Financial Services Hearing With Chairman Bernanke
Read Chairman Bernanke's prepared testimony>>
Bloomberg on the hearing:
Bernanke Begins 'Thorough Review' of Fed DisclosureFederal Reserve Chairman Ben S. Bernanke initiated a review of the information it provides the public after lawmakers criticized the central bank's disclosure policies during the unprecedented expansion of its holdings.
"We at the Fed have begun a thorough review of our disclosure policies and the effectiveness of our communication," Bernanke said today in remarks prepared for testimony before the House Financial Services Committee. Board Vice Chairman Donald Kohn will lead a panel for the review.
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"It does not seem to me healthy in our democracy for the amount of power that is now lodged in the Federal Reserve with very few restrictions to continue," said Representative Barney Frank, a Democrat from Massachusetts and the committee chairman.
Chairman Barney Frank and Chairman Bernanke on transparency of information:
Chairman Frank: "In the '80s, the results of the Open Market Committee weren't published until the next Open Market Committee - people had to guess how the committee had voted. The question of the minutes came up, the first response of the Federal Reserve Chairman was to deny that there were minutes. Then later, they were found in a drawer and made public. There were serious arguments made that the kind of openness that Henry Gonzalez was pushing for would undermine the conduct of monetary policy. Despite that, he was able to persuade the Fed to make the changes -- probably out of fear that if they didn't do that there would have been legislation that would have been, from their standpoint, harsher. And zero negatives have resulted, and in fact, I think you are better off today. I don't know what you think but if we were still in a period where the FOMC voted and people didn't know how they voted, the uncertainty, the ability that you have to influence the markets would have been greatly attenuated ...We had a previous hearing, one of our colleagues, the gentleman from Florida Mr. Grayson, asked Mr. Kohn--who I thought was an excellent witness--but he said well, he couldn't give information about who the recipients [of funds] were. I hope in this study of openness that it will be completed quickly, and that you'll put a very severe test against these claims. Historical experience is that there is a tendency is to claim damage when there isn't any."
Rep. Paul Kanjorski:
Rep. Kanjorski: "I think all of you...have failed for all of us, particularly the general public, to annunciate what the problem is. And it's very clear when we listen to the debates of the various parties and the interest groups that they're talking past each other, not to the problem. What I'm raising the question of, is what can we do, what can you do, what can the key players do? In as simple terms as possible, define what is the problem, what are the potential end results of the problem, and where is our guide path going?"