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Fed Struggles with Perceptions of Transparency

As the debate over the Federal Reserve's transparency heats up in Congress, Paul Solman looks at the agency's attempts to balance public disclosure and the secrecy it uses to protect financial markets.

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    This nefarious cartel of tyrants is in a position to literally acquire control over the assets of the world.


    With the power to regulate the money supply is also the power to bring entire economies and societies to its knees.


    In response to the suspicion out there, Chairman Ben Bernanke is trying to make his a more open Fed, as his participation in the public forum that ran on the NewsHour this week suggests.

    Alice Rivlin, vice chair in the '90s, says it's part of a trend.

    ALICE RIVLIN, former White House budget director: They have been less and less secretive over the years. This started back in the Greenspan years. There was a time when the Fed didn't tell anybody anything about what they were doing, even on monetary policy. They didn't say what they had done. They allowed the markets to guess.


    Thirty-five-year Fed veteran, now vice chairman, Don Kohn, has been charged with making the Fed more intelligible to the public.

    DONALD KOHN, Federal Reserve vice chairman: The Federal Reserve has become increasingly transparent about what it's doing and why it's doing it over the last, I would say, 15, 20 years. Twenty years ago, we weren't even announcing our decisions when they were made; you had to infer them from our actions.


    But this March, the chairman of the Fed visited his hometown — Dillon, South Carolina — with cameras from "60 Minutes" and then, last weekend, the public TV forum dubbed "Bernanke On the Record" in Kansas City.

    But, despite the new transparency, plenty at the Fed remains off the record. We could shoot the New York Fed getting its marching orders for the day, for instance, but absolutely no audio. A stray doubt about some banks, say, might tank its stock or the market as a whole.

    The Board of Governors meetings in D.C. are even more secretive, for the same reason the New York meeting is, says Vice Chairman Kohn.


    We bring information to bear from the private sector, from foreign governments and foreign central banks that they tell us in confidence about what's going on in their businesses. So it would inhibit the discussion, and it would be less — the policy coming out would be less good. We do make transcripts, and we release them after five years.

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