In a bid to increase transparency, the Federal Reserve will for the first time make public the forecasts for benchmark interest rates that will inform discussions at tomorrow's meeting of the Federal Open Market Committee (FOMC), which sets monetary policy for the nation. But despite this action, there is still plenty of opacity in how the Fed conducts business.

For starters, the Fed delays release of the actual transcripts of these meetings for five years. While the FOMC releases minutes of these meetings three weeks after the fact, the most recent full transcript currently available is for December 12, 2006. And the released transcripts have been edited from the originals. To this day, the only non-edited versions of transcripts of FOMC meetings past are those of meetings during the 1970s, donated by former Federal Reserve Chairman Arthur Burns to the Gerald R. Ford Presidential Library. Scholars have used these records to conduct analyses of past Fed actions. The Fed went so far as to deny that it maintained tape recordings of FOMC meetings until, in 1993, a Congressional probe forced then-Federal Reserve Chairman Alan Greenspan was forced to admit to the existence of these records. 

Another transparency shortfall: The Fed doesn't report which European banks benefit from its currency swaps with foreign central banks–an amount that has risen to more than $100 billion since September in response to the European debt crisis. Under such swap agreements, a foreign bank draws on dollars at the Fed in exchange for its own currency. The foreign bank agrees to buy back its currency at a certain date at the same exchange rate, plus interest. This gives the foreign banks, which have become dollar-starved as American investors pull out their money in European ventures, U.S. currency to lend out to banks and institutions. Because the swaps are collateralized with foreign currency and the exchange rate is set, the risk to the Fed is considered low. But critics have argued this information should be made public. At the height of the 2008 financial meltdown, the Fed’s outstanding dollar swaps rose to $586 billion by the end of 2008, according to an audit of Federal Reserve emergency programs recently released by the U.S. General Accountability Office.

Meanwhile, the Fed had to be dragged kicking and screaming by the courts and Congress to release detailed data on emergency loans to big banks and other financial institutions during the recent financial crisis — an amount that peaked at more than a trillion dollars. The Fed had always kept its dealings as the "lender of last resort" secret but came under tremendous pressure after it  launched an unprecedented raft of programs with an alphabet soup of names—TAF and TALF and TLSF–to help prop up financial institutions that got in trouble when the subprime mortgage market crashed. It also ramped up traditional "discount window" lending, a permanent Fed program through which banks may borrow funds on a short-term basis, and set up currency swap lines with certain foreign central banks. It took a lawsuit by Bloomberg News and provisions in the recently-enacted Dodd-Frank financial law to force the Fed to give up the data.

A recent General Accountability Office report recommends a number of ways that the Fed should increase transparency, noting that "[W]ithout more complete documentation of the directors’ roles and responsibilities with regard to the supervision and regulation functions, as well as increased public disclosure on governance practices to enhance accountability and transparency, questions about Reserve Bank governance will remain."