U.S. Representative Darrell Issa. Photographer: Sandy Huffaker/Bloomberg
The prospective head of the U.S.
House Oversight Committee said he will consider whether the
five-year lag time for the release of transcripts of Federal
Reserve meetings should be shortened.
“If the Fed’s full transcripts can be released sooner,
they should be,” said Representative Darrell Issa, a California
Republican who’s set to chair the panel in January, in an
interview. “If they’re going to have some definable negative
effect on their deliberations or ability to do their job and on
markets, then we have to be cautious.”
Issa’s proposal comes amid rising criticism of the central
bank by Republicans, who won control of the House in November
elections. John Boehner, the presumptive House speaker, and
three other Republican leaders have criticized the Fed’s plan,
announced a day after the election, to buy $600 billion of
assets to boost the economy, saying it risked weakening the
dollar and fueling asset bubbles.
Shortening the time before transcripts are disclosed is the
first specific Fed issue Issa has indicated he will examine
after pledging to intensify scrutiny of the central bank. The
Fed in 1995 began its policy of releasing verbatim discussions
with the time lag under pressure from Henry Gonzalez, the
Democratic chairman of the House Banking Committee in the early
1990s.
Issa, now the senior Republican on the oversight panel,
said yesterday that he had discussed the issue in a private
meeting with Kansas City Fed President Thomas Hoenig, who was in
Washington for a separate meeting with House Republicans.
‘Slightly Shorter Time’
“He didn’t see it as inherently wrong” to shorten the
delay, Issa said. “But he obviously thought that the next day
was too soon, five years he was comfortable with and that we
would work on whether there was a slightly shorter time.”
Diane Raley, a spokeswoman for Hoenig, said Issa’s
characterization of Hoenig’s position is accurate.
The five-year delay “eliminates any opportunity to say
their decision may have been wrong,” Issa said. He cited
interest-rate cuts in 2002 and 2003 that some critics say fueled
a U.S. housing bubble that led to the financial crisis that
began in 2007.
“If you assume that those kind of timelines are correct,
then it begs the question of, ‘Is there enough transparency soon
enough?’” Issa said. Fed Chairman Ben S. Bernanke has said the
central bank’s monetary policy wasn’t responsible for causing
the housing bubble.
Meeting Minutes
Michelle Smith, a spokeswoman for the Fed in Washington,
declined to comment.
The central bank releases minutes of meetings, which take
place eight times a year, about three weeks afterward. The
minutes summarize meetings without giving verbatim quotes or
identifying policy makers who make remarks.
The prospect of increased transparency follows this week’s
release by the Fed, under orders from Congress, of documents
naming recipients of $3.3 trillion of central bank aid during
the financial crisis, along with details including the amounts
of loans, interest rates and dates. Issa said he wasn’t prepared
to comment on that issue.
Federal Reserve officials are considering steps of their
own to increase transparency, possibly including regular press
conferences by Bernanke. He is the only head of a major central
bank who doesn’t give media briefings to explain actions and
projections.
Minimal Impact
“The five-year lag is certainly something we can look
at,” St. Louis Fed President James Bullard said today in a
taping of C-Span television’s “Newsmakers” program to air Dec.
5. “But I think the feeling has been that you do want to keep
those deliberations open and honest and as forthright as
possible, and then you want to release the information once it’s
not likely to have as much impact on financial markets.”
Over the past two years, Issa’s committee has disclosed
internal Fed e-mails that he says showed cover-ups of bailout
payments to creditors of American International Group Inc. and
details of Bank of America Corp.’s takeover of Merrill Lynch &
Co. Fed officials have said they didn’t try to limit public
disclosures on Bank of America and that AIG information that was
required to be released was disclosed by the company.
Hearings Possible
Representative Jim Jordan, the Ohio Republican who is
likely to chair a subcommittee under Issa, will “have a lot of
impact” on the Fed transparency effort, Issa said. The panel
may hold hearings and conduct studies of the issue before
considering any potential legislation, he said.
“I always prefer if good suggestions were taken and they
prevent legislation or if enabling legislation is agreed to in a
process,” Issa said.
Republicans are taking chairmanships of House committees in
January after winning control of the chamber in the November
midterm elections.
To contact the reporter on this story:
Scott Lanman in Washington at
slanman@bloomberg.net.
To contact the editor responsible for this story:
Christopher Wellisz at cwellisz@bloomberg.net