If you want to know who says what at next week's meeting of the Federal Reserve’s Federal Open Market Committee (FOMC), which oversees market operations for the central bank, you will have to wait until the year 2016 to find out.
While the FOMC releases the minutes of these meetings three weeks after the fact, full transcripts are kept secret for five years. Right now the most recent transcript available is for December 13, 2005. And even these transcripts have been edited from the original.
As a result, the public still does not know the details of what Federal Reserve officials were talking about as the recent financial crisis began to build and then exploded.
“These committee meetings are the real guts of U.S. economic policymaking….Were Fed officials privately worrying about the housing market? Were they aware of leverage in the system? Did they understand the dangers of credit default faults?” asks Matt Stoller, who served as staffer for former Rep. Alan Grayson, D., Fla. in an opinion piece for Politco earlier this year.
The FOMC, which consists of 12 members, including members of the Board of Governors of the Federal Reserve System and representatives from individual reserve banks, holds eight regularly scheduled meetings a year. In these meetings, the FOMC reviews economic and financial conditions and makes decisions on monetary policy. In the recent economic downturn, these meetings have been far from routine, as the FOMC has decided and then announced major operations such as "operation twist" and "quantitative easing" in attempts to spur economic growth.
The Fed has taken steps in recent years to improve transparency, some at its own initiative, some by mandate by Congress or because of lawsuits, but there is still a lot it could do to improve communications with the public, according to a recent General Accountability Office (GAO) report. While the GAO did not touch on the issue FOMC transcripts, it has been a point of contention in the past.
Back in 1975, a student at Georgetown University Law Center, David R. Merrill, made a Freedom of Information request for certain records, including "memorandums of discussion"–the detailed records of its deliberations, challenging a 45-day delay in their release. The case went all the way to the U.S. Supreme Court, which sent it back to the District Court. Ultimately the District Court, which had first sided with Merrill, ruled in favor of the FOMC, in 1981.
In the lawsuit, the FOMC argued that giving the public information about its inner workings too soon would cause harm because it would lead to “exaggerated market response.” The FOMC said this would largely benefit larger investors, would make the marketing of government securities more complex and put the FOMC at a “competitive disadvantage in the market.” Merrill had produced affidavits from experts who argued that on the contrary, release of information would enhance market activities.
In 1976, as that lawsuit was winding its way through the courts, Congress approved the Government in the Sunshine Act, which required that agencies, which would include the Fed, “make promptly available to the public, in a place easily accessible to the public, the transcript, electronic records or minutes of the meeting.”
The FOMC anxious to avoid these new requirements, voted that same year to discontinue "memorandums of discussion"–which had been keeping in some form since 1936. Transcripts from that time reveal FOMC members discussing the lawsuit and the legality of continuing these records.
"Governor, I see nothing in the opinion of the lower court that mandates this Committee to keep a Memorandum of Discussion…Later, someone could bring a suit; if they did, the answer could be given that we no longer keep a Memorandum of Discussion. We move to dismiss," said the general counsel at the time, at a July 1976 meeting.
However, that does not mean the Fed didn't keep track of who said what. In secret, the FOMC meetings were tape recorded and stored at the Fed. Nearly two decades later, in 1993, a Congressional probe led by then House Banking Committee Chairman Henry Gonzalez, D, Texas, then-Federal Reserve Chairman Alan Greenspan was forced to admit to the existence of these records.
Beginning in 1995, the Fed began making edited versions of these transcripts available to the public after a five year time lag. But these transcripts are edited before they are posted. The only nonedited versions of FOMC transcripts now in the public domain are those kept by former Federal Reserve Chairman Arthur Burns, who donated his papers to the Gerald R. Ford Presidential Library. Scholars have used these records to conduct analyses of past Fed actions.
What happens to the nonedited versions of these transcripts? They are destroyed, says Robert Auerbach, a professor at the Lyndon Baines Johnson School of Public Affairs, at the University of Texas at Austin. Auerbach, who worked on committee staff under Gonzalez and in both Democratic and Republican administrations, notes that Greenspan stated in a 1995 letter to certain members of Congress that "unedited transcripts will be discarded when all the participants at the meeting have approved the lightly edited written transcript."
"The Federal Reserve should stop destroying the source transcripts and should stop turning off the recording system at its policy making committee," said Auerbach in recent testimony before a House Financial Services Subcommittee.
The Federal Reserve did not return a request for comment.
About the data
What: Transcripts of meetings of the Federal Open Markets Committee
Where: Federal Reserve
Availability: Federal Reserve makes edited versions of transcripts available after a five year delay, here. Unedited versions of these transcripts are destroyed.
Usability: Transcripts are downloadable in PDF format.