On Friday, the New York Times reported that four agencies responsible for implementing the financial reform bill are announcing new transparency policies:

After passage of the law overhauling the nation’s financial regulations, the federal agencies responsible for writing the rules are striving for transparency to avoid the appearance of improper coziness with lobbyists, bankers and executives in the financial services industry.

After closely tracking similar policies put in place by the Treasury to oversee the stimulus and TARP programs, we've started looking into just what these policies will entail.

Unfortunately, details are still scant, but we're collecting what we can about the new policies apparently being put in place by the Fed, the FDIC, the SEC, and the CFTC. They're strongly reminiscent of the previous policies around the stimulus and TARP, where new disclosure policies were self-imposed by the Executive over particularly vulnerable or sensitive decision making processes, ostensibly to protect merit-based decision making from undue special interest influence.

In plain English, they're posting who they meet with, so that they make honest decisions as they reform our finance system.

These policies should be a very important development, protecting important decisions, and giving us a view into who is trying to influence the reworking of our financial regulatory system.

We'll be looking in more detail at how these policies work, and whether they're effective as they're developed and implemented. In the meantime, there are a few guidelines that should cover what they're doing.

First, the reporting needs to be timely. Disclosure needs to move at the pace of influence, and reading about last quarter's meetings enables history, not oversight.

Second, the reporting needs to be online. They should follow guidelines for openness, and encourage reuse and analysis. (To see the sort of view into lobbying that we've envisioned, see this mockup of a lobbying disclosure site.)

Third, the disclosures need to be substantive. They should include information like the date, names of people attending the meetings, substance of the conversation, the clients represented, and copies of materials submitted. If disclosing the meetings protects decisions, adding substance to what gets disclosed should enhance that effect.

Finally, careful thought needs to be given to what gets reported. Agencies should consider carefully whether the rules will apply to different classes of meetings, and offer clear guidance about what constitutes a reportable meeting. They should also recognize that relying on the Lobbying Disclosure Act definition of lobbyist isn't particularly meaningful, since influence can easily find its way around the twenty percent rule.

We'll be following this closely, since it can be another test case in how online transparency can affect a situation where concentrated interests are swarming a few very important decisions.

If you have any further suggestions for how these policies should work, please add them in the comments, or suggest any further resources to add to our research.

The House Financial Services Committee is holding a hearing on the Fed Transparency bill. The legislation started as a pet project of Federal Reserve gadfly, Rep. Ron Paul, but since the Fed's massive intrusion into the market and expansion of responsibilities has attracted so many cosponsors to force a hearing and likely a vote in Congress. If ever there was a doubt that Congress responded to public concerns, this should show that they clearly do. Watch here. (And especially watch for Rep. Alan Grayson's dollar sign tie. I also suggest The New Republic profile of Grayson.)

The House Financial Services Committee has posted the Obama Administration's proposed Financial Regulatory Reform package. The committee tells me that the bill is from the Administration, with the exception of Title X.

Title I of the bill sets up a Financial Services Oversight Council. This council will have enormous influence, as the top-level body created to address systemic financial risk. The primary Council will be made up of top level government officials, who, by virtue of their positions, already have to disclose a great deal of information, to mitigate potential conflicts of interest.

There is a reasonable argument to be made regarding how transparent this council's proceedings will be. At a minimum, we know who will be on this council. Little more disclosure will be required of them, however, since the council will probably fall under aegis of the Federal Reserve, which is explicitly exempted from the Federal Advisory Committee Act, which governs the transparency and operations of Federal Advisory Committees.

(b) Nothing in this Act shall be construed to apply to any advisory committee established or utilized by— (1) the Central Intelligence Agency; or (2) the Federal Reserve System.

While this may or may not be acceptable for the primary Financial Services Oversight Council, since the members are all subject to other rigorous disclosure laws, the proposed legislation provides for subcommittees to be created under the primary Oversight Council:

SEC. 105. TECHNICAL AND PROFESSIONAL ADVISORY COMMITTEES. The Financial Services Oversight Council is authorized to appoint such special advisory, technical, or professional committees as may be useful in carrying out its functions, and the members of such committees may be members of the Financial Services Oversight Council, or other persons, or both.

These advisory committees will presumably not be subject to the openness requirements of the FACA. This means that advisory committees set up to advise the most powerful financial oversight body will be operating in secret. Their membership, their proceedings, even the potential or real conflicts of interest of their members will not be required to be aired to the public.

This body will have the power to fundamentally shape our financial system, determining who is "too big to fail", and what should be done about it. The Federal Advisory Committee Act was created, in part, to protect government employees (like those on the main Council) who are reaching out to expert advisors for consensus advice. Without the enforced protections of carefully designed disclosure, the Financial Services Oversight Council will be vulnerable to manipulation and public mistrust.

Advisory committees created to support the Financial Services Oversight Council should be subject to disclosure requirements that can grant to members of the Council (and ideally to the public as well) confidence that their recommendations are prepared in good faith and without personal gain in mind.

While not every Federal Advisory Committee Act requirement may be appropriate for financial oversight proceedings, the disclosure requirements so essential to our public trust and merit-based decision making should not be overlooked entirely, as they appear to have been here.

Following calls from their fellow senators, Banking Committee Chair Chris Dodd and Ranking Member Richard Shelby slammed the Federal Reserve for refusing to release the names of the counterparties to the A.I.G. bailout. The counterparties are the ones who are actually receiving the majority of the bailout money.

During a committee hearing this morning on A.I.G.'s problems, Dodd stated clearly that "it is not clear who we are rescuing." The counterparties were not "innocent victims" and the public "has a right to know" who is receiving the bailout funds sent through A.I.G.

When questioned, Federal Reserve Vice Chairman Donald Kohn refused to release the names of the counterparties because it could "make companies less likely to do business with anyone receiving government funds, risking further turmoil at AIG and in financial markets more broadly."

Dodd and Shelby both laid into Kohn, telling him his statement was "not adequate" and "very disturbing." Shelby further stated, "People want to know what you’ve done with this money."

You can watch the full committee hearing here.

UPDATE: Should also point out this moment from Sen. Jim Bunning:

“You are telling us,” he said sternly to Mr. Kohn, “that the counterparties that got par for their bonds or for whatever — the American taxpayer shouldn’t know who they are? And then you may come back to us and ask for more money for more banks and more corporations? You will get the biggest ‘no’ you ever got.”

He added that he would do everything in his power to “stop you from wasting the taxpayers’ money on a lost cause.”

A.I.G. counterparty transparency is quickly becoming a bipartisan populist issue. Who will drop a bill to force the disclosure?