August 20, 1957 FOMC Minutes

FOMC minutes

under date of August 12, 1957, transmitting a list of questions re lating to open market operations which had been submitted to Chairman Martin by Congressman Patman in connection with the former's recent testimony before the House Banking and Currency Committee concerning the proposed Financial Institutions Act. In commenting on the matter at the request of the Chairman, Mr. Riefler referred to the amount of work that would be necessary to prepare the answers and pointed out that it would be necessary for the Federal Open Market Committee to authorize submission of the requested information. He also referred to two letters from Mr. Patman, both dated August 14, 1957, in which other questions were asked, including some having to do with open market matters. Copies of these letters were then distributed. Chairman Martin said that all were aware of the problem that at the present time and that his general approach was being encountered was that the System had absolutely nothing to hide at any time. If that the sooner it was found out the better. anything was wrong, he felt in both Houses of Congress a group He went on to say that there existed on the Federal Re to be seeking information of members who were going that as much information and he thought serve System continually, To put it another reasonably be supplied. furnished as could should be as a public body to the System had an obligation way, he felt that not be the data should and that requested information supply the involved. He work that was basis of the simply on the refused

recognized that there might be a difference when it came to submitting information on current open market transactions but r ecalled that a response to a request by Senator Gore for current data already had been made. In an ensuing discussion, question was raised about the response that should be made to certain questions asked by Mr. Patman involving information that would have to be obtained from dealers in Government securities. Chairman Martin expressed the view that, when this was the case, the information should be obtained by the Congress direct from the dealers or the dealer community. He did not feel that it would be proper to supply information which had been given to the System on a confidential basis. Question also was raised as to whether the amount of time necessary to compile the responses should be pointed out in some in furnishing the information and Chairman Martin expressed manner the view that there would be no objection to bringing this out in way. Governor Vardaman suggested that this could some appropriate seem to be an undue delay in pointed out in explaining what might be compiling the information. with a question by Mr. Rouse concerning whether In connection on an overtime basis, Chairman information should be compiled the not be "stepped on" at all, that the System should Martin indicated System should not be unduly dilatory but that on the other hand the the data. in furnishing

Governor Vardaman expressed the view that the very furnishing of the information sooner or later would be an asset to the System. Governor Robertson said that in going over the questions it occurred to him that one could not determine, just by reading them, what information could properly be given and what could not be given. He suggested that it might be necessary to set up a committee to make those decisions in the first instance and then come back to the full Committee. Chairman Martin then said that he had had in mind suggesting that the Committee give a blanket authorization for the furnishing of such noncurrent information as appeared feasible and proper, that it authorize Messrs. Riefler and Rouse to confer with respect to the matter, and that if they felt that it was not feasible or proper to furnish certain information they bring the matter back to the full Committee for discussion at a meeting of the Committee. He also sug authorization apply to the questions raised in the gested that this as the original list of questions, and also August 14 letters as well inquiries of the same general nature. to any subsequent Secretary's note: On Friday, August 23, Secretary talked to all of the members the Market Committee who of the Federal Open present at the meeting on August 20 were Mills and Williams, who except Messrs. about whether the were not available, names of parties with whom the Account specific transactions fell with conducted category. It was in the confidential agreed that they did not, and unanimously that the names should be furnished.

Mr. Riefler said that, as he understood it, the line of distinction would be that when the information which was requested had come to the System on a confidential basis from an outside party, should be obtained by the Congress from such party. the information the procedure suggested by Chairman Martin was ap Thereupon, Riefler and Rouse were authorized to proved unanimously and Messrs. proceed on the basis indicated. next meeting of the Committee would be It was agreed that the held at 10:00 a.m. on Tuesday, September 10, 1957. Thereupon the meeting adjourned. Secretary