WASHINGTON -- Federal Reserve Chairman Alan Greenspan has warned members of the Federal Open Market Committee against leaking policy decisions to the press.
Mr. Greenspan said that if the leaks don't stop, the Fed will reconsider its policy of waiting six weeks before releasing a summary of the committee's previous meeting.
House Banking Committee Chairman Henry B. Gonzalez made an issue of FOMC leaks to news organizations several weeks ago.
Mr. Greenspan wrote to the Texas Democrat on July 20, saying "unauthorized release of FOMC proceedings through unofficial channels is unfair to the public, is potentially disruptive of the policymaking process, end erodes public confidence in the Federal Reserve."
Rep. Gonzalez released the letter to the press on Monday.
"I have discussed the issues raised by the recent developments with members of the board and Federal Reserve bank president," Mr. Greenspan told Mr. Gonzalez.
Mr. Greenspan also said that the Fed believes current policies are "soundly based," and earlier release on monetary policy decisions would reduce the committee's "flexibility and willingness to make needed adjustments in policy or in the directive guiding policy."
Rep. Gonzalez, a frequent critic of the Federal Reserve, has introduced legislation to force the Fed to release a videotape of Federal Open Market Committee meetings 60 days afterward. And recently, as leaks have increased, he has advocated requiring the FOMC to meet on a Friday and release a summary of that meeting on the next Monday.
"Financial markets do not work well when inside information, including detailed leaks, are given to a privileged few," he told Mr. Greenspan in a letter Monday.
In the letter, Rep. Gonzalez also asked the Fed to encourage banks to tell small-business borrowers that their advertised prime lending rates are not necessarily the lowest rates they offer. He called the practice of offering some business customers lower rates than their published prime rates "deceptive."
But in a letter, Mr. Greenspan rebuffed the congressman's suggestion.