Critics Push the Fed for More Public Rulemaking Meetings

Since July 2010, when the Dodd-Frank Act became law, the U.S. Federal Reserve has held 47 votes on financial regulations. Of the 47 votes, the Fed only held two public meetings. The other votes were submitted electronically, and the votes were just recently disclosed.

Bipartisan critics say that the closed off rulemaking has made it harder for Congress to hold the Fed accountable and has broken with a long-held tradition of providing the public with insight into how rules are being written and implemented.

"People have a right to know and hear the discussion and hear the presentations and the reasoning for these rules," Former Federal Deposit Insurance Corp. Chair Sheila Bair says. " All of the other agencies which are governed by boards or commissions propose and approve these rules in public meetings. I think it would be in the Fed's interest to do so as well."

There are more votes on the way as the central bank works to reshape the regulatory environment and direct how much capital banks must hold, what kind of trading they can do, and what fees they can charge retailers on debit-card transactions.

The Fed indicates that open meetings are held more often and that growing demands on the governors' time makes it difficult to coordinate schedules. But the recent dissension of Fed Governor Sarah Bloom Raskin to the draft Volcker Rule was not disclosed until Feb. 14, though she has recently said that she was concerned the rule was too unwieldy for banks to comply with and for regulators to enforce.

Fed officials say that many open meetings are formulary and will provide little insight into the rulemaking process, and with 250 separate rule writing projects under way, coordinating schedules for meetings would be difficult. Moreover, each rule is open to public comment for between 60 and 90 days, and Fed officials are called before Congress and grilled on the status of controversial regulations.

Source: "Fed Writes Sweeping Rules From Behind Closed Doors," Wall Street Journal (02/21/12)