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fomc | 1,977 | Thank you. You know, without going through the expressed opinion meticulously, but having listened very carefully to the views expressed around this table, I would like to make the following proposal: that we vote on a monetary aggregates directive; that we specify a range of 3 to 7 for Ml; a range of 6-1/2 to 10-1/2 f... | 119 |
fomc | 1,977 | The center point in the funds rate 4-5/8-- | 14 |
fomc | 1,977 | Where it is now, yes. It's off-centered toward the higher end. Well, I don't hear any shriek of horror, and therefore would you be good enough to call the roll. | 38 |
fomc | 1,977 | Chairman Burns Yes Vice Chairman Volcker Yes President Balles Yes President Black Yes Governor Coldwell Yes Governor Gardner Yes Governor Jackson Yes President Kimbrel Yes Governor Lilly Yes Governor Partee Yes Governor Wallich Yes President Winn Yes It is unanimous. | 49 |
fomc | 1,977 | All right, let's turn to item 7 on the agenda, the memorandum from Governor Partee reporting on the thinking of [his sub]committee as to the precise form of our domestic policy directive. This was put before the Committee, oh, two months ago, and a question was raised at that time by Governor Jackson, and I thought tha... | 152 |
fomc | 1,977 | Well, Mr. Chairman, the subcommittee has not made an effort in this proposal to do anything substantive. All we wanted to accomplish in the way, you might say, of a clean-up of the records of the Committee was to put directly into the directive the directive [specifications]. And to discontinue the specification sheet,... | 562 |
fomc | 1,977 | There is no basic disagreement at all on my part with the subcommittee. I do feel that stressing aggregates is a defense for us, even though the Chairman has pointed out many times that Congress really thinks in terms of interest rates and that hiding behind good-looking aggregates will not help us if interest rates go... | 256 |
fomc | 1,977 | Would the other members of the Committee wish to say anything? Frank? | 14 |
fomc | 1,977 | No, I have nothing to add. | 8 |
fomc | 1,977 | John? | 2 |
fomc | 1,977 | I must say that I'm sort of attracted by Henry's reasons for using the word "target," and I would be prepared to go with that. I caught up with this fairly recently. It's an interesting alternative to consider. | 44 |
fomc | 1,977 | Well, as I say, Mr. Chairman, it seems to me that that recommendation, which may have merit on its own, violates the spirit of the exercise here, which was to simply transfer what we now have into a different and more useful form. So I think it could be considered by you and by the Committee if it wishes, but it is not... | 89 |
fomc | 1,977 | How would you feel if it didn't violate the spirit? | 11 |
fomc | 1,977 | Well, you know, I must admit that I'm inclined to back away a little from the use of the word "target" in the case of the monetary aggregates because I've always felt that, as I think the Chairman has stated to the Committee, our target is the performance of the economy. That is, our objective and the target we have in... | 188 |
fomc | 1,977 | May I make this suggestion: that we consider first of all the main thrust of the memorandum by Mr. Partee and then discuss further to the extent that we may wish to do so the verbal changes that Governor Wallich has suggested? Is there any difficulty with the main recommendation , that is, spelling out these ranges of ... | 77 |
fomc | 1,977 | You say any difficulty. I have a slight difficulty in that I think it has a kind of spurious precision to it. And maybe it neglects some of the nuances in our conversation. But I don't have any strong feeling if this is the way the Committee wants to go. I think even in this case it's pretty hard just to drop in these ... | 116 |
fomc | 1,977 | But actually, all of these numbers now-- | 9 |
fomc | 1,977 | --now appear anyway. | 5 |
fomc | 1,977 | --now appear in the monthly policy record. | 9 |
fomc | 1,977 | They're just a little more formalized this way, and I don't see that advantage, but I have no-- | 22 |
fomc | 1,977 | Paul, you just voted on it. [ | 9 |
fomc | 1,977 | ] That's correct. | 4 |
fomc | 1,977 | But I would echo Paul's reservation. This does provide a bit more emphasis, placing them within the directive. | 21 |
fomc | 1,977 | Well, what is the thinking of other members of the Committee? | 13 |
fomc | 1,977 | Mr. Chairman, the release of the policy record is in a new phase--of 30 days. I would have some concern if I thought that release might be accelerated. I think we all would. | 41 |
fomc | 1,977 | But in that event, you could contemplate that we might only release to the public the almost meaningless directive that we've published in the past. I don't see how, if we were advised by a court that we had to release it earlier, that the court would permit us to simply release such an innocuous statement. | 62 |
fomc | 1,977 | Well, Mr. Morris, at this particular point you've stepped outside of your own realm of expertise. You had better listen to our counsel as to what-- | 31 |
fomc | 1,977 | We had a memo from the counsel on this. | 10 |
fomc | 1,977 | --as to what a court would or would not permit us. Mr. O'Connell. | 19 |
fomc | 1,977 | Mr. Chairman, I stated earlier the possibility that the Court of Appeals may render a judgment to confirm an interpretation of law requiring immediate release of a directive policy action. Assuming the directive were included in that record, we are taking the position that the most immediate time frame within which tha... | 147 |
fomc | 1,977 | All right, thank you, Mr. O'Connell. Mr. Jackson. | 16 |
fomc | 1,977 | I think we ought to incorporate it in the record just like it's proposed. We just had a long discussion this morning about our living within the spirit of the Sunshine Act, and I think this is just evidence of that intent. | 45 |
fomc | 1,977 | Well, you see, these specifications are now reported in the policy record, and what we're really talking about is the inclusion of these specifications in the directive to the New York Reserve Bank as well. Which means, as far as the monthly policy record is concerned, these numbers would be reported twice instead of j... | 123 |
fomc | 1,977 | That's exactly it. | 4 |
fomc | 1,977 | I raise a question, Mr. Chairman. If we were to, at a later date, decide there were to be a reserves intermediate target or something, would you also advocate that that be a part of this? | 43 |
fomc | 1,977 | If it were a short-run target, absolutely. It would appear down here in the operative instruction. Art, I'd forgotten what we had in the longer-run statement. Do we now use reserves? We had proposed that, at one point, to carry out the intent of the previous subcommittee report. That is, it's a longer-run thing if you ... | 77 |
fomc | 1,977 | Oh, yes, Governor Partee, I'm sorry, it does say to foster bank reserve and other financial conditions. | 23 |
fomc | 1,977 | Yes, but we don't specify the numbers. | 9 |
fomc | 1,977 | We don't specify the amount. | 6 |
fomc | 1,977 | Because we don't have a specified target, you see. | 11 |
fomc | 1,977 | That's why I said, if later on you did, you would include that in your directive. | 19 |
fomc | 1,977 | I'm not sure--depending on what we did, it might appear in the long-run paragraph rather than a short-run paragraph. | 25 |
fomc | 1,977 | Well, you have both. It would appear in one place or the other. | 16 |
fomc | 1,977 | No, I think we could amend it, you know, and anyway amend their operation. We would amend the instructions. And as a matter of fact, it seems to me that the instruction--because it is specific and is what we've told the Manager to do--is more amenable to a modification of [this] kind, than is the case now in our curren... | 78 |
fomc | 1,977 | Mr. Lilly. | 4 |
fomc | 1,977 | Just a question of how this would be carried out. As I understand, if this were adopted in the Committee's directive and instructed in this form, on page 3 we would show the weekly average federal funds rate of about 4-5/8-- | 52 |
fomc | 1,977 | No. | 2 |
fomc | 1,977 | 4-5/8 to 4-3/4. | 13 |
fomc | 1,977 | That is exactly what we would release. | 8 |
fomc | 1,977 | It would not show the range for the funds rate, Mr. Chairman? | 15 |
fomc | 1,977 | 4-1/4 to 5, which gives you the little range within the big range. | 20 |
fomc | 1,977 | Yes. | 2 |
fomc | 1,977 | In this particular instance. | 5 |
fomc | 1,977 | That's not presently reported in this. | 7 |
fomc | 1,977 | Yes it is. I just checked that. It was reported in the last policy record. | 18 |
fomc | 1,977 | My guess is that this is just the second time we've done that. | 14 |
fomc | 1,977 | Would it say 4-5/8 or 4-5/8 to 4-3/4? | 24 |
fomc | 1,977 | It's at 4-5/8 to 4-3/4. | 16 |
fomc | 1,977 | I think that's what it would have to say. | 10 |
fomc | 1,977 | Well, at least I've been very precise that we shouldn't. This was released February 10. | 19 |
fomc | 1,977 | Well, this is part of a January meeting, which will be released on Friday. | 17 |
fomc | 1,977 | Oh, I'm sorry. Yes, but this has been approved by the Committee. | 16 |
fomc | 1,977 | We need to reemphasize what Chuck said, that the big advantage of this is that it does away with the specification sheet, which I think always made us vulnerable--as far as our public posture is concerned--in having some kind of a secret document. | 53 |
fomc | 1,977 | Well, I honestly don't see that, because the policy record contains the numerical specifications now, and that particular sheet is a piece of a working paper for the Committee. I don't think we're vulnerable. The advantage I see is that when you segregate and look solely at the instructions to the New York Desk at the ... | 123 |
fomc | 1,977 | Is there any possibility, Mr. Chairman, that this may trap you in your testimony with Congress. | 20 |
fomc | 1,977 | I don't see--I considered that very carefully, and at a certain time I was a little opposed and seeing some possible difficulty. And my next objection was that it was simply repetition--why do we have to say the same thing twice? But I finally--my present position is that there is a slight advantage in saying it twice,... | 91 |
fomc | 1,977 | Mr. Chairman, I have one final concern, and that is, twice, I think, it appears that you [are] given the discretion in this statement of calling the Committee together. Now if it appears "the Manager will notify the Chairman and will then decide," this could--I may need counsel's assistance on this--but this could conc... | 90 |
fomc | 1,977 | To the extent that that is a difficulty, we lived with that difficulty for some time thus far without trouble or embarrassment, you see, because that is contained in the policy record now, and has been for some time. | 44 |
fomc | 1,977 | I think the rules of the Committee permit calling a meeting by a certain number of members anyway. | 19 |
fomc | 1,977 | I think that this doesn't technically mean you can't call a Committee meeting anytime you want to. This just says the Manager would notify you if [the directive] is significantly inconsistent, and there may be other reasons for calling the meeting. | 46 |
fomc | 1,977 | It's an instruction to the Manager, not to the Chairman. | 12 |
fomc | 1,977 | It imposes a duty on the Manager, though. | 11 |
fomc | 1,977 | Any further discussion desired? Let's have just a show of hands. Members of the Committee in favor of the Partee [sub]committee recommendation, would they kindly raise their hands. Those opposed. The majority is clearly in favor. We don't need a formal vote on this. | 55 |
fomc | 1,977 | Mr. Chairman, can we interpret the prior vote to cover this directive with the numbers inserted? | 19 |
fomc | 1,977 | I think we should. We still have an opportunity--one that we've delayed time and again--to act on the report of our [sub]committee which has considered [public] agency [securities]. | 41 |
fomc | 1,977 | Mr. Chairman, excuse me, there is a point-- | 12 |
fomc | 1,977 | Sorry, I overlooked that. Now, as for the changes in language which Mr. Wallich has recommended, I share the sentiments expressed by Governor Partee. I have resisted the word "target." I never use it because it can lead to misinterpretation. And your main point, Mr. Wallich, namely the need to accent the attention that... | 260 |
fomc | 1,977 | You may recall, Mr. Chairman, this group was appointed specifically in response to a question about whether we should be purchasing what might be called some special agency issues. More specifically, WMATA, the Washington Metropolitan Area Transit Authority, and whether that was an appropriate kind of security for us t... | 1,033 |
fomc | 1,977 | I have one concern about this rule. I would love to see the Metro Washington issue now in our portfolio, I'd like to see us get rid of that, and for a very obvious reason. [The presence of] this [asset in our portfolio] is dug up by individual Congressmen, and they come forward with the argument: "Now you have supporte... | 116 |
fomc | 1,977 | $117 billion, according to table 1. | 10 |
fomc | 1,977 | I should just add, Mr. Chairman, which I did not say--that the subcommittee contemplated that we would not sell those issues that would in the future not be eligible for new purchase except as part of any general sales program which was undertaken in any event. Since they have been at the very least extremely rare, I t... | 92 |
fomc | 1,977 | But we did agree that where opportunities arise when we were going into sales, we ought to view that as our prime-- | 24 |
fomc | 1,977 | Certainly. | 2 |
fomc | 1,977 | Mr. Chairman, would it be acceptable to the Committee if we discussed with the Federal Financing Bank whether they would like to take over? This may be very difficult. | 33 |
fomc | 1,977 | Sell these to the Federal Financing Bank? | 8 |
fomc | 1,977 | Yes, this would be an unusual sort of transaction. | 11 |
fomc | 1,977 | Why not do the unusual thing--get them to buy it? | 13 |
fomc | 1,977 | And maybe take the financing back. | 7 |
fomc | 1,977 | Give it to them. Sell it to them at a market price. | 14 |
fomc | 1,977 | On the substance of your concern, Mr. Chairman, I don't think the [sub]committee was of one view that there is a concern [but] I would have the concern that it's hard for this Committee to distinguish among issues that are fully guaranteed by the federal government. That, in effect, the decision about support of a loca... | 130 |
fomc | 1,977 | There's a big difference. Unfortunately, the people who comment on this don't recognize this--it stirs up concerns. | 23 |
fomc | 1,977 | I must say my main interest in the work of your subcommittee was in getting rid of the D.C. issues. | 24 |
fomc | 1,977 | We thought we were accomplishing that purpose and have accomplished the purpose in terms of new purchases. We haven't accomplished it in terms of-- | 26 |
fomc | 1,977 | That will have very little influence, I think, on congressional opinion, but maybe municipal finances from this point on will be handled so wisely, so prudently around the country that this problem will not arise. | 41 |
fomc | 1,977 | Mr. Chairman I have only one question about the report. Let me just check this with Paul. It's a nice way of getting rid of these bits and pieces. My recollection was that the financing bank was originally sold to the agencies as an optional source of financing. That is, it was wasn't mandatory. For a while, the Treasu... | 190 |
fomc | 1,977 | I think conceptually you are correct. If my memory is right, virtually all these agencies--not by the terms of the Federal Financing Bank legislation, but by the terms of their own substantive legislation--can't go into the market without some other device where the Secretary of the Treasury can force them into the Fed... | 181 |
fomc | 1,977 | I think this is [desirable], too, Chuck. We encourage them to come into the Federal Financing Bank. They decide in their own judgment that they want to issue something separately--why, then, they ought to stand on their own. | 49 |
fomc | 1,977 | Could they get as attractive a rate by doing it on their own, you think? | 17 |
fomc | 1,977 | No, but some of them have wanted to anyway. Historically, they wanted to be independent of any other government financing source. | 25 |
fomc | 1,977 | Most of these require the Secretary of the Treasury's approval? | 12 |
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