WASHINGTON — A month after lawmakers voted in large numbers to require the Federal Reserve Board to name the companies borrowing from the discount window, Chairman Ben Bernanke is forging a compromise that would meet them halfway.
In testimony Tuesday to the Joint Economic Committee, Bernanke said the Fed would soon release more details on how many institutions borrow from the central bank's lending facilities, what kind of collateral they are posting and more information on the private firms that help manage the liquidity programs.
The announcement comes as a growing number of lawmakers are complaining about the deluge of cash the Fed has funneled into markets during the financial crisis with virtually no say from Congress.
In an effort to tamp down that anger, Bernanke renewed his commitment to explaining the Fed's actions.
"The Federal Reserve remains committed to transparency and openness and, in particular, to keeping the Congress and the public informed about its lending programs and balance sheet," he told the panel. "Over time, we expect to continue to expand the range of information on our Web site as our review of disclosure practices proceeds."
The Fed chief also discussed the stress test results regulators are set to release this week and the broader state of the economy. But his comments on transparency were particularly notable as the Fed works to head off more extreme proposals.
"The Fed clearly recognizes the benefits of transparency, but at the same time, particularly in this environment, I don't think the Fed wants to take the chance of naming individual institutions going to the window for fear of another round of bank panic," said Kevin Jacques, the chairman of finance at Baldwin-Wallace College in Berea, Ohio. "This could be successful in fending off any future attempts from Congress."
The issue of disclosure of Fed activities spilled into the open last month as the Senate debated a budget resolution. An amendment sponsored by Sens. Bernie Sanders, I-Vt., and Jim Bunning, R-Ky., which required the Fed to publish details on all of its lending efforts, was supported by 59 senators. Though the amendment was nonbinding, it demonstrated how low the Fed's stock had sunk in Congress.
Working to repair that relationship on Tuesday, Bernanke repeatedly emphasized his willingness to share information with lawmakers.
"If Congress needs more information about the operations we are doing, how we manage our collateral and lending, I think we can work with you on that," he told the panel.
But Sens. Sanders and Bunning were left unimpressed.
"If Mr. Bernanke does not accept what we did in the budget resolution, we will pass it again in a stronger form," Sen. Sanders said in a statement.
Sen. Bunning said that Bernanke's comments may have sufficed before the Fed introduced its myriad liquidity programs.
"These are not normal times," he said in a statement. "If the Fed is using its printing press for backdoor bailouts and fiscal policy, ... we need to know exactly who the money is going to."
But Sen. Richard Shelby, the top Republican on the Senate Banking Committee, who co-sponsored a less extreme budget amendment enhancing Fed disclosures, seemed pleased.
The Alabama Republican "believes strongly that the Federal Reserve must be more transparent with the American people about its vastly expanded activities," a spokesman said. "There is legitimate concern, however, that identifying individual companies that access the Fed's various liquidity facilities could further destabilize our already fragile financial situation."
Bernanke was careful not to divulge how many banks regulators plan to say need more capital on Thursday when the results of stress tests are released. But he did express confidence that any bank that requires more capital will be able to find it from private sources or preferred stock conversions but not the Treasury Department.
"I've looked at many of the banks, and I believe that many of them will be able to meet their capital needs through either issuance of new capital or conversions or the sale of assets," he said.
Regulators first told the nation's 19 largest banks on April 24 how they did in the stress tests. Since then, Bernanke said regulators have been willing to work with banks on any "misunderstandings," but he said the discussions have not been negotiations.
"We have reviewed those data, looked at the numbers and assumptions and have now satisfied ourselves that the data we have is accurate," he said.
Bernanke was also subjected to tough questioning from Sen. Charles Schumer on credit cards. The New York Democrat took Bernanke to task for refusing to move up the effective date for rules that ban unfair and deceptive card practices. The rules are slated to take effect in July 2010 and in a letter Monday to Schumer, Bernanke said the Fed believes "issuers must be afforded sufficient time for implementation."
That decision, Schumer told Bernanke, was "unconscionable."
Bernanke responded that he shared Schumer's frustration but found himself balancing many competing priorities.
"My real quandary is how can we best help consumers in ways that don't create worse problems in the market," he said. "That's the issue I'm still grappling with."
The Fed chief also rejected claims from Kenneth D. Lewis, Bank of America Corp.'s chief executive, that Bernanke and then-Treasury Secretary Henry Paulson pressured the Charlotte banking company not to publicly disclose its concerns about acquiring Merrill Lynch & Co. Inc.
"I did not in any way ask Mr. Lewis to obscure any disclosures or fail to report any information that should be reported," Bernanke told the panel.
He also offered lawmakers access to the Fed's notes and documents concerning B of A's Merrill acquisition.