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fomc
1,977
So moved.
3
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A motion has been made that this agreement be entered into. Is there an objection? I hear none, and therefore, I'm going to sign it now and dispatch it to the Treasury since they're very nervous over there. I hope they've got somebody in the mail room.
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I wonder where it goes--
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Opinion has been expressed by expert members of this Board that this isn't a loan. I just want to say that I'm going to withhold any such determination. It is in effect a loan. Until I talk to, if necessary, to experts whether this is a loan or a purchase of foreign currencies that the Treasury--
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I use "repurchase agreement," you don't criticize that.
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For 15 years we've been trying to--
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The only way I've ever understood the whole swap network is in the language of loans.
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Mr. Chairman, I wonder if I could ask, in wrapping up on this subject, any overall evaluation you might have of the combination of the IMF and BIS facility to the U.K. in terms of the prospects of getting them out of their trouble. What the outlook is and how they got these two major new facilities?
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My apologies to you. My attention was diverted; it seems Mr. Wallich set a precedent. Would you be good enough to repeat your question?
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I was simply asking if you would care to give us your evaluation of the prospects for the U.K. now that they have both the IMF and the BIS facility?
33
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Well now, look, they have the IMF loan [at] 3.9 [percent]; they have a commitment from us and the Treasury amounting in the aggregate to $500 [million], they can draw on that. They have a supplementary commitment for $300 million by the Bundesbank. They now have this standby sterling balance facility of $3 billion. Wha...
382
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Thank you.
3
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Well, if there are no further questions about these foreign items, we have to return to consideration of the Government in the Sunshine [bill]. A question has arisen whether the FOMC is or is not covered by the Government in the Sunshine legislation. As of today, I'm not prepared to make any recommendation to the Commi...
212
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Yes, Mr. Chairman. The issues to which I think attention should initially be addressed, Mr. Chairman, relate to the definition of "agency" as it's set forth in the statute [and] the question, Does the law apply to the Federal Open Market Committee? In essence, the requirement of the law is that every agency as defined ...
1,672
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Thank you very much. I have unavoidably become involved in the study of this problem in extensive conversations concerning it. And I don't have a single reason to question anything Mr. O'Connell has stated. But I do think we have a congressional problem, one that I'm trying to test. I'm not using the word resolve, beca...
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Mr. Chairman.
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Yes.
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If the Congress were to support the position that you've just outlined, isn't it still possible that suit can be filed by some people who aren't happy with that and take it to the courts? Or is that not a--
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May I address that, Mr. Chairman? It's a very good and realistic possibility that, at the time the Board of Governors issues its proposed regulations under Sunshine, which will be forthcoming within a very short period now to meet the March 1 deadline, that publication of those regulations and the absence of similar re...
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The suit might still be brought.
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It could. Certainly, Mr. Chairman. Yes?
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When does the statute require that the regulation be published by an agency?
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There has to be a publication within a framework of 30 days for comment, then a review of the comments and a simultaneous oversight review by the Administrative Conference of the United States under the terms of the statute. [Conforming], then, to a 30-day statutory comment period, a 10- to 15-day period for the staff ...
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Which means that, if the decision of the Committee should be to come under the legislation, that we might be a little late in doing so, and this possibility was discussed with Congressman Fascell, who saw no difficulty.
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If we did publish a regulation and presumed that we were subject, the regulation would be of a very modest nature, is that correct Tom?
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At present, that is correct. The draft that I've drawn to date is much more modest then you might otherwise assume.
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That's because of the exemptions? Is that what makes it modest? The two exemptions?
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No, no, the exemption is written into the Sunshine law. The basic exemption, that is, exemptions under which you can close meetings.
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Perhaps I didn't understand Governor Gardner's question. What do you mean "modest"?
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Well, if we were by some mischance to be subject to the Sunshine, our regulation concerning open and closed meetings would almost be entirely closed meeting.
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I would like to think that it would be entirely, rather than almost entirely, even if we decide that we come under this act.
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But what would be the difference between being under Sunshine? You make the assumption you're under it vis a vis the way we're operating now. Forgetting all of those [unintelligible], what would be the basic difference?
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They are the legal questions, or possibly legal difficulties, that Tom will refer to, but I think we better go with that [assumption].
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But those I don't--the ones that he listed in his opening remarks--
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Let Tom address them now, and then we'll return to your question.
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Addressing the question as I understand it, Governor, What would be the difference between being covered totally and technically under the law, and not being covered but adopting a position as though we were covered? Is that correct? The difference between these two positions?
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That isn't my question.
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All right, sir.
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My question is, is there some fundamental operating difference--like the release of the minutes. Assuming that we could close the meetings, either being under the law or not under it, which I gather, is the fundamental difference, then in the one case we can wait 30 days and in the other case we couldn't?
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Addressing specifically the issue of the minutes, if we are covered by the statute, the makeup of the minutes in some respects wouldn't be as full as they presently are in our Record of Policy Actions. In other [respects], the law requires, for instance, that you identify every document that is before the Committee by ...
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If we decide that we are not an agency covered by the statute, but do decide to publish as a public gesture the Committee rules of procedure, we are then not constrained as to time by the Administrative Procedures Act or the Sunshine Act, and therefore, we could publish our own voluntary and gratuitous disclosure any t...
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As I understand your inquiry, we can have up until the eve of March 12 to issue whatever form of statement we intended to issue with respect to our proposed practices, that's correct. Thus, we could await the Board [of Governors] action in publishing a finally adopted set of regulations in final form, which might, say,...
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Gentlemen, let me just interrupt. I don't know why I was favored with this cup of coffee, but I was so favored, and therefore, if any of the rest of you would like coffee, you will not be so favored, but the coffee is right there. And let's take perhaps a short break, coffee break, if you so wish. Gentlemen, the coffee...
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Could I ask a question, Mr. Chairman? Would you feel you are able to describe what the [Federal Reserve] Board is going to do with respect to the regulation on its own? The Sunshine Act--you're not prepared to do that yet?
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No, that's a very good question, and I've issued instructions to the staff, and the instruction has been--draw up a set of rules and procedures. And work with it hard--the procedures should be such that Sunshine will be neither audible nor visible at the Board table. Or it'll be audible and visible only to the absolute...
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Under the circumstances, I should say we started with this and we're now about this [business]. That's about all I can say, Mr. Chairman. More directly, the Board has legal--
38
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But we have to live within the law. But, you know, there are ways of turning this into a grand ceremony or [instead] dealing with it in a way that satisfies the law [while] not obstructing Board business, in taking Board time, on minutiae of procedures.
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I trust that the document that is finally before the Board, subject to some continuing amendments to make more simple and less obtrusive the provisions of that regulation, will soon be considered by the Board. The regulations, I think I can say, President Eastburn, pretty well follow the exact mandated statute. What we...
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You might indicate what kinds of meetings will be open to the public.
14
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At this time the regulations clearly contemplate that matters dealing with consumer affairs, by their nature, will be open to the public. Otherwise, the Board's regulations announce its intent to close such meetings as are allowed in the other 9, really 10, total 10 exemptions of the statute. It is contemplated that, o...
128
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I think the Bank Presidents would be especially interested in the question of whether matters that come before Mr. Coldwell's committee [the Federal Reserve Board's Committee on Federal Reserve Bank Activities, or BAC] involving Federal Reserve Banks in general [and] Reserve Bank budgets in particular would be handled ...
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I could, Mr. Chairman--taking the specifics, for instance, of a personnel action, within a Reserve Bank, that is normally presented to [the] Board [of Governors] for confirmation or approval. It is hoped that, by definition of the exemption for personnel matters, which is found in the statute, such discussions by the B...
197
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Let me indicate this, too. If Federal Reserve Bank budgets were to be handled in an open meeting, then our public image, if nothing else, would require that we devote a good full day to consideration of those budgets. Otherwise, we're simply rubber stamping what a committee had done, and we're not doing our job.
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It is mostly likely that the [Bank Activities] Committee meeting would be open, too, under those circumstances.
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Now, I hope you would do more research on that question, because the Board does not have that much time. It's largely the [Bank Activities] Committee's job. The Board traditionally has not spent a day on the budget. Now maybe we should, but we don't have too much time. You know that this is a very hard-working Board.
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Well, Mr. Chairman, I believe that Governor Jackson's point was that if that particular budget examination were done by a committee of the Board, that if the Board were required to have an open session, so would the committee. I believe that was the point he was making.
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Well, then, maybe the [Bank Activities] Committee ought to be a smaller committee?
18
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It's possible. If it were, for instance, a one-man committee associated with staff of the agency, rather than three members of the Board, I believe that it escapes the definitional impact of the statute and would not be subject to the Sunshine Act.
51
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Suppose that we have a recommendation such as we had from the New York Bank, the Kansas City Bank, concerning new computers--now, would that have to come before the Board in open session?
40
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Mr. Chairman, the matter presently to the best of my understanding is delegated to the Bank Activities Committee for initial determination and a recommendation to this Board.
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The final determination if it's within our limits?
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Final determination by the subcommittee within a certain dollar limit. If it came within that dollar limit, the decision could be made on delegated authority by the committee, [and] the committee would first have to ask, "Must this be open to the public?" It's the matter of the purchase of equipment. If there were noth...
122
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What about the question of the general level of salary increases or a guideline for salary increases within our Federal Reserve Banks?
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Two possible exemptions from open meeting, Mr. Chairman. Very briefly, one under exemption 2, relating solely to the internal personnel rules and practices of an agency. We would have to urge that a discussion of that matter, insofar as it relates to the Banks, would come within this exemption because we're a unified s...
229
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The best answer to this, Mr. Chairman, is to have one open [meeting], and then nobody would show up after that.
27
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Well, we haven't discussed regulatory matters, and a good deal of [the Federal Reserve] Board's time is spent on regulatory decisions. Tom, I believe that, because of the nature of such decisions, we could close those meetings.
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Except in consumer areas.
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I'm talking about a bank holding company application, some matter involving individual institutions.
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I have no reason to believe, Governor Gardner, that in almost every case, such items could be [unintelligible] closed meetings. There is a requirement in the statute that goes beyond the conduct of the meeting itself, namely, either [a] transcript is prepared or, [if] the meeting is closed pursuant to one of four speci...
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Tom, you didn't mention transcript when you were talking in terms of the possible implications [for] the Committee--is that because the exemptions make the minutes possible?
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That's correct.
3
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In both cases?
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The nature of our closing exemptions would make minutes the name of the game.
15
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But again you'd have the question of sensitive and nonsensitive parts in the minutes.
16
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Yes, you would.
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You have another question, which I probably can answer myself, but maybe I'd better get some guidance. If you have a consent calendar item, that is just as much a decision as a regular calendar item?
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Under the present format of the Board's operation, Governor, that is correct. It's possible, and this would be up to the Board and the Chairman, it's possible that consent calendar items can be [exempt] because [of] their nature, largely a circularization function as much as what was formerly known as a consent calenda...
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So you don't have a Board meeting?
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That's correct. If they were the only items, and the Board adopted that method of circulating to the Board members for reading and for initial approval, the discussions in Congress indicated that this is perfectly appropriate.
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Also dangerous.
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Mr. Coldwell, have you given any attention to these rules that the staff is working on?
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Yes.
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Have you been involved?
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Yes. Governor Gardner, Mr. Allison, and I spent a couple of hours on this subject just prior to this meeting.
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I hope you will find ways of dealing with Federal Reserve Bank problems so that as few of them as possible need to be handled in open session.
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I think we have.
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You think you've already done that.
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Well, we're headed in that direction. I'll let the Vice Chairman [of the Federal Reserve Board] speak on that subject.
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We have a plan. The problem, Mr. Chairman, as you know, is that if a committee, regardless of its size, is delegated to act for the Board, then it becomes subject to Sunshine by that delegation. So we are working on alternative ways. Now, a number of the Board committees--in fact, the majority--do not have delegated au...
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You see, this question about Federal Reserve budgets disturbed me because these budgets are worked out very extensively by our staff. They're worked on very extensively by Mr. Coldwell's committee. I work on it to some degree with Mr. Coldwell outside the Board Room. The amount of time that has been spent by the Board ...
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In the process, too, Mr. Chairman, you end up publishing the budgets of the individual Federal Reserve Banks, which has never been done.
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Well--
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To the extent that those budgets can constitute documents before this Board.
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Well, if it's an open session?
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Then they are exposed.
5
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We consider the budgets--well, of course, they're before us. Well, gentlemen, Sunshine brings us blessings, it also brings us problems, and the problems do not all lie with the legislation. We've got several weeks, but this may still prove to be a very heavy burden on us. I hope that the staff will continue to be resou...
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Yes sir.
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Well, we may be unable to reach that deadline, but we don't want to be too late--[Secretary's Note: The raw transcript for the January 17 session ends at this point. It seems that the meeting recessed here, but there may have been additional discussion.] January 18, 1977
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Gentlemen, our meeting will get under way now, please. We need to act on the minutes of the December meeting. Is there a motion to approve? Motion has been made and seconded. Any questions? Let's move on, then, to the report by Mr. Holmes on market operations.
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[Secretary's note: This statement was not found in Committee records.]
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