,1994

T able of C ontents
Summary............................................................................................................................. 1
Introduction.........................................................................................................................1
Background............. .......................................... ................................................................2
FOMC Transcripts During the Bums Chairmanship ..................................................... ...6
Threats to the Federal Reserve Tradition of Secrecy Under Government in the
Sunshine Act and the Freedom of Information A c t............................................

Alan Greenspan as Chairman of the Council of Economic Advisors ...........................

Ending and Editing the Memorandum of Discussion and Padding the New
"Minutes” .............................................................................................................

Federal Reserve Officials Maintaining Their 17-Year S e c re t......................................

Federal Reserve Plans for Congressional Testimony...................................................

FOMC Testimony Before the House Banking Committee..........................................

The Admission of Chairman G reenspan......................................................................

Testimony of FOMC Vice Chairman McDonough.......................................................

Inspection of FOMC Tapes and Transcripts................................................................

Government Accountability .........................................................................................

Appendix I ......................................................................................................................
Chronology of Events

Appendix I I ...................................................................................................................
Inventory of Transcripts at the Federal Reserve

Appendix III .................................................................................................................
House Banking Committee Inventory of Materials Obtained from the Gerald
R. Ford Library

Appendix IV .................................................................................................................
Responses of Federal Reserve Officials About Transcripts of FOMC Meetings

Appendix V ....................................................................................................................

Responses of Federal Reserve Officials About Tape-Recordings of FOMC
Meetings
Appendix VI ................................................................................................................
Responses of Governors on Submitting Notes on October 15, 1993 FOMC
Conference Call

Appendix V II ................................................................................................................
Responses of Presidents Who Refused to Submit Their Notes on the October
15, 1993 FOMC Conference Call

Appendix V I I I ..............................................................................................................
Transcripts and Memoranda from the Federal Open Market Committee

Summaiy
The Federal Reserve has, without legitimate purpose, perpetrated and
maintained for seventeen years an effort to conceal from the public and the

Congress transcripts of its Federal Open Market Committee Meetings. This
effort continued at the October 19,1993 House Banking Committee hearing
where the Federal Reserve attempted to mislead the Congress about a 17-year
inventory of transcripts. A reading of three years’ worth of transcripts recently
released from the papers of former Federal Reserve Chairman Arthur Burns
clearly indicates that the public release of FOMC transcripts will certainty not
harm the public interest. Instead, release of the transcripts enhances the
public’s ability to understand how their government makes some of the major
decisions which affect their everyday lives. The Federal Reserve has an
obligation to continue its practice of recording and transcribing FOMC
meetings, and then make the transcripts available to the public soon
thereafter.

Introduction
On May 18, 1976, the Federal Open Market Committee (FOMC)1, of the Federal
Reserve voted to discontinue its policy of releasing to the public a detailed Memorandum
of Discussion of its meetings.
This was a very controversial decision since those memoranda were highly valuable
as the public’s only means of attempting to discern how and why our nation’s central bank
established a course of monetary policy. Since that time, the Federal Reserve has issued a
"policy directive," released six weeks after each meeting, which is only a summary of the
meeting and does not indicate the individual FOMC members’ policy positions. The policy
directive is vague, useless and a poor substitute.
In order to restore the public’s ability to understand the monetary policy rationale of
the FOMC, on January 5,1993, Rep. Henry B. Gonzalez (D-Texas), Chairman of the House
Committee on Banking, Finance and Urban Affairs, introduced HR 28, the "Federal Reserve
System Accountability Act of 1993." HR 28 would, among other reforms, require the FOMC
to prepare a verbatim transcript of its meetings for release to the public within 60 days of
the meeting. The FOMC, which jealously guards itself against outside observation or scrutiny,
is actively resisting this proposal.

1
The FOMC is the policy arm of the Federal Reserve and consists of the board of Governors of the
Federal Reserve and the presidents of the 12 Federal Reserve Banks (four of whom are voting members on
a rotating basis, while the New York Federal Reserve Bank is always on the FOMC).

In the course of conducting hearings on this legislation, the House Banking
Committee uncovered one of the best-kept secrets in Washington: Despite years of denials,
the FOMC has, in fact, recorded and transcribed in complete detail, every meeting since
1976.
The Banking Committee has conducted an investigation into the circumstances
surrounding the activities of the FOMC with regard to the transcripts. The investigation
involved surveys of all members of the FOMC and the review of many documents, including
three years of recently unearthed transcripts of FOMC meetings.
This report provides evidence that Federal Reserve officials planned to deceive and
mislead the Congress in their testimony at the October 19,1993 House Banking Committee
hearing in regard to the inventory of transcripts at the Federal Reserve and that the officials
carried out their plan at the hearing. Several of the Federal Reserve witnesses later
specifically admitted in letters to Chairman Gonzalez that they knew their submitted
testimony was not complete. For example, Silas Keehn, President of the Federal Reserve
Bank of Chicago said in his letter to Chairman Gonzalez on November 8, 1993:
"At the time of the October 15 conference call, I expressed concern about the
possibility that my testimony as then drafted might be viewed as inaccurate
and that therefore, as noted above, I would have to amend the text of my
testimony to reflect the statement that Chairman Greenspan would make in
his October 19 testimony. Others expressed similar views but I am unable to
recall who did so or their comments in any detail."
(President Keehn’s statements were reviewed by the Banking Committee staff when they
listened to the tape recordings of this conference call, as noted below.) However, President
Keehn did not change his written testimony and did not offer corrections to his oral
testimony. Additionally, after Chairman Greenspan failed to inform the Congress about the
existence of a 17-year inventory of FOMC meeting transcripts in his October 19, 1993
testimony, and along with the other Federal Reserve witnesses, did not correct this omission
in answers to specific questions regarding FOMC meeting records.
This report describes the events leading up to the decision of the FOMC to
discontinue issuing a Memorandum of Discussion and the actions taken to conceal for 17
years, the existence of the transcripts of the FOMC.
Also, this report illustrates now, more than ever, the urgent need to instill democratic
values into the Federal Reserve System by enacting the reforms contained in HR 28.

Background
On October 15, 1993, four days before the members of the Federal Open Market

Committee were to appear before the Committee on Banking, Finance and Urban Affairs
to testify about the record-keeping practices of the FOMC, the FOMC members participated
in a conference call with Federal Reserve Chairman Alan Greenspan, at his behest. On
January 13, 1994, House Banking Committee staff went to Federal Reserve headquarters
in Washington, D.C. to listen to a tape of this conference call. Some surprising things
happened during the call. Several FOMC members learned for the first time that their words
were being taped and then carefully transcribed after each FOMC meeting. Even more
surprising was the acknowledgement by Chairman Greenspan that transcripts dating back
to 1976 are being kept on file at the Federal Reserve’s headquarters.
Despite this revelation, the fact that 17 years’ worth of transcripts exist was never
mentioned when Chairman Greenspan, speaking for the rest of the FOMC members,
testified before the House Banking Committee on October 19, 1993.
After numerous inquiries by House Banking Committee Chairman Henry B. Gonzalez (DTexas), to Federal Reserve officials, Federal Reserve Chairman Greenspan finally admitted
in an October 26, 1993 letter to Chairman Gonzalez that transcripts exist dating back to
1976. Chairman Greenspan said he did not remember when he learned of the 17-year
inventory of FOMC meeting transcripts, "until a staff member jogged my memory in the last
few days." When Chairman Greenspan did learn of the transcripts several years before, he
said he "gave the matter of these procedures [retaining old unedited FOMC transcripts] no
further thought until recently."
The fact that former Federal Reserve Chairman Arthur Burns donated the complete
transcripts of FOMC meetings that took place during his tenure to the Gerald R. Ford
Presidential Library indicates the great importance he placed on keeping these records.
Although in 1977 Chairman Bums publicly stated that the FOMC would stop taking minutes
of its meetings, the truth is that he continued the taping and transcribing of the meetings.
This policy has been continued by his successors.
It seems hard to believe that Chairman Greenspan did not know the great importance
that was attached to the inventory of FOMC transcriptions when he was told of their
existence. As early as 1975, Chairman Greenspan, in his role as Chairman of the Council of
Economic Advisors in the Ford Administration, learned of the importance of transcriptions
of FOMC meetings from Federal Reserve Chairman Burns. An official report (described
below) of a June 16, 1975 meeting of the Executive Committee of the Economic Policy
Board of the Ford Administration indicates that CEA Chairman Greenspan was in
attendance. The record reveals that at that meeting Chairman Burns discussed the Federal
Reserve’s specific points of opposition to the Government in the Sunshine Act. A central
concern of Chairman Bums was the provisions relating to transcriptions of FOMC meetings.
The Federal Reserve was able to keep secret from the public, the Congress, and
evidently, from many of its own officials, an inventory of transcripts of FOMC meetings.

Once the Banking Committee learned of the existence of the transcripts, it demanded
their release to the Committee and to the public. After much stonewalling, the Federal
Reserve has offered to begin issuing transcripts edited by its own staff with a five-year lag.
The Federal Reserve said it would begin issuing transcripts it has edited for 1988 FOMC
meetings in early 1994 and then slowly over a number of years issue additional edited
transcripts back to 1976.
The Banking Committee finds this wholly unacceptable for two reasons. First, the
Committee wants all the transcripts issued immediately and second, the Committee is highly
suspect of the Federal Reserve’s editing of its own transcripts.
The Banking Committee compared the editing techniques of the Federal Reserve
with those of the archivists at the Gerald R. Ford Presidential Library in Ann Arbor,
Michigan. The Gerald Ford Library is overseen by the Office of Presidential Libraries, a
division of the National Archives and Records Administrations, located in Washington D.C.
The Banking Committee recently examined the December 22, 1992 FOMC meeting
transcript, obtained by a media outlet under a Freedom of Information Act (FOIA) request.
Upon inspecting the edited transcript obtained under the FOIA, the Banking Committee
agrees with the American Banker newspaper statement that the 84-page transcript was so
heavily redacted by the Federal Reserve that the document was "mostly blank," and
concluded "it’s hard to imagine the Fed can justify the extent of editing in the transcript
released to this paper."
This was not the case with the approximately 3,000 pages of 1976-1978 FOMC
meeting transcripts obtained from the Gerald Ford Library and examined by Banking
Committee staff. What is particularly striking is that while the Federal Reserve professes
to apply an editing standard similar to the archivists, the product of the archivists contains
relatively few deletions compared to the Federal Reserve which leaves relatively few words.
These three years of transcripts are now available for public inspection.
Upon reading the transcripts, the Banking Committee discovered that the Federal
Reserve not only has a polity of redacting transcripts given out under FOIA requests, but
it attempts to skew the information in the directives issued after each FOMC meeting. For
example, in 1976, the Federal Reserve made a decision not to release complete minutes of
its FOMC meetings, even with a five-year lag, which had been its policy up until that time.
The Federal Reserve instead decided to release a "summary" of its meetings. But in reality,
they were "padding" the summary with boilerplate materials about the economy. Concerned
that someone might notice, then Federal Reserve Chairman Arthur Burns ordered his staff
to add pages to the summary to look like there were substantial discussions taking place. His
exact instructions noted below were that he did not want anything that remotely resembled
"padded" minutes, but he directed his staff to "produce several additional pages."
A reading of the transcripts revealed that the FOMC members and staff discussed
what should or should not be included in the Memorandum of Discussion (detailed minutes

in paraphrased form) which had been made available to the public up to 1976. A
communication from Joseph Coyne, Assistant to the Board, to Chairman Arthur Bums,
describing material that the FOMC should consider withholding is included in this report.
The Banking Committee held hearings on HR 28 on October 7,13,19 and 27,1993.
The October 19 hearing focused on the issue of maintaining a record of FOMC meetings.
Both Federal Reserve Governors and Bank Presidents testified that day: Chairman Alan
Greenspan, Governors Wayne D. Angell, Edward W. Kelley, Jr., John P. LaWare, Lawrence
B. Lindsey, David W. Mullins, and Susan M. Phillips; Federal Reserve Presidents Edward
G. Boehne (Philadelphia), J. Alfred Broaddus, Jr. (Richmond), Thomas M. Hoenig (Kansas
City), Jerry L. Jordan (Qeveland), Silas Keehn (Chicago), Robert D. McTeer, Jr. (Dallas),
William J. McDonough (New York), Thomas C. Melzer (St. Louis), Robert T. Parry (San
Francisco), Gary H. Stem (Minneapolis), and Richard F. Syron (Boston).
This report discusses the following events:
1976:

Describes FOMC discussions of transcripts, Government in Sunshine Laws,
editing of 1976 FOMC transcripts and the FOMC’s decision to end issuing
detailed paraphrased minutes of their meetings in 1976.

1992-93:

Describes communications between the Banking Committee and Federal
Reserve officials at the end of 1992 and the beginning of 1993, which focused
on the necessity of a verbatim record of FOMC meetings.

10/15/93:

Discusses the Federal Reserve meetings where preparations were made for
the October 19, 1993 hearing before the Banking Committee on the subject
of records and notes of FOMC meetings, including written and oral testimony
of Federal Reserve witnesses.

10/19/93:

Describes the testimony of the FOMC members before the House Banking
Committee, the omissions from their testimony and the subsequent revelations
from correspondence with Chairman Gonzalez.

10/27/93:

Describes subsequent testimony of Federal Reserve Vice Chairman William
J. McDonough at a House Banking Committee hearing on October 27,1993.

1993-94:

Details the subsequent actions by the Banking Committee in investigating the
misleading testimony which led to the October 26, 1993 admission of
Chairman Greenspan.

FOMC Transcripts During the Burns Chairmanship
The Gerald R. Ford Library, 1000 Beal Avenue, Ann Arbor, Michigan, received
Federal Reserve communications and FOMC transcripts from the late Arthur Burns. Arthur
Bums died on August 26, 1987 after a very distinguished career as a staff member and
director of the National Bureau of Economic Research (1930-68), professor at Columbia
University (1944-69), Chairman of the Council of Economic Advisors (1953-56), Counselor
to President Nixon (1969-70), Chairman of the Board of Governors and the Federal Open
Market Committee of the Federal Reserve System (1970-1978), and U.S. Ambassador to
West Germany (1981-85). The inventory of the documents during Chairman Bums’ tenure
as Federal Reserve Chairman obtained by the Banking Committee is included in Appendix

Far from being records that would impair monetary policy, as Federal Reserve
officials have insisted, the FOMC transcripts from the Gerald Ford Library illuminate critical
issues that are important to those who wish to discover how the views of individual members
of the FOMC and their staff determine the nation’s monetary policy. For example, the
discussions involving whether the central bank should adhere to targets of bank reserves or
the money supply versus targeting interest rates is an interesting discovery of different
individual’s views in the transcripts which were never adequately revealed to the public. For
the first time, the nation has a fairly complete record of monetary policy discussions for this
period by those who determined the country’s monetary policy.
The collection of Federal Reserve material at the Gerald Ford Library contains many
documents that will not only be interesting to economic historians, but they also have
relevance today. For example, part of the "Federal Reserve System Accountability Act of
1993," HR 28, submitted by Chairman Gonzalez, provides for Senate confirmation of the 12
Federal Reserve Bank presidents. Chairman Gonzalez submitted a similar proposal in the
1970s as an amendment to a Federal Reserve bill. Joseph Coyne, who is still a senior official
at the Federal Reserve, and was Assistant to the Board of Governors under Chairman
Arthur Bums, and Arthur L. Broida, Secretary of the FOMC under Chairman Bums, took
a poll of Federal Reserve presidents and then sent the results to Chairman Bums in a
memorandum dated September 30, 1975:
"Each president was asked the following questions: At the time you were
asked to consider the position of president of your Reserve Bank—if the law
had required Senate confirmation of your appointment, would your interest
have been: a. Greater, b. Less, c. No different from what it actually was, d.
Not sure [...]
"Six presidents (Morris, Volcker, Eastbum, Winn, and MacLaury) said their
interest in the post of president would have been no different if Senate
confirmation had been required at the time of their appointment.

"Four presidents (Black, Kimbrel, Baughman, and Balles) said their interest
would have been less.
"One president (Clay) said he would have had no interest while another
(Mayo) said his interest would have been no different if confirmation were
required only initially but would have been less if confirmation were required
every five years."

Threats to the Federal Reserve Tradition of Secrecy Under Government in
the Sunshine Act and the Freedom of Information Act
In 1976, when Arthur Bums was Chairman of the Board of Governors and the
Federal Open Market Committee, the Federal Reserve was faced with two threats to its
secrecy. One was the Government in Sunshine legislation which called for prompt public
disclosure of government meetings and was being considered by the Congress. The other was
a lawsuit by David R. Merrill, a law student at Georgetown University. Merrill challenged
the Federal Reserve’s 45-day delay in releasing the domestic policy directive. Merrill
charged in his suit that the delay cannot be equated with promptness. The Federal District
Court agreed with Merrill and found the Federal Reserve in violation of the Freedom of
Information Act. The Federal Reserve appealed and the U.S. Circuit Court of Appeals
upheld the lower court on the legal basis that use of exemption 5 of the FOIA by the
Federal Reserve was invalid. The Federal Reserve appealed to the Supreme Court which
accepted the FOMC’s assertions and remanded the case back to District Court. The
Supreme Court ruled that the Directives contained confidential information but the Supreme
Court did not find that immediate release would harm monetary policies or commercial
interests. It left it up to the District Court to ascertain the impact of immediate release.
David Merrill, the plaintiff, had been represented by public interest lawyers, a
Georgetown University professor, Victor H. Kramer, and assisted by Douglas L. Parker. Mr.
Kramer left the area to take another position and withdrew, and Parker litigated the action
in the District Court. Using affidavits from the FOMC, the District Court issued a summary
judgement that "current release of the Directive would cause harm to the government’s
monetary and commercial interests." At that point Merrill and his lawyer, Douglas L. Parker,
decided not to pursue an appeal.
They had shown that FOIA was applicable to the Federal Reserve. There would have
undoubtedly been more FOIA requests and cases if the public knew the Federal Reserve
had maintained FOMC transcripts. As a result, the transcripts of the FOMC meetings in
1976 show the FOMC to be somewhat frantic about their vulnerability to both FOIA
requests and the proposed "Government in the Sunshine Act". The Federal Reserve
considered several options. One defense would be to announce that no more detailed
minutes were going to be prepared so that there was nothing to seek in a FOIA request,
even though they knew there were secret FOMC transcripts. Another was to pad the

"minutes" so that it looked like more than the severely incomplete record that it was. Still
another response was to organize a lobbying effort using the banks it regulates to lobby
against the "Government in the Sunshine Act" and against laws authorizing the General
Accounting Office (GAO) to audit the Federal Reserve.
Rep. Henry Reuss (D-Wisconsin), Chairman of the House Banking Committee in
1975-1981, discussed this lobbying campaign during a speech to the U.S. House of
Representatives ("What the Secret Minutes of the Federal Reserve Banks Meetings
Disclose," Congressional Record-House. May 24, 1977, p. 16236). According to Reuss, the
Board of Directors’ minutes of the Chicago Federal Reserve Bank meeting of December 11,
1975 indicate that the president of their bank, Robert Mayo, said:
"While such a transcript would be subject to court subpoena, even more
critical to the system would be the scrutiny of the Congress." (emphasis added
in the Congressional Records
What President Mayo may not have told his directors is that the FOMC meetings
were currently being taped and transcribed, and used to prepare the Memorandum of
Discussion. At the April 20, 1976 executive meeting of the FOMC, the following exchange
occurred between President Mayo and Thomas J. O’Connell, the Federal Reserve’s General
Counsel2:
"Mavo Now what this adds up to Tom is that if we get Government in the
Sunshine we have an even more elaborate procedure because of the tape
requirement than the memorandum of discussion is now. Is that a fair
statement?
TJOC Well, I’d certainly say in terms of preparing the transcript, that is the
tape for publications, you are subjecting the Committee to what the Chairman
has quite accurately described has been the burden of the staff and the
Chairman with respect to the memorandum of discussion"
Later in the discussion (p. 19) Arthur L. Broida said:
"Art Well, we do of course, tape, we transcribe these meetings preparing the
memorandum of discussion."
This exchange indicates that FOMC members knew that these meetings were tape-recorded
and a transcription was used in the preparation of the Memorandum of Discussion.

2
FOMC transcripts of 4/20/76, Tape 8, p. 14. The "Memorandum of Discussion” is the paraphrased
transcript that the Federal Reserve stopped releasing in 1976.

Alan Greenspan as Chairman of the Council of Economic Advisors
Federal Reserve Chairman Greenspan said in his October 26, 1993 letter to
Chairman Gonzalez that he did not remember when he learned of the 17-year inventory of
FOMC meeting transcripts, "until a staff member jogged my memory in the last few days."
When Chairman Greenspan did learn of the transcripts several years before, he said he
"gave the matter of these procedures [retaining old unedited FOMC transcripts] no further
thought until recently."
However, according to documents obtained by the Banking Committee, Alan
Greenspan, when he was Chairman of the Council of Economic Advisors in 1975, was
among 16 people attending a meeting where Federal Reserve Chairman Arthur Burns spoke
to the Executive Committee of the Economic Polity Board, the top-level economic policy
board in the Ford Administration.3
At this June 15,1975 meeting, Chairman Bums discussed the impact of the proposed
"Government in the Sunshine Act,"4 on the Federal Reserve and indicated the Federal
Reserve’s opposition to this Act. It was decided that the Office of Management and Budget
(OMB) "will work with Chairman Bums to ensure that the Administration’s views on the
legislation are rapidly communicated to the Hill." At this time, the Congress was considering
passing the "Government in the Sunshine Act".
At the meeting, all attendees including Alan Greenspan were informed about the
existence of and importance to the Federal Reserve of the verbatim transcripts of its FOMC
meetings. Furthermore, by an executive order of President Ford on June 15,1975, Federal
Reserve Chairman Arthur Bums was invited to attend all meetings of the Executive
Committee of the Economic Policy Board. Federal Reserve Chairman Bums would have
had ample time to apprise CEA Chairman Greenspan of the importance of FOMC
transcripts at the meetings, a matter that was discussed by Chairman Bums over several
years of FOMC meetings. In addition, letters in the collection at the Gerald Ford Library
indicate Federal Reserve Chairman Bums and CEA Chairman Greenspan communicated
a number of times on the impact of the "Government in the Sunshine Act" on the FOMC.
The Banking Committee has also received a May 21,1975 memorandum written by
Don Winn, then Special Assistant to the Board of Governors, to Chairman Bums that
contains the following handwritten note on the first page: "Copy sent to Alan Greenspan
6/[?]/75." This memorandum details the proposed "Government in the Sunshine Act" as it

3
Minutes of the Executive Committee Meeting of the Economic Policy Board were obtained from
the Gerald Ford Presidential Library, L. William Siedman Files, EPB Meeting Minutes, June 14-19,1975, Box
22.
* The Government in the Sunshine Act requires all government agencies to release minutes of their
meetings to the public.

applies to the Board of Governors and to any transcripts or other records of the FOMC. It
is clear from this memorandum that the Federal Reserve was very concerned about the
subject of transcripts of their meetings.
Information contained in these early documents and transcripts indicates that Alan
Greenspan collaborated with Arthur Burns to conceal the existence of transcripts, out of fear
that knowledge of their existence would prompt numerous requests from the Congress, the
press and the public for access to the documents. This is something the Federal Reserve is
still seeking to avoid.
Also, Don Winn, as current Assistant to the Board and Chief Congressional Liaison
for the Federal Reserve, meets frequently with Chairman Greenspan and briefs him on
many issues related to the Congress. He participated in the October 15, 1993 FOMC
conference call where preparations for the testimony on the subject of FOMC records were
discussed. Don Winn’s memorandum and his experience in the 1970s on the Federal Reserve
liaison staff indicates he, too, participated in the effort to conceal the existence of transcripts.

Ending and Editing the Memorandum of Discussion and Padding the New
"Minutes”
At the April 20, 1976 meeting of the FOMC, Chairman Arthur Bums spoke about
ending the Memorandum of Discussion (MOD) and substituting a polity directive released
five or six weeks after each FOMC meeting in an exchange with David P. Eastbum, then
president of the Federal Reserve Bank of Philadelphia.5
"Eastbum The reason I asked that question was it seemed to me we incur
certain costs in cutting out the memorandum of discussion in terms of
implications to others on the outside that we’re being more secretive if you
want to put it that way, that this is a devious way to get around the law." (the
"Government in the Sunshine Act")
Bums 'That depends how we present it. Now I would want to present this, I
would want to make a virtue of this, and never mind how we arrived at it. We
were not seeking virtue for the sake of virtue, I’m not going to argue that but
if you let us say we decide to drop the memorandum of discussion, all right
than we’re doing away with an instrument of secrecy retained in the Archives
for a period of 5 years. We have a policy record and that policy record is now
going to be very much fuller than it was, so the public will be informed
promptly and much more fully, that’s another virtue."

5 FOMC transcripts of 4/20/76, Tape 8, p. 18.

Today there are legitimate criticisms of the "minutes" of FOMC meetings that the
Federal Reserve issues five or six weeks after each FOMC meeting. Chairman Burns
addressed these criticisms in an FOMC meeting on May 18, 1976. He tried to answer the
criticism that the directive contains a rehash of economic conditions rather than real
minutes. Chairman Burns also reacted adversely to the skimpy nature of the sample
summary he had been shown.6
Bums "We’re describing this document as an expanded policy record. We’re
providing more information than in the past. And that is partly the justification
for eliminating the memorandum of discussion. Now on the basis of this
concept the document should be longer, vou see, must be longer, and this is
a formal consideration that cannot be neglected and we need some additional
pages. Now as for the information that is contained about the economy, well,
I think vou credit individuals who follow the Federal Reserve with more
knowledge than I think many of them really have. I think it’s a useful
summary. Those who feel it merely repeats that which they already know will
have no difficulty skipping paragraphs or pages. [...] Now when this document
was first shown to me, it was hardly longer, or just about a page or two
longer-2 pages longer than a policy record was in the past. And I told
members of the staff, well that will not do. I’m not going to tell you how to
add additional pages, and I’m certainly not going to sav that we would do
anything that remotely resembles padded, but produce several additional
pages." (emphasis added)
At their May 18, 1976 FOMC meeting, the FOMC members voted to discontinue
preparing the MOD. The MOD provided a detailed record of FOMC meetings with
attribution of remarks in paraphrased form to individual FOMC participants. The directive
issued by the Federal Reserve for this meeting said:
"At this meeting the Committee approved a motion that the memorandum of
discussion be discontinued after the memorandum for the meeting of March
15-16, 1976. [...] The memoranda of discussion are detailed accounts of the
proceedings of meetings of the Committee, which have been available to the
public 5 years after the end of the year to which they apply. The decision to
discontinue these memoranda reflected the Committee’s judgement that the
benefits derived from them did not justify their relatively high cost [...]"
Among those voting for this measure were former Federal Reserve Chairman Arthur Bums
and former Vice Chairman Paul Volcker.
Federal Reserve Chairman Bums had responded on April 18, 1975 to Rep. Wright

6 FOMC Transcripts of 5/18/76, Tape 1, pp. 7-8.

Patman (D-Texas), who was then Chairman of the House Banking Committee’s
Subcommittee on Domestic Monetary Policy, about the release of unedited materials from
which the memoranda of discussion were prepared for the period 1971 to 1974. Chairman
Burns wrote:
"You refer to the ‘unedited materials from which these memoranda were
prepared.’ These materials cannot be supplied because they are routinely
disposed of after the Committee has formally accepted the memorandum of
discussion for the meeting in question.
"[...] Currently, we are employing a combination of note-taking and tape
recording. In any event, the materials are disposed of when they have served
their purpose, as noted above."
On November 17, 1977 (Hearing before the Subcommittee on Domestic Monetary
Policy, "Maintaining and Making Public Minutes of Federal Reserve Meetings," p. 57),
Chairman Burns testified:
"In the absence of express statutory protection against premature disclosure
of the memorandum, we would feel compelled to object to a proposal of
returning to the practice of keeping extensively detailed minutes of FOMC
meetings."
Chairman Burns said the "FOMC might be compelled under the Freedom of
Information Act (FOIA) to make public all or significant portions of the MOD more
promptly than the specified period whether it be 3 or 5 years" as specified under the
legislation then being considered. Thus his letter of April 18, 1975, indicating that records
taken from tape-recordings are used only for preparing minutes, and his November 17,1977
Congressional testimony that the Federal Reserve objects to "keeping extensively detailed
minutes of FOMC meetings" helped perpetuate the secret about the existence of an
inventory of transcripts of FOMC meetings.
It will be disturbing to those who have studied the MOD to discover that they may
not be accurate and that officials of the Federal Reserve knew the "game" being played with
the editing. At the April 20,1976 executive session of the FOMC (in which some staff were
present) members discussed what would be placed in other "memoranda" and what would
be placed in the policy record. In answer to a question about whether a subject would
appear in the MOD, FOMC Secretary Arthur L. Broida says:7
"Broida If individual members make comments of that sort, the memorandum

7 FOMC transcripts of April 20,1976, Tape 9, p. 8.

of discussion plays it straight."
The Federal Reserve’s General Counsel Thomas J. O’Connell commented at a March 29,
1976 meeting about transcriptions’ provisions of the proposed "Government in the Sunshine
Act" when meetings are closed to the public:8
"If

closed, what portions, all having been transcribed, what portions could be
deleted, and we’re then back to the same game we’re now playing with the
memorandum of discussion (emphasis in original)."
Thus, the Federal Reserve informed the outside world that the FOMC would no
longer keep detailed records of its meetings so that there would be no document of
proceedings to request under the FOIA The Committee now knows that this statement is
patently false and that verbatim transcripts have been kept continuously for 17 years.

Federal Reserve Officials Maintaining Their 17-Year Secret
On October 8, 1992, Chairman Gonzalez sent a letter to each of the 12 Federal
Reserve Bank presidents and the seven Federal Reserve Governors requesting their views
on recording and promptly releasing complete minutes of the FOMC meetings. The 19
Federal Reserve officials were especially strident in their denunciation of Chairman
Gonzalez’s bill, HR 28, which mandates complete disclosure of FOMC meeting minutes.
They did not want any word-for-word record of their meetings made public. None of the 19
Federal Reserve officials admitted what most now say they knew at the time--that the
meetings were tape-recorded. At the time, none admitted that transcripts existed back to
1976 although several officials later said they knew about these transcripts (see Appendix
IV).
Federal Reserve Governor Wayne Angell informed the Banking Committee that he
knew about these transcripts for several years. St. Louis Federal Reserve President Thomas
Melzer said he viewed the transcripts in 1989. Chairman Greenspan said he knew about
them for two years but "gave the matter no further thought until recently" (see October 26,
1993 letter). He then told FOMC members in an October 15, 1993 conference call that he
had recalled the existence of the inventory of transcripts one year previously. Then on
October 26,1993 Chairman Greenspan said a staff member "jogged his memory" so that he
was able to recall that he learned of the transcripts two years before.
Governor Angell wrote the following statement to the Banking Committee on January
14, 1993:

8 FOMC transcripts of March 29,1976, Executive Session, Tape 1, p. 18-19.

"Even though some of us would not alter our remarks whether or not a
transcript is published promptly, some members believe they or their
colleagues would tend to tone down their trial advocacy of a viewpoint or to
become somewhat locked in to the trial position."
He failed to mention his knowledge of FOMC transcripts and tape-recordings.
President Thomas Melzer, who later admitted, in an October 28, 1993 letter to
Chairman Gonzalez, to seeing transcripts of a FOMC meeting in 1989, wrote the following
to the Banking Committee on Januaiy 15, 1993: He "would be strongly opposed to any
literal record of FOMC deliberations [...]" In a letter to the Banking Committee after the
October 19,1993 hearing President Melzer also admitted learning of the tape-recordings of
the FOMC meetings in July 1985.
In his letter of December 24,1992 to the Banking Committee, Chairman Greenspan
stated his position that only a "comprehensive summary of the main points made in the
course of [the FOMC] discussion" is sufficient for purposes of accountability. Chairman
Greenspan also criticized "releasing at any time a literal record of FOMC deliberations through videotaping or other means such as word-for-word transcripts." He failed to mention
the existence of tape-recordings or transcripts of FOMC meetings stored at the Board of
Governors although he later admitted he knew about them at the time.
President Robert T. Pany of the San Francisco Federal Reserve Bank wrote to the
Banking Committee on January 13, 1993:
"The availability of videotapes or word-for-word transcripts of meetings would
inhibit the free flow of information [...]"
In fact, the tape-recordings and the 17-year inventory of transcripts of FOMC
meetings at the Federal Reserve were already covered by the FOIA. In a letter to the
Banking Committee after the October 19, 1993 hearing, President Parry admitted he knew
about the existence of tape-recordings of the FOMC meetings since 1986.
President Silas Keehn of the Federal Reserve Bank of Chicago, who later admitted
he knew about tape-recordings of the FOMC meetings, wrote to the Banking Committee on
January 13, 1993:
"with respect to your question about producing a more detailed written record
or tape of the proceedings of the FOMC meetings [...] the mere existence of
such a record is the issue. [...] any change to the minutes and record-keeping
process currently used by the FOMC would be ill-advised [...]"
President Keehn did not tell the Banking Committee about the existence of taperecordings for any FOMC meetings and in these passages in his letter he was, in effect,
informing the Banking Committee that none existed. In later correspondence to the Banking

Committee after the October 19,1993 hearing, he admitted he knew about tape-recordings
after July 1981.
J. Alfred Broaddus, Jr., President of the Federal Reserve Bank of Richmond, who
would later admit to knowing about the tape-recordings, wrote to Chairman Gonzalez about
his knowledge of FOMC records on October 22,1993:
"The only minutes or notes of which I am aware that are taken at FOMC
meetings are the Records of Policy Actions of the Federal Open Market
Committee. The records include the domestic policy directives, which contain
the FOMC’s instructions to the Federal Reserve Bank of New York."
Again in his January 13,1993 letter he informed the Banking Committee that there were no
detailed records when he wrote:
"I would oppose the preparation of a detailed record currently, however,
because there are no mechanisms to prevent its premature release."
This statement conflicts with President Broaddus’ knowledge of tape-recordings of FOMC
meetings since 1986 which he revealed in his October 28,1993 letter to Chairman Gonzalez.
It was clearly a statement that misled the Banking Committee on the existence of verbatim
records of FOMC meetings.

Federal Reserve Plans for Congressional Testimony
On September 20 and 24, 1993 Chairman Gonzalez sent invitations to most of the
Federal Reserve witnesses who would appear at the October 19, 1994 Banking Committee
hearings. He asked each witness to present their "own independent views" on "notes or
records that you are aware others have made at any FOMC meetings and the location and
dispositions of any such material." In preparing for this testimony the FOMC had two
conference calls. All but three of its nineteen policy-makers (seven governors and 12
Federal Reserve Bank presidents) participated in the October 15,1993 conference call. By
the time of the October 15, 1993 conference call, many of these witnesses had submitted
their written testimony.
Following the October 19,1993 Banking Committee hearing, Chairman Gonzalez sent
letters to the witnesses and asked a number of specific questions about the content and
preparation of their testimony. A summary of some of the replies are included in the
following tables.
One Federal Reserve Bank president later wrote to Chairman Gonzalez that he and
other participants in the October 15,1993 conference call had concerns that their submitted
testimony may be "viewed as inaccurate" unless it was amended to reflect information about

tape-recordings and transcripts of FOMC meetings. Silas Keehn, president of the Federal
Reserve Bank of Chicago, in his letter to Chairman Gonzalez on November 8, 1993 said:
"At the time of the October 15 conference call, I expressed concern about the
possibility that my testimony as then drafted might be viewed as inaccurate
and that therefore, as noted above, I would have to amend the text of my
testimony to reflect the statement that Chairman Greenspan would make in
his October 19 testimony. Others expressed similar views but I am unable to
recall who did so or their comments in any detail."
President Robert T. Parry of the Federal Reserve Bank of San Francisco expressed
the same concern for misleading testimony in his letter to the Banking Committee of
November 5, 1993:
"In light of the new information concerning the transcripts [revealed in the
October 15, 1993 conference call] I expressed a concern that my written
testimony was incomplete. In addition, to the best of my memory, another
participant (I cannot recall who it was) states his written testimony included
a statement to the effect that no written records existed at the Board.
However, these issues were not pursued because it was understood that
Chairman Greenspan would convey the information about the transcripts."
One Federal Reserve Bank president, in response to an inquiry sent November 8,
1993, supplied the Banking Committee with notes of the October 15, 1993 conference call.
These notes reveal that there was a discussion of how Chairman Alan Greenspan would
testify about the tape-recordings and transcripts, and how this would cover for the testimony
of the other Federal Reserve witnesses, some of which had already been submitted.
On January 13, 1993 the Banking Committee staff went to Federal Reserve
headquarters in Washington, D.C. to listen to a tape-recording and read a transcript of the
October 15,1993 conference call. They determined that the notes from the Federal Reserve
president were generally correct. Many participants of this conference call may not have
known they were being recorded. Here is a description of what the Banking Committee
staff heard.
"Until 10 minutes ago I had no awareness that we had detailed transcripts,"
Chicago Federal Reserve President Silas Keehn.
"In the future, we have to be more forthcoming. If we keep stonewallinp. we’re
going to be in trouble." (emphasis added) Dallas Federal Reserve President
Robert D. McTeer.
"The Committee never knew they were being kept," St. Louis Federal Reserve
President Thomas Melzer said in reference to the FOMC transcripts.

"The Chairman is not highlighting these transcripts... We’re not waving red
flags," Secretary of the FOMC, Donald Kohn.
During the call, the FOMC also discussed its two primary concerns: How to withhold
the transcripts under new Department of Justice laws regarding the Freedom Of Information
Act (FOIA) requests and which arguments they could use to prevent the release of 17 years
of FOMC transcripts.
The call begins with Federal Reserve Chairman Greenspan speculating on whether the
existence of transcripts will be exposed at the October 19,1993 House Banking Committee
hearing.
"We can have some wishful thinking that it might not emerge on Tuesday (at the
hearing), and there is a possibility it might not. I wouldn’t bank on it, but if it doesn’t
happen on Tuesday, at some point it’s going to become an issue."
Later in the call, Chairman Greenspan stated:
"It would be utter naivete to believe that, with this change of the Justice
Department, this issue will not arise. It may not arise on Tuesday, but if we
had any presumption that it’s never going to arise, we’re smoking something."
With Greenspan worried about the potential revelation that might occur at the
hearing, he reflects on his previous performance before the Banking Committee on October
13, 1993:
"I would say the Fed-1, House-0."
Chairman Greenspan reflects that his excellent logic may not convince even his
friends on the Banking Committee:
"We were on very safe ground here earlier this year, and presumed threats to the
Federal Reserve System were considerably far less six to nine months ago...The basic
problem that I sense-even though I gave what I thought were conclusive answers, is
that I was confronted with non-rationality~(One Republican Congressman in
particular) (laughter)...We can become very vulnerable if this is not handled properly.
The logic of the case is on our side."
Federal Reserve General Counsel Virgil Mattingly says he views the chances of
withholding material more than three years old as "not good." He also referred to the use
of Exemption 5 of the FOIA regarding deliberative material and said of the FOMC
meetings, "The bulk of the debate is not of a deliberative nature."
At this point, Chairman Greenspan took the opportunity to tell everyone about the

existence of the FOMC transcripts.
"Most if not all of vou until now, nr fairly recently, are aware that we have got raw,
unedited transcripts going back 10 years?” (emphasis added)
It was clear at that point that not everyone had been informed. Philadelphia Federal
Reserve President Edward Boehne did not know, nor did Chicago Federal Reserve President
Silas Keehn. Boehne expressed his concern and said that he had been on Federal Reserve
Chairman Arthur Burns’ staff in 1976 when the decision was made to end the practice of
making the Memorandum of Discussion of the FOMC meetings available after five years.
He explained the Federal Reserve’s public position at that time when the policy on
publishing edited transcripts was changed:
"The meeting was being recorded and the recording was done for the purposes of
what we now call the minutes. But that it would be recorded over at subsequent
meetings, so that there was never any indication that there would be a permanent,
written record of transcript nature."
Chairman Greenspan replied:
"I first became aware about a year or so ago--I was under the presumption
that it was common knowledge."
President Robert Parry was also disturbed about his new knowledge of transcripts and
said he viewed his testimony to the Banking Committee as incomplete:
"What I wanted as part of my testimony was what I clearly thought that I knew at
that time." (Referring to testimony before the House Banking Committee)
General Counsel Mattingly suggests a response to Chairman Gonzalez’s request for
information of FOMC records and notes:
"You could say the Chairman has described the record-keeping practices of
the Secretariat."
After it was established that an inventory of transcripts existed, the FOMC proceeded,
with Mattingly’s assistance, to discuss arguments within the confines of new Department of
Justice laws regarding "Freedom of Information Act" requests.
Chairman Greenspan said:
"...Do we not object to the Congress’ request-inevitably it will come--for raw
transcripts? What capability, from what we’ve discussed so far, does this
committee have in withholding those?"

Mattingly suggested that they could "show harm to prevent release." But then
discounted it, saying in the past it was used "too much and used inappropriately. This would
be difficult to keep confidential," he said.
Chairman Greenspan also suggested that they could argue that the "physical amount
of work involved is costly and prodigious." He also suggested that they "give cost estimates,"
adding, "There are two types of numbers, global numbers and people numbers."
Mattingly agreed saying it "enhances our case," and is "forthcoming in some respect."
Federal Reserve Governor John LaWare agreed, "The attitude and image we project
to the public would be one of cooperation."
New York Federal Reserve President William McDonough even discussed destroying
the material:
"After the Memorandum of Discussion...we could destroy the material. We could give
ourselves some protection of just stating the amount of work involved. We could say
it’s too old to be interesting. See if that would fly."
Boston Federal Reserve President Richard Syron agreed with McDonough:
"Going back maybe there will be no interest. They will find these are not interesting
and hopefully we could stop doing it."
St. Louis Federal Reserve President Thomas Melzer suggested they could destroy
transcripts and say that they didn’t view the FOMC as an official record. He also said that
the offer to prepare the Memorandum of Discussion runs the risk because "people didn’t
know they existed."
Chairman Greenspan then reads his prepared answer for the Banking Committee
regarding the issue of transcripts:
"I have suggested to the Reserve Bank presidents that they respond to your questions
regarding whatever records may be kept at their own Banks; I will cover records
made by the Board staff, and, in particular, by the FOMC secretariat.
Some individual members of the Board staff take handwritten notes and retain
them to help them in discharging their responsibilities. The meetings are
recorded electronically by the FOMC secretariat. These audio tapes are used
to assist in the preparation of the minutes that are released to the public
following the subsequent meeting; thereafter, the tapes are recorded over. In
the process of putting together the minutes, an unedited transcript is prepared

from the tapes, as are detailed notes on selected topics discussed in the course
of the meeting. These materials generally are seen only by the staff involved
in preparing the minutes, and the documents are kept under lock and key by
the FOMC secretariat."
Dallas Federal Reserve President McTeer asks Chairman Greenspan if he will be
speaking before the rest of them, to which Chairman Greenspan replies "yes."
At this point, President McTeer says, as indicated above, they "had better quit
stonewalling."
Chairman Greenspan tells him it is "not an accurate statement" and that they "need
the minutes to conduct the business of the Committee."
President McTeer asks for clarification on the status of the tapes. "The tapes have
been taped over?"
Governor Lindsey says they exist.
Chairman Greenspan says they don’t.
Normand R. Bernard, Deputy FOMC Secretary, says they were taped over.
Chairman Greenspan says they were erased because it is too expensive.
St. Louis Federal Reserve President Thomas Melzer says of the differing testimony:
"That’s going to get a little suspicious after a while. You might be able to take
everybody else off the hook, and in effect, avoid the situation..."
Chairman Greenspan says he’ll handle the issue of transcripts, "I’ll do it."
President McTeer then says in reference to the letter Chairman Gonzalez sent to him
that the questions the Chairman asked were "awfully odd."
Donald Kohn says the Banking Committee was "fishing for leaks."
Federal Reserve Congressional Liaison Don Winn says, "I don’t have any sense that
they have any knowledge whatever of what we’ve been talking about."
Chairman Greenspan says:
"The existence of tapes and transcripts were never considered to be a part of
important questions by staff. Most Board members didn’t know about it.

Never considered it important...Not communicated to me as chairman."
Governor Lawrence Lindsey says:
"I didn’t know about the tapes either...What we’re doing is retroactively
changing the rules of the game."
Don Winn ends the conference call saying that he thinks it’s "almost inevitable" that
questions will arise about Chairman Gonzalez’ provisions in HR 28 dealing with the Reserve
Bank presidents (that they be appointed by the President and confirmed by the Senate).
Don Winn adds that questions about "Diversity (in Federal Reserve hiring) will come up."

FOMC Testimony Before the House Banking Committee
AD Federal Reserve witnesses scheduled to appear at the October 19,1993 hearing
on the subject of "Keeping a Record of Federal Open Market Committee Meetings" were
instructed by the Committee to answer specific questions in their opening statements and
to provide the Banking Committee with their knowledge of any notes or records of FOMC
meetings kept by others at FOMC meetings. In his written statement, Chairman Greenspan
answered this question by stating:
"The meetings are recorded electronically by the FOMC secretariat. These
audio tapes are used to assist in the preparation of the minutes that are
released to the public following the subsequent meeting. Thereafter, the tapes
are recorded over. In the process of putting together the minutes, an unedited
transcript is prepared from the tapes, as are detailed notes on selected topics
discussed in the course of the meeting. These materials generally are seen only
by the staff involved in preparing the minutes, and the documents are kept
under lock and key by the FOMC secretariat."
The existence of transcripts for the purpose of preparing the document the Federal Reserve
has called "minutes" (a document that does not identify polity discussions with any
individual) was also noted in the oral testimony of Chairman Greenspan. Both references
left out any mention of the inventory of transcripts dating back to 1976. Instead, by
combining the mention of transcripts with tapes which are erased, and by emphasizing that
these materials were used for developing the "minutes," Chairman Greenspan’s method of
presentation left the impression that no inventory existed beyond those documents needed
to prepare the "minutes."
The other Federal Reserve witnesses either testified that Chairman Greenspan would
specify the methods used by the staff to record FOMC meetings or they provided no
information about the existence of an extensive inventory of transcripts. Governor Wayne
Angell indicated that he knew about the transcripts but he did not specify that an inventory

of the transcripts existed.
At the October 19 hearing, Chairman Gonzalez asked each of the Federal Reserve
witnesses about the existence of records kept by the Federal Reserve. Chairman Gonzalez
said:
"I have a couple of questions. In the questions that I had directed, I did ask
and each of you responded, as to the notes or records that you are aware of.
But today’s testimony by Chairman Greenspan reveals to me, at least, that
FOMC meetings are tape-recorded. [...] I don’t think we have been previously
informed that there were these tape-recordings. What I am going to ask is if
any of you knew or know about these recordings being made when you
submitted testimony for today’s hearing, or are you unaware that taperecordings of the FOMC meetings are customarily being made? Can you tell
me exactly of any tapes of FOMC meetings now in existence that you do know
about? I would be glad to hear from any of you."
Chairman Greenspan answered; "Mr. Chairman, may I clarify that?" And Chairman
Gonzalez said, "Certainly." In his reply, Chairman Greenspan again failed to mention the
existence of an inventory of transcripts. Instead, he concentrated on the short life of the
tape-recordings:
"In my remarks, what I have indicated was that the FOMC staff, in the
preparation of the minutes, takes a recording for the purpose of getting a
rough transcript, but the tapes are taped over. In other words, we don’t keep
the actual tapes themselves. We do have electronic recordings of the
meetings."
Chairman Gonzalez responded, "In other words, you have no tape-recordings of the actual
proceedings."
Chairman Greenspan replied, "We have them only--as far as I know, what the staff does is,
in order to assist its presentation and preparation of the minutes, it takes recordings but
then tapes over them so they are not available thereafter."
Congressman Maurice D. Hinchey asked a follow-up question:
"First, with regard to the question that the Chairman asked of Mr. Greenspan
earlier, I just want to see if I understood the answer. As I understand it, there
are tape-recordings taken of the meeting by the staff. Those tape-recordings
serve as the basis for the preparation of the minutes that are released a
month or so later after the next meeting. And in the interim, those tapes are
then taped over so that no permanent record exists in that way. Is that
correct?"

Chairman Greenspan admitted that there were rough notes but he did not say there was an
inventory of transcripts, "There is no permanent electronic record, that is correct. We
obviously have rough notes."
On November 5, 1993, members of the majority and minority staff of the House
Banking Committee visited the Federal Reserve’s Washington, D.C. headquarters. There the
staff examined the microphones built into the FOMC conference table, the green recording
light at the head of the table, recording equipment, and the file drawers containing the
FOMC’s inventory of FOMC meeting transcripts. A page of a transcript was selected at
random and examined. The sample indicated that the transcripts were not "rough notes" as
Chairman Greenspan had testified, but rather were neatly typed with names in the left-hand
margin identifying each speaker.
This leads one to conclude that Chairman Greenspan and the other members of the
FOMC were less than forthcoming when testifying before the Committee. His testimony
could also be characterized as stonewalling the Banking Committee on the existence of an
inventory of FOMC meetings transcripts.
If any of the Federal Reserve witnesses wished to correct this testimony they had an
opportunity to speak. However, they chose to remain silent with regard to the existence of
an inventory of transcripts although, as noted in the following tables, they would later notify
the Banking Committee that they had such knowledge at the time of the October 19, 1993
hearings (see Appendix IV).
With respect to this testimony by Chairman Greenspan, Governor Lindsey replied in
his November 5,1993 letter to the Banking Committee, "To be quite candid, I am at a loss
as to where you got the impression that anyone’s testimony was misleading or false."

The Admission of Chairman Greenspan
After the October 19, 1993 hearing, the Banking Committee questioned the Federal
Reserve witnesses on the veracity of their testimony. Chairman Gonzalez sent letters to each
of the 19 Federal Reserve presidents and governors in which they were asked a number of
questions about their testimony. Chairman Greenspan was specifically asked about the
existence of an inventory of transcripts. These letters were sent to the presidents of the
Federal Reserve Banks and to the members of the Board of Governors on or before
Monday, October 25, 1993.
On the morning of Tuesday, October 26, 1993, Federal Reserve staff notified the
Banking Committee that Chairman Greenspan would completely describe the record-keeping
procedures of the FOMC meetings in a letter to Chairman Gonzalez. The Banking
Committee staff was also notified that this letter would be made public within the hour.

In his October 26,1993 letter, Chairman Greenspan indicated that a full transcribing
system for FOMC meetings existed. He said this was "common knowledge" among those
attending FOMC meetings. He also indicated that there was an inventory of FOMC
transcripts dating back to 1976. Chairman Greenspan described a complete tape-recording
system including a green light at the head of the FOMC conference table that is illuminated
whenever the tape-recording system is activated.
Chairman Greenspan indicated that he learned that the FOMC meetings were being
taped when he first became Chairman in 1987. He said he "did not learn of the transcripts
until several years ago." He said in his October 26 letter:
"I advised staff at the time that the secretariat should continue to follow
prevailing procedures-that is, retaining the old unedited transcripts and
creating new ones in order to aid staff in the production of a complete and
accurate official record of meeting proceedings for publication. I gave the
matter of these procedures no further thought until recently. Indeed, until a
staff member jogged my memoiy in the last few days, I had been under the
impression that I first learned only about a year ago that the transcripts were
being retained."

Testimony of FOMC Vice Chairman McDonough
The next day, on October 27, 1993, Governor Wayne Angell and William
McDonough, president of the New York Federal Reserve Bank and Vice Chairman of the
FOMC, testified before the House Banking Committee. Vice Chairman McDonough was
asked why he submitted written testimony for the October 19, 1993 hearing indicating that
he did not know that FOMC meetings were tape-recorded. Chairman Gonzalez questioned
McDonough in his opening statement:
"Vice Chairman McDonough, you submitted testimony as follows--and I am
going to quote from it: ‘I have no personal knowledge of any other notes or
records that others may have made at FOMC meetings.’ Yesterday I received
a letter from Chairman Greenspan saying that there have been taperecordings at FOMC meetings since 1976, that the FOMC has unedited
transcripts and staff notes from transcripts that exist back to 1976. In
addition, the meeting room for the FOMC has a complete set-up for tape
recording transcripts, and I quote: ‘A green light on top of the meeting table
near its head is lit when the recording system is in use.’ How could anyone
not know what that green light meant and fail to tell the Congress or report
that there were not literal translations?"
Vice Chairman McDonough answered the follow-up question by Congressman
Maurice Hinchey (D-NY) that he thought the green light "was to say that the sound system

was working." Hinchey questioned Vice Chairman McDonough as follows concerning the
number of FOMC meetings he had attended where he might have become informed about
the tape-recording:
Rep. Hinchey. How long have you been in your present position with the Fed?
Mr. McDonough. Three months.
Rep. Hinchey. Three months. How many meetings have you attended?
Mr. McDonough. As a member of the Federal Open Market Committee, I
have attended two.
Rep. Hinchey. Just two. Were you aware of that green light that apparently
flashed on when the recording system is in operation?
Mr. McDonough. I was aware of the green light. And part of my youth was
spent as a naval officer, and I was the chief engineer of a ship. So I ought to
ask the question of what is the light about, and I thought that the purpose of
the light was to say that the sound is in operation.
Two days later, on October 29, 1993, a Banking Committee staff member phoned
Vice Chairman McDonough and asked how many FOMC meetings he had attended before
he was an FOMC member. He replied, ’Twelve." Thus, Vice Chairman McDonough had
attended 14 FOMC meetings, attendance for nearly two years, and failed to mention this in
his testimony. His testimony about the tape-recording system is a peculiar exception to the
statement by Chairman Greenspan in his October 26,1993 that the tape-recording of FOMC
meetings was "common knowledge."
It is instructive to compare President McDonough’s comments with those of former
Board of Governors member Stephen Gardner at the August 16, 1977 FOMC meetings.
Gardner said:
"Those of us who sit at this Board are fully experienced in the tyranny of a
recorded meeting. And our meeting discussions are inhibited. Now during
FOMC meetings in 72,73, 74, and 75, you had no such experience. You knew
perhaps that your memorandum of discussion would be prepared and released
five years later. We sit here with a green light, I don’t see it this morning it
inhibits us as a Board of Governors."

Inspection of FOMC Tapes and Transcripts
Shortly after the hearing, on November 5, 1993, several members of the Banking

Committee majority staff, accompanied by two members of the minority staff, went to
Federal Reserve headquarters to observe the facilities for storing and recording the verbatim
transcripts of FOMC meetings. The FOMC meetings are held on the second floor of the
Marriner Eccles building of the Board of Governors at 20th and Constitution Avenue in
Washington, D.C. The FOMC meets in a conference room conveniently situated in a hallway
near the offices of the seven governors, including Chairman Greenspan. The FOMC meeting
transcripts are stored in a file cabinet in a small office off this hallway. Upon inspection,
Banking Committee staff members found the FOMC transcripts to be neatly typed with the
name of each speaker in the left margin.
The expansive FOMC conference room is furnished with a large table equipped with
built-in microphones. During these meetings, Chairman Greenspan sits at the head of the
table next to a staff member whose responsibility is recording these meetings. To activate
the equipment, the staff member pushes a button built into the conference table. The button
then is illuminated in green, in full view of everyone in the room. During the meeting the
staff member makes frequent trips to an adjoining room where extensive recording
equipment is kept. In addition, other microphones are placed along one wall of the
conference room as back-up recording equipment.

Government Accountability
The public relies on decision-makers in a democratic government to act as its agents
and to make decisions that promote their interest. However, government officials may have
alternative objectives, especially if they work in a large government bureaucracy. Making the
public interest these officials’ first priority is known in the social sciences as the "agency
problem." This problem also occurs in the private sector. For example, corporate managers
who are agents of the stockholders may not always perform their duties in the best interests
of the stockholders but, instead, may primarily try to enhance their own salaries.
One way to ensure that government officials are working in the public interest is to
enforce the requirement that a detailed record of their decisions and actions be kept and
made public. Accountability for public officials’ actions is a powerful inducement to
government officials to act in the public interest.
In his October 4,1993 memorandum to the heads of departments and agencies in the
Federal government, President Bill Clinton said, in reference to the Freedom of Information
Act (FOIA):
"The statute was enacted based upon the fundamental principle that an
informed citizenry is essential to the democratic process and that the more the
American people know about their government the better they will be
governed. Openness in government is essential to accountability and the Act
has become an integral part of that process."

Attorney General Janet Reno also expressed Department of Justice (DOJ) support
for agency compliance in 1993 with the "letter and the spirit of the FOIA and implementing
a ‘presumption of disclosure’ standard in which DOJ attorneys would defend agencies in
denying FOIA requests only when disclosure can be shown to cause specific harm to a
governmental interest or to invade personal privacy.”9
Public accountability for those who manage the nation’s money supply in the nation’s
central bank, the Federal Reserve System, is essential to ensure that these officials act in the
public interest. Administering policies in the public interest is especially important for
Federal Reserve officials since their decisions have such pervasive and substantial economic
effects. The twelve members of the Federal Reserve’s Federal Open Market Committee
(FOMC) manage the nation’s money supply. Additionally, they authorize the use of funds
to intervene in foreign currency markets, which can have the characteristics of a loan to a
foreign countiy. These decisions affect the level of inflation and economic activity in the
United States, the exchange rates of U.S. dollars with other currencies, the level of exports
and imports, and the flow of capital between the United States and other countries.

9 Harold C Relyea, The Administration and Operation of The Freedom of Information Act: An
Overview, 1966-1991* CRS Report for Congress, November 4,1993.

Appendix I
Chronology of Events
1975
June 16, 1975 Council of Economic Advisors Chairman Alan Greenspan attends a
meeting of the Executive Committee of the Economic Policy Board of the Ford
Administration in which Federal Reserve Chairman Arthur Bums explains Federal
Reserve opposition to the proposed Government in the Sunshine Law, S. 5. The
minutes of this meeting reveal "Chairman Bums reviewed with the Executive
Committee the outlines of S. 5, legislation relating to the accessibility of the public to
certain Government meetings."
1992
October 8,1992, Chairman Gonzalez sent letters to each of the 12 Federal Reserve
Presidents and the seven Governors requesting their views on recording and promptly
releasing complete minutes of the FOMC meetings.
October 22,1992, Chairman Greenspan sent a letter suggesting that consultation with
other members of the FOMC would be helpful before replying to specific questions
and suggestions concerning how proceedings of FOMC meetings are reported to the
public.
December 24,1992, Chairman Greenspan sent a response to the October 8 letter
stating that a "comprehensive summary of the main points made in the course of
[FOMC] discussion" is sufficient for purposes of accountability. This letter served as a
joint response for the Reserve Bank presidents and Board of Governors.
December 29,1992, Chairman Gonzalez sent a letter requesting that each Federal
Reserve Bank president and each member of the Board of Governors provide
individual responses to the October 8, 1992 letter by January 8, 1993.
January and February 1993
January 7,1993, Governor John P. LaWare of the Board of Governors responded,
"Chairman Greenspan’s letter to you of December 24 accurately conveyed the sense
of the Committee as well as my own personal views on the matter."
Januaiy 12, 1993, Governor Susan M. Phillips of the Board of Governors responded,
"Chairman Greenspan’s response accurately reflects my personal views on the issues
you raised."

Januaiy 12,1993, President Jeny Jordan of the Federal Reserve Bank of Cleveland
responded, "My view on this matter is heavily influenced by concern that the release,
or publication, of a detailed accounting of the FOMC discussion prior to the passage
of suitable interval of time would seriously impair the effectiveness of the deliberative
process."_______________________________________________ _______________

Januaiy 12,1993, Vice Chairman David W. Mullins, Jr. of the Board of Governors
responded, "A central concern is the effectiveness of the deliberative process involved
in monetary policy decision-making. I believe that a substantial degree of
confidentiality is important to insure the effectiveness of this deliberative process."
Januaiy 13,1993, President J. Alfred Broaddus, Jr. of the Federal Reserve Bank of
Richmond responded, "I would oppose the preparation of a detailed record currently,
however, because there are no mechanisms to prevent its premature release."
Januaiy 13,1993, President E. Gerald Corrigan of the Federal Reserve Bank of New
York responded, "I am writing to assure you that I agree completely with the views
set out in [Chairman Greenspan’s] letter."
Januaiy 13,1993, President Edward G. Boehne of the Federal Reserve Bank of
Philadelphia responded, "Verbatim transcripts and videotapes of FOMC meetings by
their very nature would substantially undermine the deliberative process, and the
quality of monetary policy decision-making would suffer."
Januaiy 13,1993, President Silas Keehn of the Federal Reserve Bank of Chicago
responded, "With respect to your question about producing a more detailed written
record or a tape of the proceedings of the FOMC meetings, I feel strongly that such a
written record would significantly inhibit the development of the appropriate
monetary policy so important to the proper functioning of the economy of our
country, [...] For these reasons I feel very strongly that any changes to the minutes
and record-keeping process currently used by the FOMC would be ill-advised and
would be detrimental to the monetary policy deliberations of the Committee."
Januaiy 14,195*3, Governor Wayne Angell of the Board of Governors responded,
"Even though some of us would not alter our remarks whether or not a transcript is
published promptly, some members believe they or their colleagues would tend to
tone down their trial advocacy of a viewpoint or to become locked into the trial
position."
Januaiy 15,1993, President Richard F. Syron of the Federal Reserve Bank of Boston
responded, "On a related note, my own experience in reading my own and others’
verbatim comments makes me believe that any discussion would need at least some
editing, to ensure clarity."

January 21,1993, President Thomas C. Melzer of the Federal Reserve Bank of St.
Louis responded, "I would be strongly opposed to any literal record of FOMC
deliberations..."________________
February 13,1993, President Thomas H. Hoenig of the Federal Reserve Bank of
Kansas City responded, "In an environment where every statement, including some
based on confidential information is recorded verbatim, Committee members
necessarily would be inclined to speak from a prepared text and to structure
responses in a limited manner. [...] Knowledge of these possibilities would limit the
discussion and compromise the effectiveness of the Committee’s deliberative process."
September and October 1993
September 20,1993, Chairman Gonzalez sent letters to each of the Federal Reserve
Bank Presidents and the Board of Governors, requesting their testimony at the
Banking Committee’s October 19, 1993 hearing on HR 28. Specifically, the Chairman
requested that the witnesses provide a detailed description of any notes or records
that each have made and the location and disposition of any such material, notes or
records that each were aware of others have made at FOMC meetings, and any
information they had about the relating of information publicly by anyone employed
at the Federal Reserve FOMC meetings prior to the official release of that
information.
October 13,1993, Chairman Greenspan testified before the Committee on Banking,
Finance and Urban Affairs about the provisions of HR 28, the "Federal Reserve
System Accountability Act of 1993". He makes no mention of an inventory of
transcripts of FOMC meetings.

October 19,1953, Chairman Greenspan, Governor Angell, Governor Kelley,
Governor LaWare, Governor Lindsey, Governor Mullins, Governor Phillips, President
Boehne, President Broaddus, President Hoenig, President Jordan, President Keehn,
President McTeer, President McDonough, President Melzer, President Parry,
President Stern, and President Syron testified before the Banking Committee.
Governor Angell and President McDonough submitted written testimony only. The
Committee requested the witnesses to provide the Banking Committee with their
knowledge of any notes or records of FOMC meetings kept by others at FOMC
meetings. Chairman Greenspan in his written testimony stated, "The meetings are
recorded electronical^ by the FOMC secretariat. These audio tapes are used to
assist in the preparation of the minutes that are released to the public following the
subsequent meeting. Thereafter, the tapes are recorded over. In the process of
putting together the minutes, an unedited transcript is prepared from the tapes, as are
detailed notes on selected topics discussed in the course of the meeting. These
materials are generally seen only by the staff involved in preparing the minutes, and
the documents are kept under lock and key by the FOMC secretariat." No mention is
made of an inventory of transcripts of FOMC meetings even after an exchange with
Congressman Maurice Hinchey in which Chairman Greenspan is asked about a
permanent record. All Federal Reserve witnesses also do not notify Chairman
Gonzalez of the existence of transcripts of FOMC meetings although they would later
admit that they knew about them at the time.
October 22,1993, Chairman Gonzalez sent a letter to Chairman Greenspan and the
other Governors of the Board and each of the Federal Reserve Bank Presidents
requesting detailed information concerning each witness’ knowledge of taperecordings or prepared transcripts of FOMC meetings. In addition, each witness was
required to provide the Committee with records of meetings or conference calls with
any other Federal Reserve Bank President or any member of the Board of Governors
concerning the Banking Committee’s hearing on October 19. Chairman Greenspan
was specifically asked about the existence of an inventory of transcripts.
October 26,1993, The chief Federal Reserve liaison called the Banking Committee
at 11:00 AM and said a courier was delivering a letter and that the Federal Reserve
would make it public in one hour. Chairman Greenspan sent the letter to Chairman
Gonzalez indicating that a full transcribing system for FOMC meetings existed. He
stated that this was common knowledge among those attending FOMC meetings.
Greenspan also indicated that there was an inventory of FOMC transcripts dating
back to 1976.

October 27,1953, President William J. McDonough of the Federal Reserve Bank of
New York and Governor Wayne Angell of the Board of Governors testified at a Full
Committee hearing on HR 28. FOMC Vice Chairman McDonough was asked why
he sent the Com m ittee written testimony for the October 19, 1993 hearing indicating
that he did not know that FOMC meetings were tape-recorded. In his October 19th
testimony President McDonough stated, "I have no personal knowledge of any other
notes or records that others may have made at FOMC meetings." In President
McDonough's October 28, 1993 letter to the Committee, he stated that he was made
aware of tape-recordings and transcripts of FOMC meetings during the October 15,
1993 conference call.
October 28,1953, Governor Angell responded: "In February 1986, during my
orientation to the Board of Governors meeting procedures, as well as FOMC
procedure, the Federal Reserve taping system was explained to me, including the
operation of the green light on the table as an indication the meeting is being
recorded...Several years ago I asked Mr. Norman Bernard, Deputy Secretary of the
FOMC, to review a draft dissenting statement to ensure that the dissenting statement
was a true representation of what I said at the meeting. Mr. Bernard provided me
with his edited version of what I said at the meeting, which I learned was taken from
a rough transcript...
October 28,1993, Governor LaWare responded: "I was aware from the beginning of
my tenure on the Board in August 1988 that the FOMC proceedings were being taperecorded...Chairman Greenspan advised me and other members of the FOMC that
transcripts were prepared from the tape-recordings of FOMC meetings during a
conference call on October 5, 1993.1 did not recognize until the October 15 meeting
that the Secretariat retained transcripts of the meetings."
October 28,1993, Governor Phillips responded: "I first learned that the FOMC
meetings were tape-recorded before my first FOMC meeting (December 17, 1991)
[...]. I first learned that rough transcripts of FOMC meetings were prepared from the
tapes on the morning of October 19 hearing at breakfast with other FOMC
members."
October 28,1993, Governor Kelley responded, "I learned that FOMC meetings were
tape-recorded after I joined the Board in mid-1987...I learned that written transcripts
had been prepared on October 18, 1993."
October 28,1993, President Melzer responded, "I learned that FOMC meetings were
tape-recorded in July 1985. [...] I first learned that a transcript of the most recently
held FOMC meeting existed while confirming statements I made about my dissent at
such meeting. As I recall, this occurred in 1989."
October 28, 1993, President Broaddus responded, "During the telephone conference
on October 15, 1993, Chairman Greenspan’s remarks reminded me that the staff
tape-recorded FOMC meetings, and [...] he advised that transcripts were also made."

October 28,1993, Governor Mullins responded, "Shortly before the October 19, 1993,
hearing Chairman Greenspan confirmed that FOMC meetings were taped. [...] In
August of this year, I learned from Deputy Secretary of the FOMC, Mr. Normand
Bernard, of the existence of detailed, edited notes, and transcripts of FOMC meetings
l -

________________________________________________________________________________________________________________________________________________

October 28,1993, President Forrestal responded, "I have been aware since I became
President of the Bank in 1983 that the FOMC meetings were tape-recorded. [...] I
was not aware that transcripts were prepared from the recordings of the FOMC
meetings."______________________________________________________________
October 28,1993, President McTeer responded, 'To the best of my recollection, the
first information I received about the tape-recording of FOMC meetings was during a
conference call on October 15, 1993, when it was mentioned by Chairman Greenspan.
[...] I learned about the transcripts from Chairman Greenspan during the conference
call
_______________________________________________________________
October 28,1993, President Stem responded, "While I was aware that a taperecorder was running at least occasionally during FOMC meetings, I did not know the
extent and content of the recordings. [...] I was first informed that transcripts were
prepared form the recordings during the conference call of October 15."
October 28,1993, President McDonough responded, "I learned from Chairman
Greenspan on October 15, 1993 that FOMC meetings were being taped. [...] I first
learned from Chairman Greenspan of the existence of transcripts of FOMC meetings
on October 15, 1993, during an FOMC conference call."
October 29,1993, President Boehne responded, 'To the best of my knowledge, I
learned about the tape-recordings of regular FOMC meetings from Chairman Bums
probably in 1976 or 1977. [...] I first learned about the existence of unedited
transcripts in late September or early October 1993 [...]."

November and December 1993
November 1,1993, President Hoenig responded, "Shortly after joining the FOMC in
October, 1991,1 realized that the meetings were being tape-recorded. [...] During an
October 15, 1993 conference call, Chairman Greenspan stated that a transcript of
each FOMC meeting was prepared."

November 2,1993, Chairman Greenspan sent a second letter in response to
Chairman Gonzalez’s October 22,1993 letter. Chairman Greenspan stated th a t" the
tapes and transcripts were internal working material of the FOMC secretariat for the
purposes of creating the Policy Record or Minutes, until the conference calls I
initiated on October 5 and October 15, to my knowledge none of the current Reserve
Bank presidents and only two of the other current governors had known that
transcripts were prepared and retained." In response to specific questions regarding
his knowledge of tape-recordings and transcripts of FOMC meetings Chairman
Greenspan stated, "My recollection is that I knew from very early in my tenure that
the FOMC meetings were taped. [...] FOMC staff informed me several years ago of
the existence of the transcripts going back many years."
November 3,1993, Chairman Gonzalez sent letters to Chairman Greenspan and
Federal Reserve Bank presidents and governors of the board requesting that all
records and documents of the Board of Governors, the FOMC, and the Reserve
Banks related to the matters under investigation, including all tape-recordings,
transcripts, and minutes of and notes regarding any meeting of the FOMC, are
preserved and in no way altered, destroyed, moved, or transferred out of Board files.
In addition, the letter requested Chairman Greenspan to provide the Banking
Committee with an inventory of transcripts of each meeting of the FOMC, including
conference calls, and each tape-recording of each meeting of the FOMC, including
conference calls.
November 5,195)3, Governor Lindsey responded to Chairman Gonzalez’s letter of
October 22, 1993: "When I first came to the Board, I was informed [...] that Board
meetings were taped for the purposes of taking minutes. [...] I assumed that, as in the
case of Board meetings, a tape-recording was made for the purposes of preparing the
minutes of the FOMC meetings. [...] I first learned of the existence of the transcripts
during the process of preparing for my October 19 testimony."
November 5,1993, President Pany responded to Chairman Gonzalez’s letter of
October 22, 1993: "At one of the first FOMC meetings I attended (sometime early in
1986), I remarked [...] that the voice activated microphone before my place at the
table did not amplify speech and therefore must record comments. As I recall [
Normand Bernard] stated that I was correct [...] Although I knew that some notes
were taken temporarily from the tape during production of minutes, I first learned
that full transcripts were prepared on October 15 1993, during a conference call in
which Chairman Greenspan conveyed this information."
November 5,1993, President Syron responded to Chairman Gonzalez’s letter of
October 22, 1993: "I believe I first became aware that the FOMC meetings were
recorded when I attended them as Assistant to then Chairman Volcker in 1981. [...]
My first clear recollection of being informed that transcripts were prepared dates
from the October 15 conference call [...]"

November 8,1993, President Jordan responded to Chairman Gonzalez’s letter of
October 22, 1993: "I first learned that FOMC meetings were tape-recorded during my
service at the Federal Reserve Bank of St. Louis as advisor to then-president Darryl
Francis. [...] On my return to the Federal Reserve in March 1992,1 was aware of the
sound amplification system in use at the FOMC meetings and subsequently learned
that audio recordings were made in order to facilitate the preparation of minutes of
the meeting. [...] I first learned that transcripts were prepared from the recordings of
FOMC meetings late in the afternoon of October 15, 1993, in the course of a
telephone conference call
November 8,1993, President Keehn responded to Chairman Gonzalez’s letter of
October 22, 1993: "I don’t recall when I first learned of the tape-recordings or who
informed me, but presumably it was soon after the first meeting I attended [July
1981]. [...] At the time of the October 15 conference call, Chairman Greenspan said
that the current inventories of unedited transcripts cover the period from 1976 to the
present. [...]"
November 8,1993, Notes taken during the October 15, 1993 FOMC conference call
initiated by Chairman Greenspan were provided to the Banking Committee. These
notes reveal that there was a discussion of how Chairman Alan Greenspan would
testify about the tape-recordings and transcripts, and how this would cover for the
testimony of the other Federal Reserve witnesses, some of which had already been
submitted.
November 9,1993, Chairman Gonzalez sent a letter to Chairman Greenspan
requesting that copies of every transcript and tape of meetings and conference calls of
the FOMC from 1976 to the present be provided to the Committee.
November 12,1993, Chairman Greenspan responded to November 9, 1993 letter
stating " [...] the records you are requesting are information of the FOMC, which
needs to be consulted." Chairman Greenspan indicated that this issue would be
discussed at the November 16, 1993 FOMC meeting.
November 15,1993, Chairman Gonzalez sent a letter to Chairman Greenspan
suggesting that all transcripts over three years old should be fully released to the
public. Transcripts greater than 60 days but less than three years old should be
released to the public using the same rules of editing which were applied prior to
1976 to the release of the detailed minutes of FOMC meetings. Once three years
have elapsed, complete unedited transcripts would then be released to the public.
Transcripts of any meeting would not be released until 60 days have elapsed.

November 17,1993, Chairman Greenspan responded to the November 9, 1993 letter.
The FOMC decided that no transcript should be released before five years had
elapsed from the meeting. Under this plan, the FOMC will release early next year
transcripts from meetings and transcribed conference calls held during calendar year
1988. They will edit and release the remaining transcripts subject to the five-year lag.
November 17,1993, Chairman Gonzalez sent a letter urging Chairman Greenspan to
reconsider the Committee’s proposal offered in the November IS letter. In addition,
Chairman Gonzalez suggested that Banking Committee staff and Board staff meet to
discuss possible solutions.
November 26,1993, Chairman Greenspan sent a letter agreeing to meet.
December 3,1993, Chairman Gonzalez sent a letter to Chairman Greenspan
demanding that the transcript and tape of the October 15, 1993 FOMC conference
call be made available to Committee staff for review next week. In addition, the
Chairman indicated that the Committee is investigating possible action to mislead and
obstruct Congress in violation of sections 1001 and 371 of Title 18 of the U.S. Code.

Appendix II
Inventory of Transcripts at the Federal Reserve
The Federal Reserve supplied Chairman Gonzalez with the dates of FOMC meetings
at the Marriner Eccles building in Washington, D.C. and of conference calls between FOMC
members since the Federal Reserve ceased releasing the Memorandum of Discussion.
These are listed below. The Federal Reserve indicates it has transcripts of these meetings
except as noted.

Federal Open Market Meetings
1976
March 29 (special session)
April 20
May 18
June 22
July 20
August 17
September 21
October 19 (partial)
November 16 (partial)
December 20 (partial)
1977
January 17-18 (partial)
February 15
March 15
April 19 (partial)
May 17
June 21
July 19
August 16
September 20
October 17-18
November 15
December 19
1978
January 17
February 28
March 21
April 18
May 16
June 20
July 18
August 15
September 19
October 17
November 21
December 19
1979
February 6
March 20
April 17
May 22
July 11 (partial)
August 14
September 18
October 6
November 20

1980
January 8-9
Februaiy 4-5
March 18
April 22
May 20
July 9
August 12
September 16
October 21
November 18
December 18-19
1981
February 2-3
March 31
May 18
July 6-7 (partial)
August 18
October 5-6
November 17
December 21-22
1982
February 1-2 (partial)
March 28-29
May 18
June 30
July 1
August 24
October 5
November 16
December 20-21

1985
Februaiy 12-13 (partial)
March 26
May 21
July 9-10
August 20
October 1
November 4-5 (partial)
December 16-17

1990
Februaiy 6-7 (partial)
March 27
May 15
July 2-3
August 21
October 2
November 13
December 17-18

1986
February 11-12
April 1
May 20
July 8-9
August 19
September 23
November 5
December 15-16

1991
February 5-6
March 26
May 14
July 2-3
August 20
October 1
November 5
December 17-18

1987
February 10-11
March 31
May 19
July 7
August 18
September 22
November 3
December 15-16

1992
February 4-5
March 31
May 19
June 30
July 1
August 18
October 16
November 17
December 22
1993
February 2-3
March 23
May 18
July 6-7
August 17
September 21

1988
February 9-10
March 29 (partial)
May 17 (partial)
June 29-30 (partial)
August 16 (partial)
September 30
November 1
December 13-14

1983
February 8-9
March 28-29
May 24
July 12-13
August 23
October 4
November 14-15
December 19-20

1989
February 7-8
March 28
May 16
July 5-6
August 22
October 3
November 14
December 18-19

1984
January 30-31
March 26-27
May 21-22 (partial)
July 16-17
August 21
October 2
November 7
December 17-18

FOMC Telephone Conference Calls

1977
May 27
October 31 (no transcript)

1983
January 1 4 ,2 1 ,2 8
April 29
June 23
July 25 (no transcript)
August 8 (partial)

1978
January 5
March 10
May 5
August 8 (no transcript)

1984
January 11 (no transcript)
March 20 (no transcript)
October 18 (no transcript)
December 7 (no transcript)

1979
January 12 (no transcript)
March 3 (no transcript)
April 27
June 27
July 17,19
July 27 (no transcript)
September 20
October 5, 22

1985
January 18
September 10 (no transcript)
September 23 (no transcript)

1976
November 8

1980
February 22 (no transcript)
March 7
April 29
May 6
June 25
July 25
August 22
November 26
December 5,12
1981
February 24
April 28
May 6
June 17
July 17
1982
March 2 (no transcript)
May 20 (no transcript)
July 15 (no transcript)
August 27 (no transcript)
September 24

1986
January 17 (no transcript)
April 21 (no transcript)
1987
February 23 (no transcript)
April 29
September 8 (no transcript)
October 20
October 21 (no transcript)
October 22 (no transcript)
October 23 (no transcript)
October 26 (no transcript)
October 27 (no transcript)
October 28 (no transcript)
October 29 (no transcript)
October 30 (no transcript)
1988
January 5
May 6 (no transcript)
May 24 (no transcript)
June 22
July 19
August 5 (no transcript)
August 9 (no transcript)
October 17
November 22

1989
February 23 (no transcript)
May 31
June 5
July 26
October 16 (tape only)
October 17 (tape only)
October 18 (tape only)
November 6 (no transcript)
November 27 (no transcript)
1990
January 16 (no transcript)
April 11
August 6 (no transcript)
September 7,17
December 7
1991
January 9
February 1
March 26
April 12, 30
May 1
June 10, 24
August 5
September 13
October 30
December 2 (tape only)
December 20
1992
January 9
March 11
July 2
December 14
1993
January 6
February 18
March 1
October 5,15,22

Appendix III

House Banking Committee Inventory of
Materials Obtained from the
Gerald R. Ford Library
1000 Beal Avenue
Ann Arbor, Michigan 48109
All of this material has been edited by archivists of the National Archives and Records
Administration and is open to public inspection.
Federal Ooen Market Committee Meetine Transcripts
03/29/76
04/20/76
05/18/76
06/22/76
07/20/76
08/17/76
09/21/76
10/19/76
11/08/76
11/16/76
12/20-1/76
01/18/77
02/15/77
03/15/77
04/19/77
05/17/77
05/27/77
06/21/77
07/19/77
08/16/77
09/20/77
10/17-8/77
11/15/77
12/19-20/77
01/17/78
02/28/78
03/10/78

FOMC Meeting
FOMC Meeting
FOMC Meeting
FOMC Meeting
FOMC Meeting
FOMC Meeting
FOMC Meeting
FOMC Meeting
FOMC Conference Call
FOMC Meeting
FOMC Meeting
FOMC Meeting
FOMC Meeting
FOMC Meeting
FOMC Meeting
FOMC Meeting
FOMC Telephone Conference
FOMC Meeting
FOMC Meeting
FOMC Meeting
FOMC Meeting
FOMC Meeting
FOMC Meeting
FOMC Meeting
FOMC Meeting
FOMC Meeting
FOMC Telephone Conference

Other Materials from the Chairman Bums Collection

FOMC Meeting Background Notes
03/15-16/76
FOMC Meeting Background Notes
04/20/76
FOMC Background Notes relating to Minutes
FOMC Memoranda relating to Policy Record
Files from the Chairman Bums Collection
Box #
"Government in the Sunshine Act" Files
B52-3
Press File 05/24/76
B90
Federal Reserve Board - White House Aug-Dee 1975 B117
Coyne Files
C6
Ken Guenther Files
C8-9

File #
1,6,7
2,3,6
1,2

Appendix IV
Responses of Federal Reserve Officials About Transcripts of FOMC Meetings
Governors
and presidents

Date of first knowledge of transcripts

Date that
individual
informed the
Banking
Committee of
personal
knowledge of
transcripts

Angell

Several years ago

10/19/93

Boehne

September or October 1993

10/28/93

Broaddus

October 15, 1993

10/28/93

Forrestal

When he received 10/22 letter

10/28/93

Greenspan

Knew in 1987, then forgot. Told FOMC members on October
15, 1993 that he remembered one year ago. Several days
before he sent 10/26/93 letter staff had reminded him that he
knew two years ago.

10/19/93

Hoenig

October 5, 1993

11/01/93

Jordan

October 15, 1993

11/08/93

Keehn

October 15, 1993

11/08/93

Kelley

October 28, 1993

10/18/93

LaWare

October 5, 1993

10/28/93

Lindsey

while preparing 10/19 testimony

11/05/93

McDonough

October 15, 1993

10/28/93

McTeer

October 15, 1993

10/28/93

Melzer

1989

10/28/93

Mullins

August 1993

10/19/93

Parry

October 15, 1993

11/05/93

Phillips

October 19, 1993

10/28/93

| Stem

October 15,1993

10/28/93

| Syron

October 15, 1993

11/05/93

Appendix V
Responses of Federal Reserve Officials About Tape-Recordings of FOMC Meetings
Date of first knowledge of tape-recordings
Governors
and presidents

Date that
individual
informed the
Banking
Committee

Angell

Orientation in February 1986

10/28/93

Boehne

1976 or 1977

10/28/93

Broaddus

During Volcker’s tenure (maybe earlier)

10/28/93

Forrestal

1983

10/28/93

Greenspan

Beginning of tenure, August 1987

10/19/93

Hoenig

October 1991

11/01/93

Jordan

While working at the St. Louis Federal Reserve Bank, 1967-81

11/08/93

Keehn

Don’t recall (after July 1981)

11/08/93

Kelley

Mid-1987

10/18/93

LaWare

August 1988

10/28/93

Lindsey

When I first came to the Board (November 11, 1991)

11/05/93

McDonough

October 15, 1993

10/28/93

McTeer

October 15, 1993

10/28/93

Melzer

July 1985

10/28/93

Mullins

Before October 19, 1993

11/02/93

Parry

1986

11/05/93

Phillips

December 17, 1993

10/28/93

Stem

Knew of it during FOMC meetings

10/28/93

Syron

As assistant to Chairman Volcker in 1981

11/05/93

Appendix VI

Responses of Governors on Submitting Notes on October 15,1993 FOMC Conference
Call
Alan Greenspan,
Chairman

"I have no notes regarding the October 15 conference call. For this call, the
FOMC secretariat has a tape-recording, a transcript of the tape, and a
memorandum summarizing the views expressed on various alternatives for
information release."

David Mullins, Vice
Chairman of the
Board of Governors

"Since I did not participate in nor did I receive a briefing on any
conference call on Friday, October 15, 1993, 1 can provide no information
on questions 8a through 8i."

Wayne Angell

"I did not take any notes during the October 15, 1993, conference call."

Edward Kelley

"I was out of the country throughout the week which included Friday,
October 15, 1993, and did not participate in a conference call which I
understand occurred on that date."

John LaWare

"I took no notes during the call and my executive assistant was not present."

L. Lindsey

"I do not have, nor did I even have, notes, tape-recordings or memoranda
regarding the conference calls."

Susan Phillips

"I did not participate in the October 15, conference call. I was attending
some meetings in Iowa."

Appendix VII

Responses of Presidents Who Refused to Submit Their Notes on the
October 15,1993 FOMC Conference Call

| Richard Syron,
Boston

^ ni
"My staff and I have some brief, handwritten notes on the
disclosure issue, some of which are from the conference
call." [notes not sent]

Edward Boehne,
Philadelphia

"I did not take notes during the call. Richard Lang, who
was not present for the entire call, took incomplete,
handwritten notes. The appropriate procedure for
obtaining FOMC-related material not regularly released
is to make the request through the office of the
Chairman of the FOMC." [refusal to send notes]

J. Alfred Broaddus,
Richmond

"This question directs me to provide an extraordinary
disclosure of internal deliberative documents and
information. I feel obliged to decline to provide such
deliberative information at this time, particularly
information that may involve individuals whom you have
asked me not to consult and that could affect their rights
and interests or that would involve otherwise privileged
communications. I hope you will understand that my
reluctance to release details of internal Federal Reserve
conversations unilaterally without the opportunity to
consult others affected does not arise from any disrespect
for you or your Committee, but from a sense of fairness
and obligation to the Federal Reserve System and its
officials. As a matter of information, I will tell you that
we have no tape-recording of this meeting or memoranda
regarding it." [refusal to send notes]

Thomas Melzer,
St. Louis

"There were no tape-recordings or memoranda that were
prepared by me or my staff regarding the October 15
conference call. I made a few brief notes solely for my
personal use; presumably my staff did the same." [notes
not sent]

Gaiy Stem, Minneapolis

| Robert D. McTeer,
Dallas

"Preston Miller, of our staff, made notes but I am not at |
liberty to disclose them because they are regarded as
information of the FOMC and are subject to restrictions
on the disclosure of FOMC information contained in the
Committee’s Rules Regarding Availability of Information,
12 CAR 271 (Rules)." [refusal to send notes]
"While I do not believe that I have any information that
will add to what I’ve already related, I respectfully urge
you to deal with Chairman Greenspan as the spokesman
for the FOMC on the questions of releasing internal
documents after the FOMC has had a chance to
deliberate." [refusal to send notes]

Appendix VIII

Transcripts and Memoranda
from the
Federal Open Market Committee

Arthur Burns Collection
Gerald R. Ford Library
Ann Arbor, Michigan

Memorandum from the
Federal Open Market Committee
April 7,1976
Arthur Burns Collection
Gerald R. Ford Libraiy
Ann Arbor, Michigan

BOARD OF GOVERNORS
o r TMC

FEDERAL r e s e r v e s y s t e m

Office Correspondence
To_______ Chairman Burns_______ Snbj*>gt?
From_____ Arthur

L. Broida

Apm7.1976
Examples of Potentially_____________________
Troublesome Passages in Che
February 1975 Memorandum of Diacussic

Given below are illustrations taken from the FGMC memorandum of
discussion for February 1975 of passages which could prove troublesome If
released prenaturely.

The Illustrations are divided into two groups:

(A) those which could excite curiosity and lead to requests for staff
reports or other documentation, and (B) those which could be subject
to misinterpretation.
Only one of the statements cited (No. 2 in Group B) was
released to the plaintiff in response to the recent Court order.

number of others which might reasonably be considered to be factual
in whole or part were withheld on one of the grounds cited in our
response to the Court— mostly, on the ground that they related to
procedural matters.

This Court (or some later one) may, of course,

disagree with our judgment

and order the release of such statements.

Illustrations of statements which could excite curiosity and
lead to requests for staff reports or other documentation.
1.

"...staff documents indicated that the Committee had
failed to achieve its targets for the aggregates because
of the constraints it had placed on movements in the
Federal funds rate."

(p. 12)

"...the staff had explored several different methods of
formulating the policy alternatives, and

concluded

that the current format probably was the clearest."

(p. 53)

2
3.

"...the code used to transmit recommended changes in
discount rates was in the Federal Reserve code book
that was available to quite a few people in the System."
(p. 75)

"A table in the green book, for example, indicated that
the economic stimulus or net change in tax receipts in
fiscal year 1976 that would result from Administration
tax proposals amounted to $10 billion*"

5«

(p. 41)

"...a chart protraying the long-run growth paths for
associated with the various policy alternatives had
been included in the blue book at times in the past."
(p. 52)

Illustrations of statements that could be subject to misinter*
pretation.
1.

"The question of the appropriate length of the lag had
been-raised from time to time by Committee members, and
after a new analysis the staff had reached the conclu
sion that the lag could be shortened significantly with
out militating against any legitimate purpose of the
Committee."

(p. 11)

(This passage could have proved

particularly troublesome if the Committee had decided
not to reduce the lag.)

32.

"... three of Che largest banks in his District with
whom he

had contacts recently had volunteered

the information that they were continuing to pursue
very restrictive * olicies.

In several major cities,

they were denying credit to borrowers who would have
been welcomed a year ago."

(p. 78)

(This passage

was released to plaintiff.

Subsequently, one Com

mittee member remarked that it could be interpreted
as an indication -hat the Comaittee was encouraging
restrictive lending policies when, in fact, that was
not the case at all.)
3.

"...it was particularly important that whatever
differences might exist within the System be
debated around the table and not aired in public."
(P. 8)

"...relating to the use of the term 'non-voting
member*...there had been some little difficulty
recently because of misunderstandings that
arisen in the Congress."

(p. 14)

"A number of other subjects of common interest to
Board members and Reserve Bank Presidents were then
discussed, including the extent to which it was appro
priate for Reserve Bank Presidents to communicate

-4
certain types of information to the directors of
their Banks, and tu*e procedures that had been
followed in connection with a recent discount
rate action."
6.

(pp. 14-15)

"...it would be best if the (discount rate)
reduction followed rather than led actions abroad.
Toward that end, the Board night consult with
other central banks....

Some consultations of

that sort had occurred regarding recent reductions
in the discount rate."
7.

(p. 26)

"They (the directors of the Dallas Bank) had gone
along with invitations to be in the first wave of
the last two reductions in the rate..."

(p. 86)

DRAFT
April 8, 1976

TO:

Federal Open Market Committee

FROM:

Chairman Burns

SUBJECT:

The FOMC memorandum
of discussion

During the special FOMC meeting held on March 29, 1976, I
indicated that I was giving serious thought to recomnending to the
Committee that the memorandum of discussion be discontinued.

After

further consideration, I have decided to make that recommendation.
My conclusion reflects our experience in connection with
the recent Court order that we make "segregable facts" from the
memorandum available to a plaintiff. -The effort to comply with
the Court order in an appropriate manner required the expenditure
of a tremendous amount of time by our senior staff and a consider
able amount of my own time, which I can ill-afford.

Moreover, the

premature disclosure of "segregable facts" could, in some cases, do
damage to the work of the Committee— particularly if the present
Court or some later one rules that we acted inappropriately in with
holding certain facts about foreign currency operations and procedural
matters.
The staff has developed a proposal for meeting the needs
now served by the memorandum of discussion in other ways.

Although

I have not yet had an opportunity to study their suggestions in
detail, I believe they are worthy of consideration by the Consaittee.

DRAFT
4/8/76
TO:

Federal Open Market Comnittee

SUBJECT:

Proposed procedures if

FROM:

The Secretariat

memoranda of discussion are discontir

The purpose of this memorandum is to suggest alternative
means of serving certain n«.eds now served by the FOMC memoranda of
discussion in the event that the Committee decides to discontinue
those memoranda.

Briefly, the proposal consists of the following

elements:
1.

Expand the Record of Policy Actions (the Policy Record) to

include a fuller account of the considerations underlying the actions
reported there, including more information on any significant differences
of view expressed by members.
2.

Expand the Minutes of Actions (which would be retitled

"Minutes of the Federal Open Market Committee") to include an
account of the considerations underlying nonpolicy (procedural)
actions, and the reasons for dissents, if any, whenever the action
is preceded by a substantive discussion and a public record appears
desirable.

Like the present minutes of actions, the new minutes

would be made available for public inspection with the same delay
as the policy record— currently, 45. days.
3.

Place in the Conmittee's files (with copies distributed to

the members, if desired) (a) various kinds of materials now included
in or attached to the memoranda of discussion, such as oral reports by
staff, and written reports on international meetings by Committee members;

-1A(b) memoranda from Che Secretariat suamarizing the considerations
underlying nonpolicy actions that are preceded by a substantive dis
cussion but for which a public record does not appear desirable; and
(c) memoranda from the Sec: etariat sunmarizing informal Coamittee
understandings and any other developments at the meetings for which
a record is desired.

24.

Discontinue the current practice of making a permanent

record of virtually every ;tatement by every speaker on every
issue saised at a meeting;
Each element of this proposal is discussed in more detail
in the first section below, and illustrations of the suggested treat
ment of various types of materials are given in a series of attachments.
The question of the timing with which information of different kinds
is made public is considered briefly in the

second section.

Elements of the Proposal
1.

Expand the Policy Record
One purpose of the policy record is to comply with the

Freedom of Information Act for "current" publication of statements
of general policy.

However, its original— and still primary— purpose

is to comply with a requirement of the Federal Reserve Act that the
Board include in its Annual Report to the Congress a statement of the
reasons underlying Coanittee actions on "all questions of policy
relating to open market operations" and the votes on such actions.
For this purpose, policy actions have long been defined as votes to
change any of the following four instruments:

the domestic policy

directive; the authorization for domestic open market operations;
the foreign currency directive; and the authorization for foreign
currency operations.— ^

\J Policy actions are also published in the Federal Register in
compliance with the Freedom of Information Act. (The full text of
the policy record is incorporated by reference in the Federal Register*

-3

The policy record also provides information abouc Committee
decisions that do not conform to the definition of a policy action
but are believed to be of vide public interest.

For example, die

one-year ranges for growt i rates in the monetary aggregates have been
reported in the policy record since they were first adopted in April
1975 in response to House Concurrent Resolution 133.

A second example

is the guidelines for operations in agency issues; the original guide
lines and all subsequent changes have been reported in the policy
record.
Under the proposal, more information would be provided on
the considerations underlying the policy actions and, when appropriate,
on the other decisions new included in the policy record.

In report

ing the reasons for the policy embodied in the domestic policy direc
tive, for example, an effort would be made to reflect more fully the
significant differences in the concerns expressed by members and in the
specific objectives they articulated during the discussion.

As at

present, the reasons for any dissenting votes would be given whenever
the dissenting members so desired.
An illustration of the manner in which such policy actions
might be reported (based on the meeting in December 1975) is shown in
Attachment A .

For comparison purposes, the corresponding material

from the policy record published for that meeting is also shown in
the Attachment.

The detailed report in the December memorandum of

-4diacussion— which occurs on pages

— is not reproduced in the

Attachment because of its length.
Attachment B illustrates the way in which the Consnittee's
discussion of the longer-run target ranges might be sumnarized in the
policy record.

The illustration is based on the decision taken last

October, and the corresponding material from the published policy
record is again shown.

The detailed report appears on pages _ _ _ _ _ _

of the October memorandum of discussion.
2.

Expand

minutes of actions (retitled "Minutes of the FOMC*')

At present, the minutes of actions for a meeting consist of a
list of all actions taken by formal vote of the Committee at that meet*
±ng, including policy actions (also reported in the policy record) and
nonpolicy (procedural) actions, and the votes on each action.

The

minutes include no information regarding the reasons for any of the
actions or the reasons for any dissents; for most nospolicy actions such
information.is now provided only in the memorandum of discussion.
Many of the kinds of nonpolicy
elicit discussion only on rare occasions.

actions taken by the Committee
These ‘include approval of

minutes, approval of the Manager's operations, agreement on date of
next meeting, agreement on tentative meeting schedule for next year,
ratification of inter-meeting actions, election of officers, and selec
tion of a Reserve Bank to execute System transactions.

-5Other kinds of nonpolicy

actions, while usually handled in

a routine fashion, occasionally are preceded by discussion.

These

include review and acceptance of the report of the periodic audits of
the System Account, annual review of authority to lend securities frqtu
the System Account, and annual authorization to renew standby swap
arrangements.
Still other kinds of nonpolicy

actions often (or usually)

are preceded by more or less extended discussion*

These include revi

sions in guidelines for operations in agency issues, revisions in
System Account allocation procedures, amendments to the FOMC Regulation
and Rules (of Organization, Procedure, and Availability of Information),
delegations of authority to act on Committee's behalf, authorizations
to Manager to undertake negotiations (e.g., looking toward some specified
swap line increase), approval of proposed letters (e.g., to Congressman
Paeman, responding to request for recent memoranda of discussion),
changes in the lag for release of the policy records, and agreement
on procedures for release of other kinds of information.
Although nearly all of such nonpolicy actions are unanimous,
dissents do occur occasionally.

For example, Governor Bucher dissented

from a proposed letter to Congressman Patman because he thought a 5-year
lag for release of the memorandum of discussion was too long, and
Governor Coldwell dissented from the decision to reduce the lag for
the policy records from 90 to 45 days because he preferred a lag of 60 days.

•6*
The proposal contemplates adding material to the present
minutes of actions only for nonpolicy actions for which it appears
desirable to make a public record of the Committee's reasons for
taking the action, and the reasons for any dissents (if the member
wishes to have them recorded). The present practice of simply stat
ing the action would be continued (a) for policy actions, since they
would be explained in the policy record, (b) for nonpolicy actions of
a routine kind, since no explanation would be required, and (c) for
nonpolicy actions for which no public record is desired.
An illustration of the explanatory material that might be
provided for selected nonpolicy actions is given in Attachment C .
The illustration is based on the Committee's action in March 1975
to reduce the lag for the policy records from 90 to 45 days.
3.

Place various materials in the Committee's files
The materials that would routinely be placed in the Committee's

files (with copies distributed to members, if desired) would include
(a) the Manager's and Deputy Managers' oral reports on foreign currency
and domestic open market operations; (b) oral staff reports on the
economic situation and outlook and on prospective financial develop
ments; and (c) written reports by members or staff on international
meetings.

Summaries of oral reports on other matters (e.g., reports

by Committee Counsel on status of law suits) could be treated in the
same way whenever desired.

-7 Similar treatment would be accorded occasional memoranda
from the Secretariat of two kinds:
A.

Memoranda concerning nonpolicy actions for which it is
desired to have a permanent record but not to make that
record public by inclusion in the minutes*

An illus

tration is provided in Attachment D . which sunmarl2 es
the Committee's discussion in August 1975, when it
accepted the latest report of examination of the
System Account.
B.

Memoranda concerning any other developments at meetings
for which a record is desired.

These developments may

take a variety of forms, as suggested by the following
illustrative list:
1.

Informal guidance to Manager (e.g., not to
accumulate foreign currencies beyond some
specific limit. , For an illustration, see
Attachment E).

Informal decisions, such as the following:
(a)

Decisions not to take recomnended
actions.

(For an illustration, see

Attachment F . relating to a staff
committee recommendation to undertake
operations in finance bills.)

-8(b)

Decisions to undertake procedural
experiments.

(For an illustration,

see Attachment G . relating to a
"tracking experiment" in blue book.)
(c)

Decisions with respect to Committee
procedures for formulating its direc
tives and targets

(e.g., discussions

of reports of Maisel and Holland SubComnittees on Directive; discussion of
procedures in response to House Concur
rent Resolution 133; discussions of
relative emphasis to be placed on
and M 2) •
(d)

Decisions regarding the content
of the policy record (e.g., with respect
to reporting specifications in numerical
form).

(e)

Decisions with respect to responses to
lav suits against FOMC.

Appointment of, and charges to, subcosmittees and
staff committees.

Comments on, or discussions of, fundamental prin
ciples that should guide System operations (e.g.,
role of operations in coupon Issues; strategy of
foreign exchange market intervention).

-9 4.

Discontinue practice ef making a permanent record of all
comments at meetings
The present memorandum of discussion is an inefficient

document in two respects.

First, it is probably true that no essen

tial purpose is served by preserving much of its present content.
For example, questions put to the staff, and the responses, often
involve elaborations of points made adequately in the written and
oral reports to the Committee.

Also, many of such exchanges are

concerned with technical issues of only transitory interest.
Secondly, the form of the document— a largely chronological
account of an oral discussion— poses difficulties for the reader
interested in an understanding of the issues the Cosmittee faced and
the judgments it reached.

To extract that information, the reader

has to carry out an analysis of those p'arts of the discussion that
interest him.

Under the proposal the Secretariat would, in effect,

be making such analyses in the course of preparing the expanded
policy records, the expanded minutes, and the various proposed
memoranda to records.

If this work is done skillfully, most readers

would be better served than they are now.
Some members of the Cosmittee may value the present memoranda
of discussion because they provide a record of their own remarks on
policy (or other) issues.

A1 alternative means of serving that pur

pose would be for the Secretariat to supply the member with copies of
the transcripts of his remarks.

10
Ttm-tnp with which information is made available to the public
As indicated earlier, the proposal contemplates that the
new minutes of the FOMC, like the present minutes of actions, would
be made available for publ* c inspection with the same delay as the
policy record.

A Federal Court has found that the present lag of 45

days for the policy record is inconsistent with the Freedom of Informa
tion Act, and it has ordered the Comnittee to make such records avail
able as soon as they are approved.

Even if this ruling (which has been

stayed) is overturned by a higher Court, the Comnittee may decide to
reduce the lag*-perhaps to 30 days.
The proposed expansions of the policy record and minutes
would increase the amount of staff time required to prepare drafts of
these documents, and probably would also increase the frequeacey of members’
comments on drafts.

Some means of expediting the drafting and clearance

of the documents obviously would be required if deadlines were shortened.
At present, shortly after each meeting the Secretariat places
on file in the Board's Public Information Office an abbreviated ver
sion of the minutes of actions— known as the "selected list of actions"—
which differs from the full minutes' mainly in excluding information on
policy decisions which are deferred for 45 days.

It is presumed that

present practices with respect to the selected list of actions would be
continued.

If so, the selected list would differ from the final

minutes in a second respect: it would not include the material added
to the minutes themselves with respect to reasons for nonpolicy actions
and any dissents.

-11
At present, the memoranda of discussion for a calendar year
are transferred to the National Archives after the close of the fifth
succeeding year.

If the Committee adopts the proposal to replace the

memoranda of discussion with expanded policy records, expanded minutes,
and memoranda to records, only the last would not be in the public
domain 45 (or fewer) days after the meeting*

Attachments

Transcripts from the
Federal Open Market Committee
March 29,1976
Executive Session
Tape 1
Arthur Burns Collection
Gerald R. Ford Libraiy
Ann Arbor, Michigan

First of all, here's a document and ehe mount of facaaal a material

and I can see that document xkzx is not going to stay with the plaintiff, it'll

be on capital hill before very long and I cans derogatory statements that might

be made on capital hill.

they

This is what that Connittee.

They sit around, and

what they know and the number of lata fact that they considers is

very scanty, it's a talking Committee and that would cause some *±xxk±££

mischief.

Next, I became aware of a fact ±a that individual statements, you see,

can so easily lead to this or that member of the Congress to ask for documentation

which obviously must exist; and additional reports*

Now, I recognize that the

tk recommendation of the Coldwell Conmittee would reduce that burden and reduce
that difficulty and that was the purpose of that Coonittee's recosmendatioo.
think
I don't/these difficulties are going to be eliminated.

I see myself, unfortnuatelj

having to devote a good deal of time after the Coonittee staff has done its work,

they'll come to me f a with questions because there's a gray zone always and itfs

pretty large.

I see also the very real possibility that after all that is done,

they'll be individual statements that will be picked up by members of the Congress.

or members of the press or both, that will cause us additional work and what is

worse than that, embarrassment.

And therefore, I want to ponder this matter

further, but 2 weeks from today when tkax. I think die next FOMC meeting, regular

meeting is scheduled,

Brolda

3 weeks.

Three weeks from today, the chances are chat I will be

recomending to the Conmittee that we do away with the aotoraodua of discussion

that we expand the policy record, so that the public will be informed rather

promptly, not only our decisions, but the reasons for our decisions, and any

shadings of .views within the Committee,

Now, it means ± a break with tradition,

but so does the sanitized version that the Coldwell Ccmittee had recommended.

We live in a new world and I think we better adjust to it.

I have not reached

a zfct firm decision on that— it* s a painful decision for me, but that is the

way in which my thinking is going.

I mention it now to you because we'll have

to reach a decision, I say have to$ we don't, but we should, we would reach

a formal decisions at the m next meeting one way or another .That's all I have

to say.

Mayo

Will there be any more information about the status of

Government in the Sunshine by that time?

Well, we may have a little not more information.

isn't going well in the legislation.

That

Our efforts to defeat it are now

prospering.

We still have chance, but ie doesn'c look very good co me.

you have any more detailed knowledge?

_______________________ if I may Mr. Chairman, I brought

to the Board's attention at the last meeting, the iffirtiaf __)_______of the

judiciary comnittee in a 2 day session last week, to enquiry into possible

conflicts with the existing Sunshine legislation proposal versus the

administrative

procedure act, the Freedom of Informatinn Act, die Privacy Act provisions,

The

Deputy A t t o m y General calling to the Connittee's attention several areas in which

he felt the proposed legislation if enacted in its present form conflicted with

existing provisions of law and these xother statutes.

language in several instances.

He has alteriied amendatory

Mr. Chairman the %xact impact of which we don't

know at this moment, but it could somewhat improve the position of the agencies,

but the Chairman, 1 think, is quite correct that substantive provisions of law

as now proposed generally requiring open meetings stand pretty well in place

and they won't be Impacted by these other amendatory proposals.

Well, we may have a change on the Bouse floort±f If we

do, I have excellent 2 1 3 reasons for thinking that we could help get constructive

assistance from the Senate conferees.

Hay I inquire Mr. Chairman the relevance of the Government:,

Coldwell

in the Sunshine in question with the memorandum of discussion.

Well, I think that that is a complicated legal question,

which involving the FOMC that Ton is still in process of studying.

correct

Is that

Tom?

TJOC

It is sir.

I can, does the Chairman wish me to comncnt at all,

I don't intend to ...

complications.

Depends on Mr. Coldwell, whether he wants to hear the

I don1 tlx,£ he well may, and therefore he's ±* entitled to.

Coldwell

Just a splash windshield opinion,

Mr. O'Connell.

What

do you think that we would have to yield in our memorandum*! of discussion,!

if we had

TJOC

at this time the Government in the IXiJU Sunshine law.

Governor, my backseat opifri on

is that that would depend

one on thejfoll applicability of the Government in the Shnshine law as finally

enacted to this Conmittee.

If it should be a judge fully applicable to this

Conmittee, than thus an open meeting I think, acadsnic the issue now of what

form a memorandum of discussion — — —

—

you would then have to detexmine what f m

could be closed.

—

a **
take kmcxxx
because. — — — —
_u

poetions of that Conmittee meeting

If closed, what portions, all having been transcribed, what

portions could be dekted, and

then

playing with the memorandum of discussion.

afc my

back to the same game we're now

It is involved, Mr. Chairman, that's

point.
rnent
Mr* Broida has an announcede&o to make>

Any other question?

Broida

tfejve left a little foza on top of your packages for you to

indicate whether you would like these materials mailed to you at your bank or

whether you dog't want then and you'd like us to destroy them.

If you check the

appropriate box, sign your name, and x leave them at your place, we'll pick x thea.

op.

If you fant to caryy them with you, leave l i m it unsigned.

Coldwell

If I could

Mr. Chairman,

question of the memorandum for Just a moment.

I'd like us to return to this

I think it will be well for

members of the Committee with w h « ______ think on the problems of deleting

the memuaandum of discussion entirely, or maintaining in an abreviated

edit form, it would seem to me that the problems which have to be addressed

in making this decision, center on 2 or 3 points.

it's going to be and delete segregable facts.

First, how much trouble

Second, how much staff time

and member debate would have to gp into a discussion of an enlarged policy

record,

And thirdly, whether the Committee is overreacting to a potential

mischief which might be down the road, and whether to move in an anticipation

3/29/76

Exec. Sea.

Tape 1

-19-

we're
portions could be deleed, and ttmwfri Chen

playing with the memorandum of discussion.

back co the sane game we're now

It is involved, Mr. Chairman, that's

■k my point.
aent
Mr. Broida has an announcwiptm to make.

Any other question?

Broida

Wejve left a little fora on top of your packages for you to

indicate whether you would like these materials mailed to you at your bank or

whether you dog't want them end you'd like us to destroy them.

If you check the

appropriate box, sign your name, and x leave them at your place, we'll pick m them

ttp.

If you dant to caxjy them with you, leave tkmm it unsigned.

Coldwell

If I could

Mr. Chairman,

question of the memorandum for just a moment.

I'd like us to return to this

I think it will be well for

members of the Committee with ( k m _ _ _ _ _ think on the problems of deleting

the memDsandum of discussion entirely, or maintaining in an abreviated

edit fora, it would seen to me that the problems which have to be addressed

in making this decision, center on 2 or 3 points.

it's going to be and delete segregable facts.

First, how much trouble

Second, how much staff time

and member debate would have to g> into a discussion of an enlarged policy

record,

And thirdly, whether the Comnittee is overreacting to a potential

mischief which might be down the road, and whether to move in an anticipation

■X of ehac mischief or wait until the mischief shows up.

Well, as I suspect things earlier whether or not __________

the one question Chat I think Mr. Broida would be able to a ns w er ,m j i

is now

Che policy record, now do you have, you send it around to members of the

Committee, do jtSi you not?

'Broida

Yes sir.

And EMMjqai 4° you find many criticises made by members of

the Comnittee.

Broida

mwx of the

Very, very few, Mr. Chairman.

12 ,

I’d say about, perhaps 8

or maybe one,* occassionally 2 comments, but most of the time

we get no coanent from the

Well, ± I would draw the inference from that, that if the

present memoranda .were doubled their lengths that there would be more comments

but that it would not be a huge burden on u m i i

the secretariat.

Is that

a fair inference?

Broida

I believe so.

Coldwell

Well, I would challenge that only to the extent that if

we're attempting in doubling the size of the policy record^ to obtaining the

flavor of each members' position, that it is going to p ± x n ________ discussion.

That isn't what I had in mind.

How Governor Wallich

argued the ease for the kind of document that I have in nind.

I don't think

that this policy record should identify individuals.

Coldvell

I don't mean indentify.

I don't think ^y name, and I don't think that the

flavor of each individual's thinking should be represented.

let's say ve do it by symbols.

Here is

Here is A's thinking, here is B's thinking.

Now,

prevailing sentiment the divergent viewpoints, now if let us say a member of the

Comnittee felt that the policy record as prepared by the staff did not convey

the majority thinking, did not convey divergent sentiment that he

____________

that he expressed clearly to the Committee, and which is not recorded in these
a
minutes, he would suggest xka sentence or a paragraph and I would expect the

secretary to adopt it.

Wallich

Do you have any opinion, Mr. Wallich?

Well, A I'm wondering what would happen for instance with let

us say, complete minority points of view.

One member of the Comnittee were to

hold a view totally different from others, this presumably would kapp have to

be stated.

It would also be stated that there was little support for it, somethin^

that conveys the balance of the meeting.

Transcripts from the
Federal Open Market Committee
April 20, 1976
Tape 5
Arthur Burns Collection
Gerald R. Ford Libraiy
Ann Arbor, Michigan

4/20/76

T«P« 5

-19-

Holland

Well chuck, velll'll come to that in a ■ minute.

I'm truing to think now about the specification* sheet ix.

The specification sheet is

not a good ke vehicle for release in my judgment because its too bold, its too bald.

They are

simply numbers and none of the qualifications around jthem that appear in

the language that are used in the policy record entry.

However you could pick up the

language in the policy record entry that is now used there, marry it right withthe dire

the staff has already done experiments in that fashion and produce I think an acceptabl

kind of version.

Now the reason for not voting and then just telling.the staff putting

them into the policy record entry I believe is a reason that looks forward to the kinds

of pressure this committee may be under from courts and from citizensry in terms of

making information available.

Formal vote information may indeed be pryed out of you a

some stage sooner than.the reasons therefore.

And

it is the development of the reason

and the back ground therefore that make the policy record late, late--in terms of 30 or

45 days, whatever the Committee decided to do.

Therefore it seems to me the Committee

would be well advised to adopt these numbers in a form where it would not feel eabarras

or open to misinterpretation if indeed they were pryed out of us on the very afternoon

the meeting and by folding them into the policy record the language would be acceptable

Afternoon, I'm just not following you.

on the afternoon of the meeting.

If they were prjed out of u

This is on the assumption of this court decision?

Transcripts from the
Federal Open Market Committee
April 20,1976
Executive Session
Tape 8
Arthur Bums Collection
Gerald R. Ford Libraiy
Ann Arbor, Michigan

jn>fyr saxkcertaln coses Is eucclng out the aeaoraaium of discussion in

terns of implications to others on the outside that we're being nore jnbjeefr

C^stofTif you want ? to put it that way, that this Is a deviaus way ■£ to

get±> around the law.

That depends how we present It.

Nov I would want to present

this, I would want to nake a virtue of this, and never mind how we arrived

at it. We were not seeking virtue for the sake of virtue, I'm not going to

argue that, but if let us say we decide to drop the memorandum of discussion,
all
vx±±/right

than we're doing away with an instrument of secreeyx retained

in the Archives for a period of 5 years.

We have a policy record and that

policy record Is now going to be very much fuller than it was, so the public

will be Informed promptly and much* more fully, that's another n

virture.

A third as we go along with— If wc-^umb the second suggestion, you see,

cutting the teal rate, that goes further in that direction and I would

present it as a deliberatfeca attempt on the part of the Fedeaal Reserve

to rid itself of the perenial charge of secrecy.
to
It
±£ftx/presentz*/to the public.

I think that's the way

Historically, it didn't arise that way,

that's true, but I think that is not an? unfair interpretation.

Transcripts from the
Federal Open Market Committee
May 18,1976
Executive Session
Tape 1
Arthur Burns Collection
Gerald R. Ford Libraiy
Ann Arbor, Michigan

5/18/76

Exec. Ses.
Tape 1

-7-

jc does seem to ■* thaC ic kinda °* **“* * great deal of the material that .is

familiar to every reader of Che newspapers who know GNP was such, employment was

such »"** so forth, now It's interesting to somebody who studies these matters

carefully to know what information the Coonittee had, that could easily be

accomplished by saying information was available up to such and such a date.on

particular..

That wouldn't help/historian

very much*

It would make his

eask much more difficult.

Walllch

Yes, but the general reader of this

. such a

reader is really very familiar with all the data that axe in that record besides

their release with a dealy of 30 days or what ever, so that they are not even a

useful way for him to recapitulate this information.

The interesting information

for the reader, I think, is £■ what the projections were of the staff_____________ ,

that's new information.

My suggestion is that we emphasize the latter and

deestphasize the former.

I follow the trend of thinking and I don't think I

wholly agree for 2 reasons.

One

is purely formal.

docuaent as an expanded policy record.

We're describing this

We're providing more information fhgn in the

5/18/76
past.

Tape I

-8 -

And that is partly Che Justification for eliminating the memorandum of

discussion.

Mow on the basis of this concept the document should be longer,

you *ee» muat ^e longer, and this is a formal consideration ehat cannot be

neglected, and we need some additional pages.

Now as for the information that

Is contained about the economy, well, I Chink you credit individuals who follow

the Federal Reserve with more knowledge than I think nany of then really have.
&
1 chink ic's a useless sumnary.

Those who feel ChaC It merely repeats that which

they already know will have no difficulty skipping paragraphs or pages.

Those

on the other hand, who may find such a recapitulation useful, or it find ChaC

chey derive new knowledge— knowledge for che first time will have an opportunity

to be insCrucCed fully.

And therefore, while I understand these eridcisms, I

chink ChaC if anything chis document maybe criticized on the ground, coming back

to my first formal polxit, ChaC 1C is not long enough.

Now when this document

was first shown Co me, it was hardly longer, or just about a page or two longer—

2 pages longer Chan a policy record was in che pasC.

staff, well thac will not dox. I'm not going

And 1 Cold members of the

to t n i tell you how to add additional

pages, and I*m cercainly not going Co say chac we should do anything

resembles padded, but produce several additional pages.

Chat
/remotely

Transcripts from the
Federal Open Market Committee
January 17,1977
Tape 2
Arthur Burns Collection
Gerald R. Ford Libraiy
Ann Arbor, Michigan

1/17/77

Tape 2

-11-

yteard about these rules; I don't know where they are now.

satisfied with them or not, I don't know.

rules and perhaps you can indicate

Whether I for one am

However, Tom O'Connell has worked on
or may
This may/not give me an opportuc

where they stand.

to say that there are insufficiently inaudible.

TJOC

now about this.

Under the circumstances, I should say we started with this and we'r

That's about all I can say Mr. Chairman.

More directly, the Board has

legal..*..
But
/ve have to live within the law.

But you know there are ways of

turning this into a grand ceremony or dealing vith/^n

but not obstructing Board business.

way that satisfies the law,

O yj
In taking Board timef-'iAnr— t*naia(7-) o?

procedures.

TJOC

I trust that the document that is finally before the Board

subject to some continuing amendments to make more simple and less obtrusively

provisions of that regulation, will soon be considered by the Board.

The regulations

m oct
t,
I think I can say President Eastbum, pretty well follow the m w < ~ .mandated statute.

What we've done is to put in regulatory form the substantive and procedural requiremen

of the statute

as they apply particularly to the Board and its mode of meeting

1 /17/77

T«P« 2

-12-

operation, providing for open meetings, closed meetings, and the perallel requirements

of the preparation of transcripts or minutes, depending on the type of meeting that's

closed.

And otherwise providing for the procedural identified step of noticing the

advance requirement for notice of the meeting, the votes and so forth.

I hope that

they closely adhere to the statute and that they don*t go beyond that.

Thus following

the mandate the Chairman has given in the adoption of them.

You might indicate what kindjof meetings will be open to the

public.

TJOC

At this time the regulations clearly contemplate that matters

dealing with consumer affairs, by their nature, will be open to the public.

Otherwise,

the Board's regulation^ announce its intent to close such meetings as are allowed in the

/JLilk'f
other 9, Peadtnfe 10, total 10 exemptions of the statute.

It is contemplated that on th

whole more, I believe, more meetings of the Board will be closed than will be open,

although there are specific subject matters that, subject to approval pr adoption by

the Board will be open to the public.

The OSCA type meetings, being an example of thexs

I think the Bank Presidents would be especially interested in the

question, whether matters that come before Mr. Coldvell's cosmittA* involving Federal

1/17/77

T«P« 2

-13-

b«
Reserve Banks in general, would/handled in open session or in d osed session, whether

Federal Reserve Bank budgets would be handled in open or in closed session, could you
address this range eiteee^jf. d

TJQC

I could Mr. Chairman, taking the specifics for instance of a

personnel action within a Reserve Bankyunder procedures is normally presented to this
0 */
Board for confirmation*^ approval.

It is hoped that by definition of the exemption

for personnel matters, which is found in the statute, that such discussions by the

Board could be closed.

The issue of a Reserve Bank budget, there is no straight exempt.

U^S
for an agencies budget or for a Reserve Bank budget, as woald be the case here, for
*
closing such a meeting.

However, depending on the nature of Che item in the budget

being discussed, for instance, if it involved or contemplated the acquisition of fefaar

a building site, and so forth.

Item^such as that we find, we believe, could under

one of the exemptions, such as section 9 (b) for premature disclosure could place the

agency at an operating disadvantage.

We will look for such closure possibilities.

Let me indicate this too.

If Federal Reserve Bank budgets were

to be handled in an open meeting, then our public image, if nothing elsejwould require

that we devote a good full day to ujiiiiiiri'wrfTVn of those budgets.

Otherwise, ve'/'simply

1/17/77

Tape 1

-14-

U P
rubber scamping what jjL a Comaiccee had£ and we're not do ins our job,

Jackson

It is mostly likely that the Conmittee aeetlng would be open too

under those circumstances.

How 1 hope you would do more research on that question because

the Board does not have that such time.

It's largely the Conoitte^s job.

traditionally hasYspent a day on the budget.

day that}/ve
hat^/we don't have too much time.

The

Nov maybe we should, but if we spend a

You know that this Is a very hard working

Board.

TJOC

that
Well, Mr. Chairman, I believe/Govemor Jackson's

point was that

if that particular budget examination were done by a Committee of the Board, that if

the Board were required to have an open session so would the Committee.

I believe that

was the point he was making.

Well then maybe the Conmittee ought to be a smaller Conmittee.

TJOC

It's possible.

If it were a Conmittee, for instance, a one-man

Committee together associated with staff of the agency, rather than 3 members of the

Board, I believe that it escapes the definitional impact of the statute and would not

be subject to the Sunshine

Act.

1 /17/77

T*P« 2

- 15-

Suppose that we have a recoomendation such as we had from the

Mew York Bank, the Kansas City Bank, concerning new computers, now would chat have

to come before the Board in open session?

TJOC

Mr. Chairman, the natter presently to the best of my understanding

is delegated to the Bank Activities Coamittee for Initial detemination and a recosmenda-

tlon to this Board.

Coldwell

The final determination if its within our Units.

TJOC

Final determination by the subcommittee within a certain dollar

limit.

OIL
If it came within that dollar limit, thus the decision could be made fig delegatee

authority by the Coamittee, the Coamittee would first have

to the public.

to ask, must this be open

Its the matter of the purchase of equipment.

If there were nothing in

that consideration Mr. Chairman, the disclosure of which at that time would jeopardize

the ability of the Coamittee to

direct and achieve a purchase within a given dollar

amount and it wouldn't adversely effect the competitive -fegust of such proposal, it

would have

*> be open to the public.

What about the question of general level of salary increases or

a guideline for salary Increases within our Federal Reserve Banks?

1/17/77

Tape 2

-1«-

TJOC

Two possible exanptions from open meeting Mr. Chairman.

Very

briefly one under exenption 2 relating solely to the internal personnel rules and

practices of an agency.

We would have to urge that a discussion of that matter insofar

as it relates to the banks, comes within this exemption because U faL ft

C7?’<*
System

and that this being back personnel matters is also an agency personnel matter, namely

of the Board.

If that were to fail I would next turn to section 9(b) that says, you

may keep a meeting closed if in the case of an agency, disclosure would likely to

significantly frustrate implementation of a proposed agency action.

of this issue of salaries, namely, the level

If by open discuss

which we are going to establish them,

what we perceive to be the market level, we were to thus bring into play competitive

forces that made it necessary for us to raise those salaries or otherwise, adversely

effect our action^ ^t's possible we could close the meeting, otherwise, it would have

to be open.

^Vuluker

jnSfr answer/this Mr. Chairman, is)have one open and then nobody

would show up after that.

Gardner

Well, we haven* t discussed regulatory matters and a good deal of

this Board's time is spent on regulatory decisions, and Ten I Relieve because of the

-17-

Tape 2

1/17/77

nature of such decisions ehac v

those meetings.

Except on consumer areas*

Gardner

I'm talking about a bank holding company application, some matter

involving individual

institutions*

I have no reason to believe Governor Gardner that in almost every

TJOC

r ?

—y

ild be [the subject to closed meetings.
case, such items could

There is a requirement in

the statute that goes beyond the conduct of the meeting itself, namely, as to either

the transcript that is prepared or that the meeting is closed pursuant to one of four

specific exemptions, you had minutes instead of a transcript.

Any meeting that is

close pursuant to section 7, 8 , 9(a), and 10, you may have minutes.

If those minutes

or the transcript are later found to contain nonseasitive items, that is, conversations

references, or innlusions that were not subject to closure, that portion of the trans

cript or the minutes must be made promptly available to the public.

Nov that contains

caution for the Board and for the FOMC should it come -e»t/statute.

The result would be

le meeting, but imaediately you must review the transcript to determine

whether portions must be made available to the public.

Partee

Tom you didn't mention transcript when you were talking in terms

of the possible implications of the Conmittee coming under— is thadbecause the

1/17/77

T«p« 2

-18“

exanp cions make Che minutes possible?

TJOC

That's correct.

Partee

In boch eases?

TJOC

The nature of our closing exemptions would make eh* minuces Che

name of the game.

Parcee

Buc again you'd have the quesdon of sensitive and nonsensitive

parts in the minutes.

TJOC

Yes you would,

Coldwell

You have another question which I probably can answer myself,

but maybe I'd beeter get some guidance.

If you have a consent calendar item, that Is

just as much as a decision as a regular calendar item.

TJOC

is correct.

Under the present format of the Board's operation Governor, thac

It's possible, and this would be up to the Board and the Chairman, it's

possible that consent calendar items can be because their nature largely a circularize*
whac
Cion function as much as/was formerly known as a consent calendar.

remove those from any form of Board agenda.

Coldwell

So you don't have a Board meeting?

That could chus

IV
1/17/77

T«P« 2

UPC

That** correct.

If they were the only items, and the Board

adopted that method of circulating to the Board members for reading and for initial

approval, the discussions in Congress indicated this is perfectly appropriate.

Coldvell

Also dangerous.

Mr. Coldwell, have you given any attention to these rules that the

staff is working on2

Doldwell

Yes.

ZfS/K.

Coldvell

Governor Gardner, Mr. Allison, and I spent a couple of hours on

this subject just prior

it i

/TkJll& AU i

I hope youjfind ways of dealing with Federal Reserve Bank problems

so that as fev of them as possible need to be handled in open session.

Coldvell

X/u/yX

tV t

You think you've already done that.

Codldwell

Well, ve're headed in that direction.

I'll let the Vice Chairman

on that subject.

Gardner

We have a plan.

The problem is Mr. Chairman that as you know,

If a Committee regardless of its size is delegated to act for the Board, th^Ei it

1/17/77

T*P« 2

-N -

becomes subject to Sunshine by Chat delegation.

So we are working on alternative ways.

Now a number of the Board comnitteea, in fact, the majority do not have delegated

authority, and they can meet without violating any law in closed session because

they're only advisers or what have you.

sU U ;

this question about Federal Reserve budgets disturbed

me because these budgets are worked out very extensively by our staff.

on very extensively by Coldwell's Conmittee.

Mr. Coldwell outside the Board room.

Board as a whole

They're worked

I work on it to some degree with

The amount of time that has been spent by the

Federal Reserve Bank budgets hasn't been large because of all

of these preparatory steps.

All right, now you have an open meeting and there maybe

some newspaper fellows there and Gardner’s common cause, and what's this Ralph Nader's

crowd, and what.not.

Here let us say we take up a budget cooing to $600 million plus,

an
and we do that within / hour, and well we'd look very bad.

Therefore, if that were

the case I would consider it my duty to just stretch it.out over a day# w ? H that's

terrible.

Th^a we'd look good or reasonably good in Mr. Nader's eyes, but v^destroy

or reduce our effectiveness.

Now there must be an answer to that.

Well we have enoug

ingenuity in this room I think to find the answer, bat Z don't think we have found it

Transcripts from the
Federal Open Market Committee
February 15,1977
Executive Session
Arthur Burns Collection
Gerald R. Ford Library
Ann Arbor, Michigan

2/15/77

Executive Session

Burns

Good rooming gentlemen, I was just about to apologize

for being late and I am sorry but I had a breakfast meeting and I couldn't get
away

colleague
on time but a calisgiii of ours suggested that this might

be a 10 minute

neeting and in view of his wise pronouncement I am not going to apologize.
But I am sorry *o be late.

I think as you all know we have a we've planned a

luncheon to honor one of our colleagues Lyle Gramley who has
Reserve but has not left this city.
Executive session

left the Federal

The we will begin this meeting being in

with a report by Mr. O'Connell who *111 recommend to the

Coomitteee that the FOMC agree that the meetings of the FOMC are not covered
by the Sunshine act. Now just a word of introduction This 1s the finding by
Mr. O'Qonnell and he has done a very extensive research on the subject
conclusion is firm.

his

I have bewn keenly aware of the fact that this conclusion

if adopted by the Committee could cause us some difficulty on Capital Hill, because
some members of the Congress interested in the SwtshH Sunshine law apparently have
been under the Impression that the FOMC is covered. And I've been a little concerned
about the finding by our counsel on the ground that some member of the Congress
interested in this subject might propose an amendment to the Sunshine law n under
which we might loose the two amedements we want. We fought hard to win and we final!v

2/15/77
did win at the last session of the Congress. And therefor* I have discussed this
subject with considerable care with Senator Ribbicoff, Senator Percy, Senator Childs
Congressman Brooks* Congressman Thesell and I have also talked this over in length

with John Gardner of common cause. And as you may know, John Gardner and his group
played a very important role in getting this legislation 1n action. And I wanted to
aake sure that this fuM finding by our counsel 1s not Interpreted first as a
circumvention of law and second that there will be or may not be a move 1n the
Congress to amend the Sunshine Act. These conversations with the members of the Congre
have gone well and they understand the position that Mr. O'Connell has reached which
I am reconmenting that the Committee adopt. We don't have any actual assurance
that there will not be congressional action but as of today I have no reason to u p
expect it. That’
s all by way of introduction and the floor 1s yours Tom.
O'Connell

Mr. Chairman the members of the committee, I believe , have

received advanced to the meeting Memorandum of law as set forth as the Chairman has
indicated the conclusion that I have reached on researching this issue. And
accompanying that memorandum was a proposed statement of policy that I have recommende
and with concurrence with the Chairman the language has been adopted for the Cornnitte
study that would set forth as published the Committee’
s statement in view if the n u i

2/15/77

-3-

concurrs and the position that I reconmend Hay I take just a few brief moments and
restate in sumnary form, what I believe is a sustainable position with reference
to the outcome of the steady of the steady done. The Issue of course Is whether
or not the statutory language per se of the legislative history of the statute
can reasonably be red so as to exclude u from its coverage the FOMC. As you have
read in the memorandum page position guide certanly by definition of the term
agency which 1s contained 1n the statute there are three basic tests that an agency
must meet as to whether or not it's covered. Then one, 1s whether or not it's an
agency as

1n that statute. The C o m n i a n

whether that agency membership 1s composed of

(

agency, secondly
body through a more

enforced Conmittee meets that requirement test. AiwSfcaiStlrd whether or not the
members of such collegial bodies two or more in number have been appointed to such
position by the President of the United States at the advice and consent of the
Senate.

If that final test is met the agency is covered.

And of course it is on

tht last third criteria that I have taken the position the FOMC is not covered.

But

the simple reason that of the body composed, the Board Membefs, of course, are
appointed to the Board by the President by the advise and consent of the Senate,
but they are ex officio members of this Committee by statute members of the Board

2/15/77
as
are designated tax members of the FOMC and of course at any given point in time the
five serving Presidents are not appointed by the President with the advise and cons*
of the Senate. So the houses d ux body does not meet the so-called agency test with
the meaning of the statute. Nor, in my judgment, is the FOMC In any sense to be cor
to be the subdivision of the agency, which is also component part of that pultun
definition.

On examination, there is no function performed by this Conmittee that

can be said to be the result of or the direct follow-up of the delegation of
authority m under the Board Conmittee.

It’
s principle function are defined by

statute and by ia some regulations issued pi pursuant to that statute. The
Conmittee is a functioning agency for other purposes and within the meaning above
the law. The Conmittee knows it is an agency within the mean of the administrative
procedure act—which is

to USC. The Conmittee is an agency and had has

taken that position with respect to the freedom of information act. But for purpose
of the Sunshine Act I am perfectly well satisfied that the start

the

composition of the Conmitte as explained by statute, viewed in the light of the
definition of agency within the Sunshine Act reasonably postures the Committee is nc
being covered by that act.

I cite in my memorandum of long, Mr. Chairman and member

of the Committee, statutory reference to the historical point as this bill was

goinc

2/15/77

-5-

through the Congress that support this position. One such being the extract contained
in the
•by a

memorandum

member

of an exchange by Miss Abzug sponsored bill in the House when asked

of the c * m * u s Congress as to the actabillty of the term “
agency"

and she very clearly stated that the test of agency status 1s the definition itself
And she gabe an example of ihexMC
would

an ex officio status of an tug agency that

not be covered by the act for the simple reason that the members wene not

appointed to such position by the President. Although she admitted that they were
appointed

to another position by the President,

was the body of which the question

raised statute's actability that was the test that's faming forming that same
rational that we shall have.

I must admitt, and the Comnittee members have seen

and have had a chance to look at the memorandum. There 1s iiwx contrary legislative
i history in the form of the debates on the floor of the house. But I point out that
on careful study, I hixi adjudge those quoted portions of the debates to have
assumed the status of coverage for the FOMC and then to have discussed other collatera"
issues such as who is a member assuming that the agency is covered.
a
to close the meeting and withhold a transsript.

Such as the right

In that exchange 1t was assumed that

the FOMC was acini ntn mentioned 1n these two or three phases. The sentence carried
was something like the FOMC, it can close Its meetings so 1t was a stated assumption

2/15/77
without Itimized evaluation of the language and statutes. Overall I adjudge the
iegiiiatiaaz . legislative history to balance in favor of a position now taken by
thus recomnending the position tk tz that is contained in the memorandum. Aad as
reflected

in the statement policy.

The recommendation for adoption of that statement

I submit that it has been very carefully pxtpuiixl prepared to adhere as closely
as possible to the language of the statute without the exageration of the statement
operated
of the Conmittee of its position that upon examination of Its own apxiletf procedures
the Conmittee has determined that Its present procedures, If continued ■to be foil owe
even though it demurs from the position of legal technical coverage by statutes, in
fact there is a compliance of the spirit of the Sunshine Act. And more particularly
the fact that the Conmittee under Its present practice releases its recordx of the
policy actions roughly a month following each of the respective meetings. And as now
written and as has been expanded on the Committee's action of several months ago is a
very x full explanative text that when viewed as compared with coverage by the
Sunshine Act where the Conmittee could under the technical terms of that Act which
hold major portions, 1f not all certain transcripts for months even a year or whatever
periid the Conmittee determined under the particular exemption required further hoidin
as its now written there Is baslcly nothing that is withheld per se in the narrative

2/15/77

contained in the record of policy action which Is released about a aonth ax after the
aeetlng.

So Jn that sense, and as the Chairman has advised each of tm the members of

Congress with whom we earlier were eluded , we feel that there Is 11 full deliverance
In the spirit of the Sunshine Act and that we can go forward In that spirit and that
we are not in any sense cutting short the rights of the public with respect to the
Sunshine Act. Hr. Chairman, I think that Is roughly those are the points I wanted
to cover
Mr. Chairman, does the emphasis that we're placing on this argument
on whether or not members of the FOMC are appointed by the President, confirmed by the
senate, does that strengthen Mr. Royce's position that on the piixl appointment of
Reserve Bank Presidents, and will that stimulate further efforts, you think on his
part based on this Government in the Sunshine issue to try to force through Congress
h the bill that he was unable to get out of the Committee last year.
Burns

Is that

Let me make an introductory comment and then turn the legal question

over to Mr. O'Connell. The all that we intend to release to the public is the statemen
of policy described as attachment B rather than the lengthy legal opinion that has
been developed by Tom O'Connell.

I think the legal opinion is a document to this

Committee and there is no Intention to release that. Tom would you be good enough to

2/15/77
nTonne 11

^
Mr. R°°s ^ ' s » as ^ ou we^

*cnow ^ ' s d iffic u lt to respond to what

will triger Mr. Royce into further action. At the present time in the pfesent setting
of the pleedings of the Royce suit , it is now on appeal and I should advise the
Comnittee that at this time mix the burden is on Hr. Royce's counsel to file his brief

in support of his appeal. As of last night he had not filed the brief so I don't knov
particularly the points he would make.

It is possible if he knew of this content he

could addresss himself in some just position urging the thesis of this position
as against us.

thought
I have talked this out I have discussed It with njy colleagues

none of us, including myself .are in the i view that it
that would weaken the Royce suit.

offers a position

I am not aware, really, of any rational.

It is

possible he could attempt to interpret the Sunshine Act.
Burns

Yes Mr. Black

Black

Tom, is it possible we might do that all the time, not issuing

our statement of position but the other actions which we worked on under the
Government in the Sunshine Act.
O'Connell

I am sorry Bob I didn't hear the last part, excuse me.

Black

I was just saying is it possible that it would be better if we

did not adopt the first part of the reconinendation issueing a statement that we

2/15/77
don't think we have covered first merely acting as If we were.
O 'C o n n ell

have an °Pinion on tha* President Black. To the contrary

I believe that our position is far better secured by the Issuance of a statement
policy of the nature I have recomnended similar to our action by the Board with
respect to the labor position several years ago when we issued a statement of policy
with respect to the System's position on labor management.

In this case I have had

calls from a number of public interest groups, I have had calls from the Hill, from
the editors of two newspapers stating

an assumption that the recently published

Board regulations Mri under Sunshine as they were released here some two weeks ago
were seeming to cover the FOMC.

Do they cover it. and my n response has been

that the matter of coverage of the sunshine act has yet to be determined by the
Committee and shortly we would announce the position.

I am concerned that if we

don't published a statement of policy in which we forthrightly set forth the
Committee's position and explain at the same time equal exposure as if covered, we
will have either law suits compeling the publication of regulation or a constant
demand when they hit at us where are a regulation. This will at least serve that
purpose so the public will know there will not be regulations covering the FOMC.

-10,u^

2/15/77
Burns

There 1s an additional comment we've been advised by two of the

men whom I mentioned, very influential.

Greatly Involved 1n this legislation to

put out such a statement of policy.
Gardner,

Tom isn't 1t true that we cannot pretend that we are covered by the

FOHC because part of the rather by the Sunshine Act because a part of what you have
to do is public regulations, if in fact you are covered by the Sunshine Act.

We have

Already gone past the date on that.
O'Connell
nonth.

Well, Governor, you point is well taken sitting now at the 14 of the

If we were to issue today a proposed regulation covering the Coranittee and

allowed 30 days as required by law we are then at March 14 to days subsequent to the
release date. Better late than never would be the attitude we have to exhibit.

urge that at this time if we are sued following issuance if the Conmittee adopts
the statement of policy and a court were to require us then to cover under Sunshine
and we issued the regulation we'd be even that much more late, so the matter of a few
days I think w probably wouldn't be at all decisive. I should say, Mr. Chairman and
Governor Gardner's question

I have great difficulty, I believe I menti

In a previous Coirmittee meeting in lightly recommending that this conmittee adopt

2/15/77

*"■

the position of coverage when there is clear apparence of noncoverage for the reason
that I don't know the administrative capabil1ty- under law of an agency taking to itself
the coverage of a statute where it Implies, and as a matter of fact, expressly involves
cutting of the time in which the agency has to answer a suit under the law.

It gives

jurisdiction in many courts of law that otherwise would not have jurisdiction over this
Conmittee if it were an ordinarily law suit.

It renders certain of the rights of this

Comnittee negative by law, and I don't believe that the Counittee has the right as a

matter of law to adopt these positions this thus covering up otherwise
towards rights. So that it would take an act of Congress or a declaration by a court
of law in my judgment to cover us under this law.
Burns

There is one there are two supplementary observations that I would

make. One is that the point that Tom has just made, was made, Tom accompanied me
to the meetings with the legislators and Tom developed this legal point in grave detail
and the members of the Congress with whom we met were very much impressed by it. That
point number one, Point number two if the mood should develop within the Congress to
amend the sunshine ■law on the ground that here is a loophole and the loop hole ought
to be closed.

If the move 1f a serious move along these lines developed, then I might

very well come before the Committee and suggest that we take the step of declaring

Transcripts from the
Federal Open Market Committee
August 16,1977
Tape 7
Arthur Burns Collection
Gerald R. Ford Library
Ann Arbor, Michigan

8/16/77

Tape 7

*4*

It and see what happens because we don't want lac the key to the

ought to

kingdom being taken in case to court.
Why don't we do what Tom suggested, Mr. Chairman, and £fy*show
? *•
another shot at dol ing them out in effect. Seeing whether he can get any clear
f r - * ,J

'indication of whether or not they intend to take it to court before we make a
decision in a vaccuum.
K b r J jJ

fiaHnor

I think that more

likely]inspire them to take it to court.

Gentlemen I want to make these points. When I c m considered this matter first
with Mr. Broida, I did not consider it in the context of what the Chairman has
just described.

I thought about it a good deal, I want to also try to reinforce

the point I made. Those of us who sit at this Board are fully experienced in
k

the tyrrjany of a recorded meeting. And eat meeting discission are inhibited
Now during those FOMC meetings in 72, 73, 74, and 75, you had no such experience.
You knew perhaps that your memorandum of discussion would be prepared and released
five years later. We sit here with a green light, I don't see it thisacxi morning
It Inhibits us as a Board of Governors. We're fully subject to in Sunshine and
•

my experience with the discussions that take place^ and I have not reviewed those
five years of minutes that will eventually become available^ l/ead me to believe

8/16/77

Tape 7

*5-

that the proper course of action is not to do a disservice to those who sat
on those Committees over those years and spoke their minds with only the con^i*-;knew
that they ae* their thoughts might be fully disclosed five years later. And

suddenly rush into court or rush into the New York Times with five years of
FOMC discussion.

Now

4* ^

Does 5 months difference make, is it all that much differ^^
Burns

Yes, but that 5 months applies to the other way too. Why
7

can't they have patience for another reason, 5 months. Why? But they are going
to get it by January, why can't they be patient? Why should we deviate from t
rule that we've established,in a political environment that could lead to mlschieas far as interpretation of this Board's action is concerned.
J
"
<■
*l o U«

In the first place, I think, I'll pick up Phill's remarks

I think times havfe changed since 4 years 7 months ago. We've had two very
significant pieces of legislation that both say that this ■is no longer
appropriate, this keeping things for 5 years.
Burns
1•, •

of Information ACT.

Well, now, but your statement is inaccurate.
Well, we have Sunshine in Government and we have the Freedom

Full text of The Federal Reserve's 17-Year Secret : With Examples of Federal Open Market Committee Transcripts

FRASER