Last week, the Federal Reserve detailed its plans for $2.3 trillion in new lending and asset-purchase measures designed to steady the economy. The announcement solidified the Fed’s foray into decidedly new territory -- including for the first time in history lending to small and mid-sized businesses and expanding corporate debt buy-back programs to include riskier classes of corporate debt.
This is a time for big action. But these unprecedented measures demand unprecedented transparency, too. With taxpayers potentially on the hook for hundreds of billions of dollars, and the Federal Reserve taking bigger risks and entering parts of the market it has historically avoided for being too precarious of an investment, citizens have a reason to want to know what’s happening behind the doors of our nation’s central bank. But the Federal Reserve has long operated as a black box, providing little information to elected officials about its actions, and even less to the public.
The CARES Act outlined oversight and disclosure guidelines for some of the money allocated by the stimulus package, but many don’t apply to the Federal Reserve. Even measures outlined in the law may prove ultimately unhelpful for ensuring the public has access to key information, like the names of corporations that are getting Fed assistance. Ultimately, Fed Chairman Jerome Powell can use his discretion to decide what gets disclosed and what doesn’t.
The sole Commissioner appointed to the Congressional Oversight Commission so far, one of the bodies charged with oversight of how CARES Act money is spent, wrote a letter earlier this week to Chairman Powell requesting the Federal Reserve disclose detailed information, including the identities of companies and terms of their deals, to Congress.
This week, on behalf of U.S. PIRG, I submitted a public comment to the Federal Reserve asking not only for the Fed to answer Commissioner Bharat Ramamurti’s call, but to ensure that information is made available to the public as well.
The biggest stimulus package in U.S. history deserves the most transparency in U.S. history. Nothing could be clearer than that.
Public comment submitted to the Federal Reserve by R.J. Cross and U.S. PIRG, April 16, 2020:
“The Fed is taking unprecedented action to stabilize our economy, and that comes with unprecedented responsibility to inform and engage the public. First, our officials need access to timely and detailed information on all money lent & spent in order to ensure the public's best interest is being served. The Fed must frequently disclose to the Congressional Oversight Commission what firms are receiving loans and on what terms as described by Bharat Ramamurti in a letter to Chairman Powell earlier this week. Second, the Fed must then make that information available online for the public. The situation demands riskier action than the Fed has ever taken, using taxpayer dollars as a backstop, and that means taxpayers should be able to see who is benefiting from Fed assistance. With so many Americans struggling to meet their most crucial needs, we must guarantee all funds are being used as effectively as possible, and true transparency is essential for ensuring that happens.”