FOMC Meetings are tape recorded; full written transcripts exist

Posted October 27th, 2009 by Michael Nystrom

From the book salon at Fire Dog Lake with James Galbraith & Robert D. Auerbach

By James K. Galbraith. Snip:

Bob’s new book, Deception and Abuse at the Fed, chronicles the battles of Henry B [Gonzalez] against the obscurantism, self-dealing and contempt for Congress that have long been hallmarks of our central bank, and that were particularly so during the long tenure of the “Maestro,” Alan Greenspan. These include management failures — a notorious “phantom airplane” in the Fed’s check-clearing fleet — and accounting abuses, civil rights violations of Fed employees, and especially the withholding of information from Congress and the public. Most luminously, Bob gives here the tale of the Fed’s 17-year effort to keep secret the fact that Federal Open Market Committee meetings are tape-recorded, with full written transcripts.

With the Great Crisis, these matters take on a new importance. To this day, Chairman Ben Bernanke has refused to disclose to Congress exactly who has received help under the many crisis measures and under what terms. The legal and constitutional situation is clear: Congress has a right to this information. There are no plausible national security concerns. If a member of Congress abuses access to such information (say for personal profit) it is up to Congress to discipline that member. Reps. Alan Grayson and Ron Paul have asked Senator Dodd, chair of Senate Banking, to withhold approval of Bernanke’s renomination to chair the Board until the Federal Reserve comes clean on this issue.

Similarly, there is a bill before Congress that would subject the entire operations of the Federal Reserve to an independent audit – a project that dates back to the great Texas populist, Wright Patman. No one reading this book will be in doubt about the need for this bill.

Finally, there is the question of financial reform. In the new effort to bring systemically dangerous institutions (now called “Tier One Financial Holding Companies”) under effective supervision, the administration proposes to vest regulation of those entities in the Federal Reserve. The Federal Reserve naturally agrees. But the Federal Reserve has never been an effective regulator for the straightforward reason that it is dominated by economists and bankers and not by dedicated skeptics who make bank regulation a full-time profession.

Anyone who wishes to understand why the Federal Reserve should not be the regulator of choice for the most dangerous financial institutions should begin by picking up a copy of Deception and Abuse at the Fed: Henry B. Gonzalez Battles Alan Greenspan's Bank

output

The Author Answers a Question:

On October 28th, 2009 Jivatman says:

Robert I have not had an opportunity to read your book but do have a couple of questions.

Based on the intro, why do you think it is only folks like Paul and Grayson who are pushing things like the audit?

And how did the Fed gain ANY type of regulatory role in banking? Isn’t the conflict of interest off the scales or am I missing something?

And the Author's Answer:

This is going to be an uphill battle since the Federal Reserve is revered and hides under its mantra of “independence”. However, there is a very good start in the Congress with the bipartisan call for a complete audit of the Fed. Here is something I worte about this battle:
The Fed’s unbridled lobbying powers could shoot down most of its perceived problems from the Congress. During my first term of service on the Banking Committee staff (1976 – 1981) I had helped former House of Representatives Banking Committee Chairman Henry Reuss uncover the Fed’s use of the banks it regulated to lobby against bills the Fed did not like. The Fed’s orchestrated lobbying campaign managed to cripple the ability of private sector auditors and government auditors from examining significant parts of the Fed’s operations. That trophy for the Fed’s lobbying success is still on the Fed’s shelf.
Few Members wanted to incur the wrath of bankers marching into their offices to argue for issues such as a complete independent audit of the Fed’s books. The special financial interest groups overcame any public interest in that issue. That did not detour Reuss. He told the House of Representatives that this lobbying was organized by the Fed was illegal because the Fed used government funds to organize private sector bankers.1
The Fed did lose some battles. Reuss was victorious in the passage of a Congressional Resolution that directed the Fed to regularly and publically report to the Congress on Fed policies beginning in 1975.
The Greenspan Fed (1987- 2006) was more proficient in lobbying. Its liaison staff could bring the famous chairman into a Member’s office. What a wonderful opportunity to have a one-on-one with the nation’s sage rendering advice about the economy or his views on undesirable legislation that would impair the Fed’s independence, the all purpose banner that could be waved to prevent individual accountability for Fed officials. The Fed knew that even friendly legislation invites ornaments (amendments) from unfriendly Members. Issues such as corruption and lies uncovered by Congressional investigations could be quietly trivialized and swept under the Fed’s lumpy rug. Greenspan even visited president elect Bill Clinton in Arkansas in 1992, reporting back that Clinton’s body language and peripheral comments were consistent with independence for the Fed.

Are they subject to the FOIA? If not presently, then by them

On October 28th, 2009 Mell_o_Drama says:

For some reason, we're expected to know every law that exists in America & in our state so we don't break it. We're supposed to know this when we're 18. There's no litmus test for them, as in the 10 commandments or rhyme or reason. C.U.R.E. Thank God for bugs, they're company for people in solitary confinement.

being in a Congressman's office?