Despite popular outcry in recent years from Americans demanding more transparency from the Federal Reserve, the central bank has operated behind closed doors to rewrite the rule book that governs U.S. financial markets.
The Fed recently publicized a push for transparency in its interest rate and emergency lending practices; but, unbeknownst to most Americans, there is much more going on behind the scenes. According to The Wall Street Journal, since the Dodd-Frank financial overhaul became law in 2010, the Fed has taken on a larger regulatory role than it ever has. Since passage, the central bank has held 47 financial regulation votes.
To give the illusion of transparency, the Fed’s five voting members reportedly email their votes in on a number of key regulatory issues, rather than casting votes in public meetings like they did throughout the 1980s and 1990s.
Central bank officials claim that public meetings tend to be scripted affairs and shine little light on the process anyway. The officials said they still give the public as many as 90 days to comment on rules.
Among recent Fed disclosures, however, was a dissent from one Fed governor on a regulation related to the Volcker rule that was released Feb. 14, a day after the public comment period on the proposal had closed, depriving public commenters of a valuable perspective.
“I can’t think of any justification” for that, said the official directing the Fed’s rule-writing work.