In tradeoff Federal Reserve yields to pressure for greater transparency

The Federal Reserve appears to have succeeded in fending off a challenge to the autonomy of its monetary policy decisions, but it is likely to face greater scrutiny of the actions it has taken since 2007 to prevent financial institutions from collapsing.

As part of the Senate’s debate on an overhaul of financial regulations, a consensus is shaping up for an amendment that would subject the central bank to additional audits by the Government Accountability Office.

The chief proponent, Senator Bernard Sanders, an independent from Vermont, agreed to insulate the Fed’s decision-making on interest rates from official second-guessing. But the Fed would be compelled by Dec. 1 to divulge the names of all the companies that benefited from the emergency lending programs.

The consensus seems to be generating sufficient bipartisan support to win approval. The White House, the Treasury Department and the Fed have signaled that the amendment is acceptable to them.

For the Fed’s chairman, Ben S. Bernanke, who had made it a priority to preserve the independence of monetary policy, the latest Senate proposal is a partial victory. But the debate showed that despite Mr. Bernanke’s support for greater transparency, the Fed still has a reputation for secrecy.

In speeches on the Senate floor on Thursday, lawmakers repeatedly assailed the Fed, while few came to its defense.

“At a time when our entire financial system almost collapsed, we cannot let the Fed operate in secrecy any longer,” Mr. Sanders said.

Senator Christopher J. Dodd, the chairman of the Banking Committee, was opposed to Senator Sanders’s initial proposal but has expressed support for the modified version. “When as much American taxpayer money has been exposed as has been, we have the right to know where it is going and who is involved in it,” Mr. Dodd, a Connecticut Democrat, said.

While the Fed has long been the target of populist attacks, a number of moderate senators have joined the current criticism.

“During the last two and a half years, the Fed has gone well beyond what was viewed as its historical authority,” Senator Charles E. Grassley, Republican of Iowa, said Thursday.

Senator Byron L. Dorgan, Democrat of North Dakota, said he had sent letters in July and March to Mr. Bernanke, asking basic questions of the lending programs — “What was the result? Who got the money? What were the terms and the conditions?” — without success.

A 1978 law subjected the Fed to regular G.A.O. audits of its operations and management, but exempted monetary policy from the scope of those audits.

The Fed has taken steps toward greater disclosure but is still viewed in much the same light as portrayed in William Greider’s 1987 book, “Secrets of the Temple: How the Federal Reserve Runs the Country.”

Not until 1994 did the Federal Open Market Committee, the Fed’s policy-making arm, promptly announce its decisions after each meeting. Not until 2000 did it agree to make a statement after every meeting, regardless of whether monetary policy had changed.

In 2004, the Fed shortened to three weeks the time between each meeting and the release of minutes summarizing the deliberations, but it still insists on a five-year lag before it releases complete transcripts of the discussions.

Senator Sam Brownback, a Kansas Republican, called that lag “indefensible,” saying, “In my judgment, that time limit should be reduced to no more than two years.”

J. Virgil Mattingly Jr., the Fed’s top lawyer from 1989 to 2004, said the accusation of secrecy had been “a longstanding refrain.”

By easing public access to minutes, transcripts and committee decisions, he said, Alan Greenspan, the Fed’s chairman from 1987 to 2006, reduced “the aura of secrecy around the bank.”

Mr. Mattingly added, “I think Chairman Bernanke has followed along and made further improvements. The improvements in disclosure have gone beyond what they are required to do by law.”

However, the Fed and its powerful New York arm have so far largely resisted the additional disclosures that the Sanders amendment seeks.

In 2008, Bloomberg L.P. sued the Fed under the Freedom of Information Act, seeking to compel the central bank to disclose the names of the companies that benefit from the emergency lending programs. (Several news organizations have filed briefs in support of Bloomberg. The New York Times has filed a similar suit.)

A federal judge in Manhattan ruled in Bloomberg’s favor last November, and a three-member panel of appellate judges upheld that ruling in March. But last week the Fed asked the full United States Court of Appeals for the Second Circuit to take up the case.

Robert E. Mannion, a former deputy general counsel for the Fed, said it had “essentially stonewalled” and said that greater disclosure about the lending programs was warranted.

David M. Herszenhorn contributed reporting.

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