February 10, 2009
Federal Reserve Chairman Ben S. Bernanke initiated a review of the information it provides the public after lawmakers criticized the central bank’s disclosure policies during the unprecedented expansion of its holdings.
“We at the Fed have begun a thorough review of our disclosure policies and the effectiveness of our communication,” Bernanke said today in remarks prepared for testimony before the House Financial Services Committee. Board Vice Chairman Donald Kohn will lead a panel for the review.
Bernanke has invoked emergency authority and more than doubled the size of the Fed’s balance sheet to $1.8 trillion to combat the worst credit crisis in seven decades. His moves have prompted concern that the central bank is encouraging excessive risk-taking, distorting pricing in financial markets and jeopardizing the Fed’s independence. The Fed hasn’t disclosed many of the assets and participants in its programs.
“It does not seem to me healthy in our democracy for the amount of power that is now lodged in the Federal Reserve with very few restrictions to continue,” said Representative Barney Frank, a Democrat from Massachusetts and the committee chairman.
Bloomberg News has requested details of the Fed lending under the U.S. Freedom of Information Act and filed a federal lawsuit Nov. 7 seeking to force disclosure.