This year's hearings in Congress on bills to change the structure of the Federal Reserve System will probably not have any significant legislative outcome.
Indeed, it is questionable whether there are enough votes in the House or Senate banking committees for bills to make, their way to the floors.
With little support for legislative change at this time, some hold the view that the hearings are simply a way of holding a stick over the Federal Reserve to be sure that it does not tighten monetary policy excessively or prematurely.
Perhaps there is a little something in that, but I doubt that is the main motive for the hearings.
The hearings probably do reflect an underlying political concern not, I assume, about the Fed's independence, but about whether the institution and its decision-making are sufficiently accountable and open for the current social and political environment.
No Basic Change Necessary
I happen to believe that the Fed is sufficiently accountable and open, and that no basic change is needed in its structure.
I believe this even though the extent of private and regional participation in national monetary policy might be considered anachronistic in today's world, where key markets are national if not global.
Congressional concern about accountability has focused mainly on the presidents of the semiprivate regional reserve banks, who vote on monetary policy as members of the Federal Open Market Committee but are not chosen by the President of the United States or confirmed by the Senate.
Concerns about openness have focused mainly on whether the committee's decisions should be immediately announced to the market.
Congress Unlikely to Act
Whatever the exact motivation for the hearings, no legislative change is likely to be made in the basic structure of the Federal Reserve System and in particular of the Open Market Committee - its central monetary policy body - because it has been working well and has established public credibility.
Also, over the years the Fed has in fact become increasingly open and forthcoming, as it has responded to the greater public demand for disclosure and to the related changes in our laws.
With regard to monetary policy, the Fed's intentions and strategy are reviewed twice a year in the hearings that are held by the House and Senate banking committees under the so-called Humphrey-Hawkins Act, passed in 1978.
The law requires the Fed to report on its approach to policy, including objectives for the monetary aggregates and related projections for growth in the nation's output and in the price level over about a one-year period.
The written report and the chairman's testimony and responses to questions provide remarkable opportunities for Congress t6 understand, probe, and express its judgment about past and prospective monetary policy. One cannot really get much more accountable.
This review process has its own problems, of course. One is inherent in the subject matter. The issues are so complex, market sensitive, and politically delicate that lawmakers and the Fed have sometimes failed or been unwilling to take full advantage of the opportunity to clarify them.
In addition, changes in the nation's financial structure over the years have greatly reduced the usefulness of traditional money and credit aggregates as guideposts for policy.
Hard to Judge
As a result, Congress and the public cannot easily get a handle on the Fed's monetary strategy for the year ahead, making it hard to comment on its adequacy or to track the Fed's success in following through.
While one can attempt to judge Fed policy by the behavior of the economy and of prices, that is not completely satisfactory.
The Fed can hardly be held totally responsible for the economy's overall performance when other factors - such as fiscal policy, developments abroad, internal market dynamics, and exogenous shocks - can be equally or more important.
I do not, by the way, feel that tactical decisions by the Open Market Committee affecting the federal funds rate should be immediately announced when taken, particularly when taken in the context of a basic policy strategy that has already been publicly presented and discussed.
I would argue that tactical decisions about how to implement policy are more efficiently made if officials do not need to worry about announcement effects and the destabilizing potential for market and political second-guessing.
For all of these reasons, there is a lot to be said for Congress worrying less about the policy-making structure of the Fed or the lag in announcements, and more about whether or how the semiannual hearings and reports on policy can be made even more productive.
Mr. Axilrod is vice chairman of Nikko Securities Co., New York.