Transcripts of the monetary policymaking body of the Federal Reserve from 2002–2008.

Mr. Chairman, I can’t support that, and I’ll tell you why. I do feel that we had an elegant solution in alternative A. I firmly believe that if we target 0 to 25 basis points—the effective funds rate we all know is trading at 1/16—it is going to create enormous backlash. It is unacceptable to me to say that the bankers will figure out how to deal with this. They can’t. Second, as far as money market funds are concerned, the expense load is usually 30 basis points. So for whatever it is worth, I will be a minority of one, but I cannot support that. Alternative A was elegant in that it made no statement. Then, and I think very important, by dwelling on this business of what our target rate is, we diminish what we’re doing, and what we’re doing is changing things fundamentally, which I fully support.

So for whatever it’s worth, I understand all the counter-arguments. Janet and I have talked about this. I know what people are going to say. I think (a) it is an unnecessary distraction, (b) it creates a potential political backlash, and (c) it is counterproductive. So I just want to state it myself straightforwardly and honestly—I may be the only person at this table, but I’ll vote against that. If you give us alternative A, I’ll vote for it. I know I’m one of 17 at this table—there are more than 17 people at this table. I apologize, but I don’t think it’s necessary to make the funds rate clear. It’s implied in what we’re doing, but alternative A gives people enough ambiguity to steer around it, and that’s my opinion. I apologize.

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