The second-in-charge of the Federal Reserve got to have the last word, on one day at least.
Widely seen as likely successor to Federal Reserve Chair Ben Bernanke, whose term ends in January 2014, Vice Chair of the Board of Governors of the Federal Reserve System Janet Yellen told a group of financial journalists meeting in Washington, D.C., that a "revolution" has occurred in the way the Federal Reserve communicates.
This, just a few hours after Reagan administration Office of Management and Budget Director David Stockman called the Federal Reserve's policy-setting group a "politburo," which according to Merriam-Webster, means "the principal policy-making and executive committee of a Communist party."
Speaking at the Society of American Business Editors and Writers conference in Washington, Yellen said the Fed's communications strategy has gone from "never explain" to a situation where "the explanation is the policy," she said.
Beginning in 2010, Yellen led a Fed subcommittee on communication that ultimately led to the decision to hold regular news conferences. Now, every other policy-setting meeting provides reporters an opportunity to quiz Bernanke about the economy and the central bank's goals. As an example of the evolution of the Fed's approach, she noted that it was only nearly 20 years ago that the Federal Reserve began issuing statements following interest-rate setting meetings disclosing that it made a decision.
Earlier in the day, Stockman told the group that the Fed has risked creating a new financial crisis through its policy of low interest rates and large-scale asset purchases. Those purchases have recently amounted to $85 billion per month. She repeated that the Fed expects to continue to hold the assets for a considerable time even after purchases end.
GAO and foreclosure
After her speech, Yellen was asked about a Government Accountability Office review finding regulators botched a costly search for foreclosure errors. Reports indicate that regulators failed to provide good guidance for the independent examination of more than 4 million foreclosures.
Yellen said the GAO called the recommendations "useful." She said the reviews turned out to be too costly, with some individual assessments approaching 2,000 pages or more, requiring up to 50 hours to assess. She said that was "not a workable approach."
Communication to remain paramount
Yellen ended her discussion with this: "I hope and trust that the days of 'never explain, never excuse' are gone for good, and that the Federal Reserve continues to reap the benefits of clearly explaining its actions to the public."
What do you think? Could the Fed be more transparent?
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