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fomc | 1,997 | Is there a second? | 5 |
fomc | 1,997 | Second. | 2 |
fomc | 1,997 | Without objection. Peter, having been duly elected to office, you now have to work. You are on. | 22 |
fomc | 1,997 | Thank you. The next topic on your agenda is the review of the Authorization for Domestic Open Market Operations. I do not have any changes to request at this time, but I did want to use this occasion to bring you up to date on three issues. The first is a preview of coming attractions. Following the Committee's discuss... | 1,055 |
fomc | 1,997 | Thank you. Questions for Peter? If not, would somebody like to move a renewal of the Authorization for Domestic Open Market Operations? | 26 |
fomc | 1,997 | So move. | 3 |
fomc | 1,997 | Second. | 2 |
fomc | 1,997 | Without objection. Ted Truman has circulated a memorandum to which he attached the text of the Foreign Currency instruments--the Authorization, Directive, and Procedural Instructions. He proposes that they be renewed in their current form for the coming year. He also suggests in his memorandum that the current $20 bill... | 137 |
fomc | 1,997 | A point of clarification, Mr. Chairman. The authority for the warehousing is in the first vote, right? | 23 |
fomc | 1,997 | Yes, the authority to enter into a warehousing transaction is in the first vote. | 17 |
fomc | 1,997 | Okay. | 2 |
fomc | 1,997 | Is that satisfactory to everybody? Would somebody like to move the first vote on the warehousing transaction agreement? | 21 |
fomc | 1,997 | Mr. Chairman, President Minehan has a question. | 11 |
fomc | 1,997 | Just one small question: When we ratcheted up the amount of the warehousing authority in the late 1980s, what was the proximate cause for that? The Brady policy? | 39 |
fomc | 1,997 | That was a period when we and the Treasury were doing quite a lot of intervention in the markets. The Treasury essentially ran out of dollars in the Exchange Stabilization Fund. We warehoused some of their foreign currencies to provide them with dollars so that they could participate with us in foreign exchange operati... | 60 |
fomc | 1,997 | Thank you. | 3 |
fomc | 1,997 | Would somebody like to move the warehousing agreement? | 10 |
fomc | 1,997 | I move the warehousing agreement, Mr. Chairman. | 11 |
fomc | 1,997 | Seconded? | 3 |
fomc | 1,997 | Second. | 2 |
fomc | 1,997 | Without objection. The next item on the agenda is boilerplate; it is the report of examination of the System Open Market Account-- | 26 |
fomc | 1,997 | Mr. Chairman, I apologize for interrupting. My views on foreign exchange intervention are well known here, and I will not rehash them. I would like to vote "no" on the question of renewing the Foreign Currency Authorization and the Foreign Currency Directive. I thought we were going to have two votes. | 62 |
fomc | 1,997 | Didn't I call for that vote, or did I miss it? | 13 |
fomc | 1,997 | You went immediately to the warehousing issue. | 9 |
fomc | 1,997 | Sorry about that; I got distracted. Let us go back and start from scratch. On the first vote, would somebody like to move the renewal of the Foreign Currency Authorization, Directive, and Procedural Instructions? | 42 |
fomc | 1,997 | So move. | 3 |
fomc | 1,997 | Second. | 2 |
fomc | 1,997 | It has been moved and seconded. All in favor say "Aye." SEVERAL. Aye. | 23 |
fomc | 1,997 | All opposed say "No." | 6 |
fomc | 1,997 | No. | 2 |
fomc | 1,997 | The "ayes" have it. On the warehousing agreement-- | 13 |
fomc | 1,997 | Move approval. | 3 |
fomc | 1,997 | Approval has been moved; is it seconded? | 10 |
fomc | 1,997 | Second. | 2 |
fomc | 1,997 | All in favor say "Aye." SEVERAL. Aye. | 15 |
fomc | 1,997 | "No?" The "ayes" have it unanimously. As I said, the next item on the agenda is the report of the examination of the System Account. This report is considered each year on an irregular schedule that relates to the variable date of the New York Bank examination. Would somebody like to move acceptance? | 61 |
fomc | 1,997 | So move. | 3 |
fomc | 1,997 | Second? | 2 |
fomc | 1,997 | Second. | 2 |
fomc | 1,997 | Without objection. The next item is a memorandum that came out in the last few days on the Program for Security of FOMC Information. Again, this is boilerplate. Does anybody have any questions they wish to direct to Don Kohn or anyone else? If not, would somebody like to move approval? | 62 |
fomc | 1,997 | Move approval. | 3 |
fomc | 1,997 | Approval has been moved. Is it seconded? | 10 |
fomc | 1,997 | Second. | 2 |
fomc | 1,997 | Without objection. President McDonough has raised an issue in a letter he sent me about the schedule for releasing the minutes. I thought I might turn the issue over to him to present. | 38 |
fomc | 1,997 | Thank you, Mr. Chairman. We now follow the practice of releasing the minutes of our meetings on the Friday afternoon following the next meeting. So, the minutes for the December meeting are scheduled to be released this coming Friday. The effect of that is that the press report on the minutes disappears into a squib in... | 360 |
fomc | 1,997 | That seems like an excellent idea to me. | 9 |
fomc | 1,997 | There is one technical problem relating to the timing. I would like to turn to Don Kohn merely to raise the question. | 25 |
fomc | 1,997 | I think Thursday resolves our problem. Sometimes, as happened when President Moskow raised a question at the last meeting, it takes a while to revise the minutes, reproduce them, and then get the copies out to the Reserve Banks so that they are available for release. | 53 |
fomc | 1,997 | A Thursday release would get the press reports into the Friday morning papers? | 14 |
fomc | 1,997 | That is right. My letter suggested a Wednesday release or a Thursday release after a two-day meeting. If we make it consistently Thursday, that is actually an improvement on my proposal. | 36 |
fomc | 1,997 | Particularly since the minutes are approved at the beginning of the Tuesday-Wednesday meetings, then presumably any problems would be cleared up on Tuesday, so a Thursday release would work. | 35 |
fomc | 1,997 | I thought it was a very useful idea. Does anybody have any further questions or comments? | 18 |
fomc | 1,997 | I think it is a good idea. I am sympathetic to it. Just a couple of things occurred to me, and I would be interested in either your reaction or Joe Coyne's reaction. One is that while The Wall Street Journal and The New York Times will likely get the story reasonably straight, are not some other newspapers and televisi... | 102 |
fomc | 1,997 | My feeling is that any news media that cant make that distinction will find the minutes so uninteresting that they probably will not carry a report on them. Those that do understand the difference are the ones that are interested enough to publish a report. | 48 |
fomc | 1,997 | I think doing it on Thursday rather than Wednesday probably helps that, too. | 15 |
fomc | 1,997 | Yes. | 2 |
fomc | 1,997 | Any further questions on Vice Chairman McDonough's proposal? Are there any objections to this change in procedure? I will assume then that the Committee will accept the change in procedure, and we will proceed on your recommendation. | 44 |
fomc | 1,997 | Thank you. | 3 |
fomc | 1,997 | In this regard, would somebody like to move approval of the minutes of December 17? | 18 |
fomc | 1,997 | So move. | 3 |
fomc | 1,997 | Second. | 2 |
fomc | 1,997 | Without objection. | 3 |
fomc | 1,997 | Excuse me, Alan. When would we release those? | 12 |
fomc | 1,997 | Thursday afternoon. | 3 |
fomc | 1,997 | We will go ahead with the new schedule for these minutes? | 12 |
fomc | 1,997 | Yes. | 2 |
fomc | 1,997 | Okay. | 2 |
fomc | 1,997 | Do we release them at 4:00 p.m.? | 12 |
fomc | 1,997 | 4:30 p.m. | 6 |
fomc | 1,997 | A question about the timing: If you release the minutes at 4:30 in the afternoon, isn't that awfully late for the next day's newspapers. Don't you want to release them earlier in the day? | 42 |
fomc | 1,997 | Our current practice is to release them at 4:30 p.m. on a Friday. | 19 |
fomc | 1,997 | For the Saturday papers. | 5 |
fomc | 1,997 | Right, but if we are trying to get more exposure to the minutes as a document to explain our policy, wouldn't it be better to release them earlier if we could? | 34 |
fomc | 1,997 | If I could ask, Mr. Chairman--Joe, we could certainly move the release time to 4:00 p.m. when the stock market closes. | 32 |
fomc | 1,997 | Yes, we could. Some options markets stay open beyond 4:00 p.m. | 18 |
fomc | 1,997 | Maybe we could consult on the timing. The other issue, Mr. Chairman, is that domestic market participants sometimes complain when we release things at the end of the day, particularly on a day when the Japanese markets are opening for the next day's trading in Japan. | 52 |
fomc | 1,997 | Are you suggesting that it would be better to release the minutes at 2:00 p.m. so that there is time for trading on the information in our markets? Let me ask you this: Can we leave the decision to Messrs. Kohn and Coyne to come up between them with an optimal conclusion? | 64 |
fomc | 1,997 | Consulting with Mr. Fisher. | 7 |
fomc | 1,997 | That will slow you down a bit! [Laughter] President Minehan. | 16 |
fomc | 1,997 | I know we have decided this issue, and I do not mean to say anything to change the decision. I had some misgivings, and they have just been heightened by this conversation. I think there is a distinction to be drawn between transparency and seeking media coverage, and I am wondering whether our discussion of these timi... | 117 |
fomc | 1,997 | Let me defend the Vice Chair's position on this because I would generally agree with you on this particular issue. The purpose of moving the release forward, as I understand the Vice Chairman, is to give more emphasis to a key policy report that we prepare in a less-than-opaque manner. We do not have that many releases... | 168 |
fomc | 1,997 | Nor would I. | 4 |
fomc | 1,997 | I just wanted to register a degree of nervousness. | 11 |
fomc | 1,997 | It is a valid issue. If we were to start to try to manipulate the press, we would lose and so would the System. Let us move to the Desk operations. Mr. Fisher. | 39 |
fomc | 1,997 | Thank you, Mr. Chairman. [Statement--see Appendix.] | 13 |
fomc | 1,997 | Questions for Peter? | 4 |
fomc | 1,997 | I have a question, Mr. Chairman. The operating balances that the commercial banking system holds at the Fed have been declining. When in your judgment do we start to get into a range where those reduced balances will materially affect your operations? | 47 |
fomc | 1,997 | I remain an optimist that it is not the level but the rate of change that is important. I am sure there is some single-digit number that would have a material effect on our behavior--whether it is as low as 1 or 0, I am not sure. But as long as we have a gradual move from the current level down toward 10, as we have ha... | 117 |
fomc | 1,997 | Just to follow up on that question, Peter, we have not made such a decision for a while, but what would happen if we were to change the degree of reserve restraint? Given that the banking industry has demonstrated its ability to operate effectively with smaller and smaller amounts of reserves, do you have any thoughts ... | 95 |
fomc | 1,997 | I don't have any concrete sense there would be anything different in what we would do every day. Maybe we would have to intervene a little more than we do currently. A development that could become problematic, I am hypothesizing, would occur if a critical mass of the major banks in the country were all to become unbou... | 207 |
fomc | 1,997 | Of course, even if banks do not need any required reserve balances at the Reserve Banks at the end of the day, they need clearing balances through the day and at the end of the day. So, even if every bank in the system were unbound, I think there would be a demand for balances at the Federal Reserve, and we would be ab... | 262 |
fomc | 1,997 | I do not doubt that. | 6 |
fomc | 1,997 | And still something for Peter to operate on in carrying out the Committee's policies. | 16 |
fomc | 1,997 | As balances have gone down, has anything happened with daylight overdrafts? Is there any pattern in what we are observing? | 24 |
fomc | 1,997 | I don't think so. | 5 |
fomc | 1,997 | I agree with Don. I generally think of the cause-effect as running the other way. We had the change in behavior in daylight overdrafts when our policy changes were implemented five or six years ago, and we are now seeing the pass-through. | 49 |
fomc | 1,997 | Further questions? If not, would somebody like to move to ratify the operations of the Domestic Desk? | 21 |
fomc | 1,997 | So move. | 3 |
fomc | 1,997 | Without objection. We also need to approve the increased intermeeting leeway for Peter. Would somebody like to move that? | 24 |
fomc | 1,997 | Move approval of $12 billion. | 7 |
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