The Financial Reform bill contains a minor concession for transparency that we called for last year — a small step for a more transparent accountable government.

Last September, I wrote about the new advisory committees that may be created as a result of the pending financial reform legislation. My concern was that these new advisory committees would be exempt from the normal disclosure requirements placed on them by the Federal Advisory Committee Act, either because the bill specifically exempts them, or because the new committees would fall under exempted agencies.

We called for disclosure requirements on new advisory committees:

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.

The version that passed the House, and now the version the Senate is considering, have both partially conceded this point.

Here’s the House language:

(a) The Federal Advisory Committee Act shall not apply to the Financial Services Oversight Council, or any special advisory, technical, or professional committees appointed by the Council (except that, if an advisory, technical, or professional committee has one or more members who are not employees of or affiliated with the United States government, the Council shall publish a list of the names of the members of such committee).

…and here is the Senate language:

(g) Nonapplicability of FACA- The Federal Advisory Committee Act (5 U.S.C. App.) shall not apply to the Council, or to any special advisory, technical, or professional committee appointed by the Council, except that, if an advisory, technical, or professional committee has one or more members who are not employees of or affiliated with the United States Government, the Council shall publish a list of the names of the members of such committee.

This is a small, but significant, concession. A simple list of the names of any non-governmental advisory committee members is far better than nothing, which is what the initial drafts of the bill would have given us. The law wouldn’t have even guaranteed public knowledge about whether such committees even exist. Now we’ll know who is on them, if there are public members.

This concession, however, probably doesn’t satisfy the condition I set in the September post, that the disclosure “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.” The FACA goes well beyond this requirement, with procedural and ethics disclosures creating a far more accountable advisory structure.

The Senate bill also, unfortunately, has another section (Section 911) that specifically exempts the Investor Advisory Committee from the FACA disclosure requirements. If the requirement for listing members’ names is good enough for the Financial Stability Oversight Council, they why not for the Investor Advisory Committee?

Exemptions to transparency requirements are often too easily abused, and expanded beyond reasonable bounds. The world of finance has complex incentives that make some disclosure requirements unwise, but that doesn’t mean that proven methods for public accountability (like the FACA) should be abandoned altogether.

That the House and Senate financial reform bills make this concession means we’re on the right track.

The disclosure requirements should go further, and apply to all of the advisory committees, not just those of the main council, but this is still an important concession.