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fomc | 1,977 | Mr. Chairman, it's been very difficult for me to visualize circumstances in which I would favor a money market directive. But it seems to me the unusual combination of circumstances has arrived. It seems to me that what might be a feasible, workable arrangement at this time would be a funds rate with a midpoint of 6-3/... | 135 |
fomc | 1,977 | Mr. Roos next. | 6 |
fomc | 1,977 | I would suggest alternative B or C for M1 and M2, fed funds rate 6-1/2 to 7, and an aggregates directive. | 32 |
fomc | 1,977 | Thank you, Mr. Roos. | 8 |
fomc | 1,977 | Yes, I would like to lend support to alternative B in regard to the aggregates; I share the view, first expressed by President Guffey, that the range on the fed funds rate should be 6-1/4 to 7, and I'd like to move [the midpoint to] 6-5/8. | 67 |
fomc | 1,977 | There's a very strong consensus in favor of the ranges for M1 and M2, and there are minor differences with regard to the federal funds rate. There is a certain preponderance in favor of a money market directive, though not everyone has expressed his views. Now, I see a good majority in favor of a midpoint of 6-1/2 perc... | 372 |
fomc | 1,977 | Eight. | 2 |
fomc | 1,977 | I understand the sensitivity [unintelligible] because in some ways I share it myself. But it would make me more comfortable, and I believe it would make some other people more comfortable, recognizing that everybody's first preference is for the [alternative] B--almost everybody's--for the [alternative] B M1 and M2 ran... | 127 |
fomc | 1,977 | And go to alternative C figures? I find that entirely agreeable, and I hope others do. The difference between the B and C monetary ranges is so small. | 32 |
fomc | 1,977 | Yes, I do. | 5 |
fomc | 1,977 | I think it depends in part on whether you have a monetary aggregates or money market directive. | 18 |
fomc | 1,977 | Well, there seems to be a preponderance of views in favor of a money market directive--those who indicated. Several members of the Committee did not express a view on that, but they may wish to do that now. Mr. Guffey. | 52 |
fomc | 1,977 | To follow up Bob's question, I would be closer to feeling comfortable with the 6-1/4 to 6-3/4 that you proposed, and took a vote on, if we went to a monetary aggregates directive, which would indeed permit-- | 53 |
fomc | 1,977 | I see. Well, again, we're either being so reasonable or I am setting an example of reasonableness, that is, in the direction of conciliating such minor differences as this. What that means is, if we have a monetary aggregates directive, that we will be quite willing to accept 6-3/4. With a money market directive, we mo... | 87 |
fomc | 1,977 | Yes, that's right. | 5 |
fomc | 1,977 | The other possibility is to take Paul's suggestion but leave the money market directive. | 15 |
fomc | 1,977 | We'll get that straight. We'll test the Committee's thinking in a moment. | 15 |
fomc | 1,977 | If strong credit demands push that fed funds rate up quite abruptly, then it can always be reconsidered. Is that the thought? | 26 |
fomc | 1,977 | No question about it. If the monetary aggregates came in very strongly, unless the news from the real economy was very unhappy, I think we might well want to consider--and I might in all probability recommend to the Committee--that we push the upper limit up a notch. Well, gentlemen, one possibility is to have a range ... | 102 |
fomc | 1,977 | I will make it a little more complete on the basis of this discussion: 6-1/4 to 6-3/4 with the C aggregates, and the money market directive if that makes more people happy. | 45 |
fomc | 1,977 | Just a minute now. Okay. Two packages now. And gentlemen, the differences between these, you would need a Solomon with all of his wisdom to be able to define the difference. I'll call these packages, respectively, A and B. Package A would accept the specifications of alternative B and a monetary aggregates directive. T... | 130 |
fomc | 1,977 | No, but could I have just a little more clarification of what you said to Peter, that, under the money market directive, we hold the midpoint where we are now unless things really start moving out of the picture, as opposed to the other one, where we start moving the funds rate gradually. | 60 |
fomc | 1,977 | Peter, well, let Peter define it. You have a given range, just for purposes of illustration; the range is 6-1/4 to 6-3/4 and either a money market directive or a monetary aggregates directive, and you are being requested to specify the difference between the two. | 62 |
fomc | 1,977 | Well, as I see it Mr. Chairman--maybe this is making it too mechanical. I think there's a zone of indifference in either case, but there's a wider zone of indifference with a money market directive, and if you want to try to roughly put a number on it, as I conceive-- | 62 |
fomc | 1,977 | No, don't. I think that's in different language but substantially the same thought that I expressed. | 19 |
fomc | 1,977 | I think Peter is saying that he would probably be moving even on the money market directive if you were at the extremes. | 24 |
fomc | 1,977 | If you got very close to the extremes. | 9 |
fomc | 1,977 | With [unintelligible] modification. SPEAKER(?) Wording says, if you approach-- | 20 |
fomc | 1,977 | Shall I redefine the packages A and B? All right, those in favor of Package A-- | 20 |
fomc | 1,977 | Four, Mr. Chairman. | 6 |
fomc | 1,977 | Those in favor of package B? | 7 |
fomc | 1,977 | Six. | 2 |
fomc | 1,977 | Let's have another show of hands. Those in favor of Package A? | 14 |
fomc | 1,977 | Four. | 2 |
fomc | 1,977 | Those in favor of Package B? | 7 |
fomc | 1,977 | Six, and one abstention. | 7 |
fomc | 1,977 | Well, I'll accept-- | 5 |
fomc | 1,977 | I'm not abstaining. I'm willing to vote, but I wouldn't vote for A or B. | 19 |
fomc | 1,977 | Gentlemen, these are very, very close, and I think the differences that separate us are pretty insignificant, considering. | 25 |
fomc | 1,977 | How do you vote when you are in favor of either one? The point is, the differences are small, and I'm not going to complain about package B even though I voted for A. If you put in the record somewhere that it was seven to four-- | 52 |
fomc | 1,977 | This is not part of the record. This is simply an informal device for gauging the Committee's sentiment in preparing for a vote. | 27 |
fomc | 1,977 | May I ask, Mr. Chairman--Governor Wallich, you indicated a preference for A, although when we were having our discussion you indicated a preference for a money market directive. | 36 |
fomc | 1,977 | My choice, which is very marginal between the two, was that I did rely quite heavily on the aggregates specifications of being able to go up to 8 on M1. | 35 |
fomc | 1,977 | I, as a matter of fact, had a preference for B with a money market directive. | 19 |
fomc | 1,977 | Oh, well, we'll give you that option. We have alternative B with a money market directive. How many would feel comfortable with alternative B specifications and money market directive? | 34 |
fomc | 1,977 | Eight. | 2 |
fomc | 1,977 | That's the largest number yet. | 6 |
fomc | 1,977 | We've reached the point where I think we will run rapidly into diminishing returns. We've reached the apex of understanding now. Let's stay there for awhile. But these are very fine shadings, and I suggest we vote on the range for M1 of 3 to 8, a range for M2 of 5-1/2 to 9-1/2, a range for the federal funds rate of 6-1... | 122 |
fomc | 1,977 | Chairman Burns Yes Vice Chairman Volcker Yes Governor Coldwell Yes Governor Gardner Yes President Guffey Yes Governor Jackson Yes Governor Lilly Yes President Mayo Yes President Morris No Governor Partee Yes President Roos Yes Governor Wallich Yes Eleven to one. | 49 |
fomc | 1,977 | To the best of my understanding, we have reached the hour of one. | 15 |
fomc | 1,977 | Well, thank you very much. Let me ask you a question or two. Let's assume that the order by the Court of Appeals is effective as of today, you see. All right, we hold our meeting and we reach a decision, and that decision is to be published, or one of the options is to publish it, in the Federal Register. | 71 |
fomc | 1,977 | Yes sir. | 3 |
fomc | 1,977 | All right now, then, when would it be published at the earliest in the Federal Register? | 19 |
fomc | 1,977 | There is almost a certainty of a three-day delay for transmission. Totally, I think, outside time, five days is the most you can expect in the way of delay, possibly four, Mr. Chairman, from the time it leaves this building forward. | 51 |
fomc | 1,977 | I see. All right, that helps me. | 10 |
fomc | 1,977 | Mr. Chairman, I might add that while it might be five days until it appears in the Register, as soon as they receive the document at the Federal Register office, they place it on public file, so anyone can see them. | 47 |
fomc | 1,977 | I see. And how soon would that have to be done? | 13 |
fomc | 1,977 | I would say that, on Art's point, that that might make it available--I think it's still a three-day interim from the time of the Committee's action forward. | 35 |
fomc | 1,977 | Well, so one can catch one's breath, at least. | 12 |
fomc | 1,977 | Yes sir. | 3 |
fomc | 1,977 | Now my mind went blank momentarily as you were speaking, Tom, and would you--you spoke of two days as being critical. The December 1 date--that I understand. But then you also spoke of January 1 under certain conditions as becoming the critical date. Would you be good enough to repeat that for me? | 66 |
fomc | 1,977 | Yes sir, I will. The December 1 date? | 12 |
fomc | 1,977 | Now, I understand that. The January 1 date. | 12 |
fomc | 1,977 | All right. If the Committee, as I urge, perhaps might express a no-objection--if, on behalf of the Committee, there were filed a request for a stay of mandate with the suggestion that we would be seeking a writ of certiorari to the Supreme Court, the Court of Appeals can act upon that and grant a maximum 30-day extensi... | 98 |
fomc | 1,977 | All right. Now isn't it clear that that is something we definitely ought to do today? | 18 |
fomc | 1,977 | I believe it is Mr. Chairman. I would recommend that. | 13 |
fomc | 1,977 | Is this discretionary on the court's part? | 9 |
fomc | 1,977 | Yes it is. | 4 |
fomc | 1,977 | Give us the rationale for directing that? I'm not sure that's clear. | 14 |
fomc | 1,977 | Otherwise we would have to release our decision on December 1. Because these other actions that are possible, such as going to the Supreme Court or seeking legislation, all of that will take time. | 39 |
fomc | 1,977 | Well, I think, Mr. Chairman, we ought to view this as part of a general strategy. If, at the end of the whole thing, we would have to publish anyway, we might have given away some benefits in terms of public posture by first having vainly tried to protest it in the courts. I'm trying to understand better, for instance,... | 98 |
fomc | 1,977 | I believe that over a period of time it will be found that a request of the Court of Appeals for this 30-day extension--and under the rules, the court has within its discretion a granting of a shorter or, under exigent circumstances, a longer period, but 30 is cited in the statute--is usually accompanied by a suggestio... | 304 |
fomc | 1,977 | Well, I think that unless members of the Committee are ready to abandon our approximate 30-day rule, I think the action recommended by Mr. O'Connell is something we ought to do and do forthwith. I think Mr. O'Connell's recommendation is thoroughly sound. | 56 |
fomc | 1,977 | That is, attempt to go to the Supreme Court. Is that correct? | 15 |
fomc | 1,977 | He can--well, to do two things. [To] take it to the Supreme Court and in the meantime start inquiries with members of the Congress, seeking congressional relief. As a matter of fact, I've already started that, but I haven't gotten very far. | 53 |
fomc | 1,977 | Mr. Chairman, I just throw this out for a thought. Concurrently with taking the legal steps that Mr. O'Connell suggests, concurrently with feeling out members of the Congress for statutory relief, what would happen if just in this one instance we did what the appellate court suggests--for example, at the end of today's... | 168 |
fomc | 1,977 | Let me make two observations. First, we would not have to publish our decision until December 1. And therefore this--the test that you suggest would be an imperfect test. Second, I don't want to anticipate the results of today's meeting. But it's entirely possible--perhaps even probable--that today's meeting will not p... | 72 |
fomc | 1,977 | I just wanted to ask Tom if you had any feedback from the Solicitor General as to his willingness to press our case. | 25 |
fomc | 1,977 | President Morris, I have feedback only at the staff level. The head of the appellate section [of the Justice Department]--who, I believe, has a leg up on the attitude of the Solicitor General because they work together daily in these matters--is not too affirmative with respect to his judgment of success in getting the... | 241 |
fomc | 1,977 | May I ask a question, Mr. Chairman? Tom, if I heard you correctly, you not only have the possibility of a request for a 30-day extension; you also have an outside emergency type for a longer extension? | 46 |
fomc | 1,977 | The Court of Appeals rule provides that a petition for an extension may be filed very quickly. Under the rule for a stay of mandate--if I may, Governor, "a stay of the mandate pending application to the Supreme Court for a writ of certiorari may be granted upon motion, a reasonable notice of which is given to all parti... | 121 |
fomc | 1,977 | So you don't go in asking for longer than 30 days to start off with. | 17 |
fomc | 1,977 | No sir, you don't. | 6 |
fomc | 1,977 | I see. | 3 |
fomc | 1,977 | Could it be possible, Tom, to outline the maximum stalling tactic--and I don't mean that in a negative sense, but just a factual sense--that we are likely to accomplish under either of these [scenarios], considering that the Supreme Court either would not grant certiorari or else would grant it but then decide against ... | 187 |
fomc | 1,977 | If I may, some of the terms of this rule that I was reading for Governor Coldwell are applicable to your question, Governor. If I may, "If during the period of stay"--and this is the 30-day stay provided in the rule--"if during the period of stay there is filed in the clerk of the Court of Appeals a notice from the cle... | 242 |
fomc | 1,977 | In other words, the Supreme Court would normally grant or fail to grant certiorari within that period? | 21 |
fomc | 1,977 | In that time period. If it hadn't [decided whether to grant], we would then take steps to extend the stay pending decision of the Supreme Court. | 31 |
fomc | 1,977 | It's the Supreme Court's custom, then, to either grant or fail to grant certiorari within the 30-day period?. | 26 |
fomc | 1,977 | To the best of my knowledge, that's correct. | 10 |
fomc | 1,977 | If the Solicitor General would not take on our case, are we still entitled to the 30 days? | 22 |
fomc | 1,977 | Well, we would know. Assuming my earlier statement, Governor, that the two petitions are filed simultaneously--namely, the petition for writ and the 30 day--we would have known the Solicitor General's attitude. It presumes that the SG would let us know within that time frame whether or not he will support a petition fo... | 101 |
fomc | 1,977 | All right. Governor Lilly. | 6 |
fomc | 1,977 | Well, following up on Henry's earlier question, just from a pragmatic point of view, what, in your view, Tom, is the likelihood of the Supreme Court overturning this appellate court? | 39 |
fomc | 1,977 | Governor, I think the likelihood is not too great, for this reason, very quickly stated. The Department of Justice under the current Administration issued, in the fall of last year, guidelines to accompany the Freedom of Information Act. And the civil division of that department now has promulgated its own suggested gu... | 236 |
fomc | 1,977 | Given that situation, what are the probabilities of a congressional action occurring? | 14 |
fomc | 1,977 | Well, that's very difficult for me to appraise at the moment. I would not rate the probabilities high, nor would I rate them low, as of now. I want to suspend judgment on that. I think we have a fair chance to get congressional action, but-- | 55 |
fomc | 1,977 | But not before this court's directive becomes operative? Given the Supreme Court denial? | 16 |
fomc | 1,977 | Well, you don't mean--that is, Supreme Court refusing to take on the case--well, I would not want to express an opinion on that, either. I think one would have to test the waters, and I've only started that. I'm neither, to repeat, pessimistic nor optimistic as yet. | 62 |
fomc | 1,977 | Mr. Chairman, shouldn't we examine the alternatives, the problem of releasing this? How would we operate if we had to release it? Would it really be so damaging? Given that this is a very unpopular thing we are promoting--this secrecy--what would be the damage to us [with] the public, central banks, academics? Wouldn't... | 84 |
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