Look who's talking, too.

• Author: Greenblatt, Alan
• Position: Taping of Federal Reserve System meetings - Cover Story

For years, House Banking Chairman Henry Gonzalez has accused the Federal Reserve System of being, in effect, a secret government more elaborate than anything Oliver North could dream up. He's not far off. Although the Fed manages the nation's money supply and thus helps determine the costs of home loans, car loans, credit card rates, bonds, and every other type of debt, including the federal deficit (in other words, all economic activity in the country), the only information about the Fed's momentous decisions is issued in fuzzy summaries Gonzalez calls "boilerplate reports on the economy that anyone could copy out of government and newspaper reports."

So Gonzalez has set out to make the Fed videotape the meetings of the Federal Open Market Committee (FOMC), the Fed's most important policymaking body, and release transcripts of the meetings after 60 days. In fighting the reform, Fed Chairman Alan Greenspan and the Fed's governors repeated longstanding claims that no verbatim records are currently kept and that to release more than a cursory outline of a meeting's minutes might cause damaging financial speculation.

The first is a lie; the second, a bureaucratic argument meant more to protect the Fed's mystique than to serve the interest of good public policy.

At the end of 1992, Gonzalez wrote Greenspan and the FOMC members--seven of whom are appointed by the president and confirmed by Congress; the others are the presidents of the 12 regional Federal Reserve Banks who are chosen largely by commercial bankers--to ask whether they knew FOMC meetings are currently taped and transcribed for a permanent record. Thomas C. Melzer, president of the Federal Reserve Bank of St. Louis, wrote a typical response, clearly implying FOMC meetings are not recorded: "I would be strongly opposed to any literal record of FOMC deliberations."

At an October 19 Banking committee hearing, Greenspan acknowledged that FOMC meetings are tape recorded "to assist in the preparation of the minutes that are released to the public."

"Those tapes are then taped over so that no permanent record exists in that way?" asked Rep. Maurice Hinchey of New York. "Is that correct?"

"There is no electronic record, that is correct," Greenspan answered. "We obviously have rough notes." Here Hinchey committed a classic Washington blunder: The congressman was not well enough prepared to ask the right question. Because Greenspan, deep in written testimony submitted before the hearing, had...