Visitation Rights

I've written in the past about Federal Reserve chief Alan Greenspan and his current propensity to visit the White House far more often than either he has or his predecessors have during previous administrations. In Barron's this weekend (link here, with a HT to Barry Ritholtz here) Alan Abelson provides an important and distressing update:

AS A FOOTNOTE, we hark back to May 24 of last year, when we penned a blurb describing some neat research done by Kenneth Thomas, who has done time in academia as a professor and is currently a lecturer in finance at the Wharton School at the U. of Penn. Through dogged persistence and crafty sleuthing, he discovered that in the three years through 2003, Mr. Greenspan had visited the White House 67% more often than he had graced it during the '96-'98 stretch of Mr. Clinton's tenancy.

As we remarked at the time, it was always possible that the markedly fewer visits might have reflected the fact that Mr. Clinton was engaged in other pursuits in the Oval Office during that particular period. But Dr. Thomas felt that Mr. Greenspan's habitual journeys to the White House was evidence of his being too tight with Mr. Bush, at the very least lending the appearance that the supposedly independent Fed was being excessively influenced by the president.

Dr. Thomas reported to us recently that Mr. Greenspan's visits to the First Residence began to drop off noticeably from 26 in the first half of last year to 20 in the second half and 19 in the first half of this year. Pure coincidence, we're sure, that the chumminess between Mr. G and Mr. B started to chill when the Fed began its serial hikes in interest rates.

Strangely, too, after Dr. Thomas went public with his findings in '04, he ran into what he calls big problems trying to extract further such info from the Fed via Freedom of Information Act requests. Even though he had been getting detailed logs of White House visitors for five years without trouble, the Fed suddenly refused to reveal the names of the visitors. Seemingly, from a policy leaning toward transparency, Greenspan & Co. quietly switched to one favoring opacity.

"I can only hope," Dr. Thomas says, "that Ben Bernanke is a little more open to disclosure" and less prone to visit the White House. We hope so, too, but feel constrained to advise him not to get his expectations up. Disclosure is decidedly not the fashion in Washington these days.

These are not wonkish, petty details. The Federal Reserve was created specifically to keep the levers of money creation safe from the whims of elected public officials, and we've learned painful lessons in the past about what happens when that separation fails. For one example, listen to this private conversation between a President and a Fed chief that occurred shortly before that President was re-elected (thanks partly to the actions of that Fed chief) and the U.S. economy fell off a cliff.

Why would either the Federal Reserve or the White House or both want to conceal basic, previously FOIA-accessible details about their relationship?