Chairman Ben Bernanke's public press conferences are intended to open the nation's central bank, the Federal Reserve, to needed public sunlight. Bernanke may well dodge any questions on Fed policies, the only policies the Fed has authority to alter. He will be eager to talk about fiscal and budget policy over which the Fed has no direct control except for Fed loans. Some of these loans were forced into public view by the recent Fed audit required under the 2010 Chris Dodd-Barney Frank Act.
What is needed is a complete record of the discussions at the Fed meetings of the Federal Open Market Committee, FOMC (12 members), and its Board of Governors (7 governors when all seats are filled). These unelected officials determine the size of the nation's money supply and the payment of billions of dollars of interest to private sector banks that currently (4/20/2011) hold $1.486 trillion in reserves at the Fed. Bernanke has said he may raise the rate of interest on these reserves, as he will be forced to do if market interest rates rise.
The transcripts of the FOMC meetings should be published within six months, ending the practice of a five-year delay. The Fed should not destroy the original FOMC transcripts that were formerly sent to the National Archives and Records Administration after 30 years.
The Fed does publish minutes of its FOMC meetings with about a month delay. The minutes are a poor and inaccurate substitute for transcripts. The minutes currently released were created by Fed Chairman Arthur Burns in 1976 as a substitute for the transcripts which the Fed publicly said would no longer be made. The 17-year lie ended in 1993. During a House Banking Committee Chairman Henry B. Gonzalez investigation the Fed was forced to show to me the 17 years of transcripts which they had kept secret, avoiding Freedom of Information requests. The transcripts were in an office around the corner from Greenspan's office.
Unlike the FOMC transcripts, the minutes contain no attributions of FOMC members' views except on final recorded votes where all but an occasional few members display unanimity. The interpreters of the Fed's minutes should read what Fed Chairman Burns said to his staff about padding the minutes and not giving the public too much information. Researching Burns' papers at the Gerald R. Ford Presidential Library and Museum, I was able to obtain and include in my book his instructions to the Fed staff about the FOMC minutes.
Bernanke's press conferences will not replace the FOMC transcripts that establish individual accountability for the Fed officials who discuss and vote on important national policies. Bernanke may give some insight into his views but this can be misleading without the transcripts. There is a clear episode in the Greenspan Fed where public statements about monetary policy were completely different from what was said by the chairman at a number of the then secret FOMC meetings.
As Bernanke surely knows, a Fed chairman can make a dangerous mistake at a press conference that dramatically affects equity markets and bank customers. This kind of information can be edited from the published FOMC transcripts in conjunction with professional archivists from the National Archives and Records Administration.
When it came to public questioning of Fed chairmen, Greenspan was the master of garblements as I well learned from preparing questions for members of the Financial Services Committee to ask Fed Chairmen Arthur Burns, William Miller, Paul Volcker, and Alan Greenspan. Greenspan even told the FOMC (10/5/1993) members how to play the congressional committee members during the very month that the Fed officials were required to be witnesses at a Gonzalez hearing on Fed records: "... it would be quite easy to say: And by the way, this reminds me of an incident in 1936 in Sacramento or something like that."
Some members of the press may be reticent to ask pointed questions on Fed polices and operations because of the need for access to the Fed chairman and to avoid retaliation. The Fed has a history of retaliation to members of the press. My book includes a picture of an internal memo about the treatment of a member of the press, Nicholas von Hoffman who was a columnist at the Washington Post and had segments on 60 Minutes.
A Fed official sent an internal memo (12/6/1974) to Fed Chairman Arthur Burns "concerning our conversation yesterday about Nicholas von Hoffman. Bart Rowen [Hobart Rowen, former financial writer at the Washington Post] thinks it would be an excellent idea for you to discuss the matter with Katherine Graham [Katharine Graham]", the owner of the Post, apparently to get Hoffman fired or warned. Although this memo may not have played a part in Hoffman leaving the Post, the following warning about the Post editor is an interesting tribute to free journalism. The Fed official warned Burns to be careful of the editor, Ben Bradlee: "Additionally, Ben Bradlee's reaction to an approach of this nature might be: "Washington's officialdom is squirming; keep up the good work."