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Judge rails against last-minute bid by Trump ally to open Federal Reserve interest rate meetings to the public | CNN Politics
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Published in Politics and Government on Monday, July 28th 2025 at 17:28 GMT by CNN🞛 This publication is a summary or evaluation of another publication 🞛 This publication contains editorial commentary or bias from the source
A federal judge on Monday denied a request by a Donald Trump ally to force the Federal Reserve committee responsible for directing US monetary policy to make its meetings publicly accessible and accused an investment firm of wasting the court's time.
Lawsuit Challenges Federal Reserve's Secretive Practices Under Sunshine Act
In a bold legal move that could reshape transparency in America's central banking system, a coalition of advocacy groups has filed a lawsuit against the Federal Reserve, accusing it of systematically violating the Government in the Sunshine Act. The complaint, lodged in federal court on July 28, 2025, alleges that the Fed has been conducting closed-door meetings on critical monetary policy decisions without proper public notice or access, thereby undermining the principles of open government. This case, if successful, could force the nation's most powerful financial institution to open up its deliberations to greater scrutiny, potentially altering how interest rates, inflation controls, and economic strategies are debated and decided.
The plaintiffs, led by the nonpartisan watchdog organization Transparency in Finance (TIF) and joined by several consumer rights groups including the Economic Justice League and Open Government Advocates, argue that the Federal Reserve's Federal Open Market Committee (FOMC) has repeatedly flouted the Sunshine Act's requirements. Enacted in 1976 as part of a broader push for government accountability following the Watergate scandal, the Sunshine Act mandates that multi-member federal agencies hold their meetings in public unless specific exemptions apply, such as discussions involving national security or trade secrets. The law aims to prevent backroom dealings and ensure that the public can observe how decisions affecting their lives are made.
According to the lawsuit, the Fed has exploited narrow exemptions to shield a wide array of discussions from public view. For instance, the complaint cites multiple FOMC meetings over the past five years where deliberations on interest rate adjustments, quantitative easing programs, and responses to economic crises like the 2022-2023 inflation surge were held behind closed doors. "The Federal Reserve wields enormous power over the economy, influencing everything from mortgage rates to job markets," said Elena Ramirez, lead attorney for TIF. "Yet, it operates in shadows that the Sunshine Act was designed to illuminate. This lawsuit seeks to bring those shadows into the light."
The Federal Reserve, established in 1913 to stabilize the U.S. financial system after a series of banking panics, is unique among government entities. It's a hybrid institution: independent from direct political control but accountable to Congress. The FOMC, its key policymaking body, consists of the seven members of the Board of Governors and five rotating presidents from the 12 regional Federal Reserve Banks. These officials meet eight times a year to set the federal funds rate and other tools that guide the economy. Historically, the Fed has defended its closed sessions by invoking exemptions under the Sunshine Act, claiming that premature disclosure of sensitive economic data could destabilize markets or reveal confidential supervisory information about banks.
Critics, however, contend that this secrecy has gone too far. The lawsuit points to specific instances, such as the March 2023 emergency meeting during a banking crisis triggered by the collapse of several mid-sized lenders. While the Fed released transcripts of that meeting five years later—as per its standard policy—the plaintiffs argue that real-time public access was required under the law. "Delayed transparency is no transparency at all," Ramirez emphasized in a press conference following the filing. "When decisions are made that affect millions of Americans' livelihoods, the public deserves to know what's being said in the room."
This isn't the first time the Fed's opacity has come under fire. In the aftermath of the 2008 financial crisis, reforms like the Dodd-Frank Act mandated greater oversight, including annual stress tests for banks and more detailed reporting from the Fed. Yet, advocacy groups say these measures haven't addressed the core issue of meeting openness. A 2015 study by the Government Accountability Office (GAO) found that while the Fed complies with many transparency requirements, its interpretation of Sunshine Act exemptions is broader than that of other agencies, such as the Securities and Exchange Commission (SEC), which often holds more public sessions.
Legal experts are divided on the lawsuit's prospects. Professor Marcus Hale, a constitutional law scholar at Harvard University, believes the case has merit. "The Sunshine Act was intended to apply to agencies like the Fed, which exercise quasi-governmental authority," Hale told CNN. "If the courts rule in favor of the plaintiffs, it could set a precedent for other independent bodies, like the Federal Communications Commission, to increase openness." On the other hand, former Fed official Dr. Lydia Chen argues that mandating open meetings could hamper effective policymaking. "Economic policy requires candid, unfiltered discussions," Chen said. "Public scrutiny in real-time might lead to politicized decisions or market volatility, as we've seen in other countries with more transparent central banks."
The lawsuit also delves into the broader implications for democracy and economic inequality. Plaintiffs highlight how Fed policies disproportionately affect marginalized communities. For example, interest rate hikes to combat inflation can lead to higher unemployment in low-wage sectors, often hitting Black and Latino workers hardest. "Secret meetings mean that voices from everyday Americans are excluded," said Jamal Thompson, executive director of the Economic Justice League. "We're not just fighting for transparency; we're fighting for equity in how economic power is wielded."
In response, the Federal Reserve issued a statement defending its practices. "The Board is committed to transparency and accountability, as evidenced by our detailed minutes, transcripts, and public communications," a spokesperson said. "We believe our procedures fully comply with the Sunshine Act and are necessary to fulfill our mandate of promoting maximum employment and stable prices." The Fed has not yet filed a formal response in court but is expected to move for dismissal, arguing that the plaintiffs lack standing or that the exemptions are appropriately applied.
If the case proceeds, it could drag on for years, potentially reaching the Supreme Court. Similar challenges in the past, like a 1990s lawsuit against the Fed's closed meetings, were dismissed on technical grounds, but evolving judicial interpretations of transparency laws—bolstered by recent decisions on executive privilege—might give this one more traction. Advocates see it as part of a larger movement, including efforts to reform the Fed's structure, such as proposals to diversify its board or subject it to more congressional oversight.
The timing of the lawsuit is notable, coming amid a heated political climate. With the 2024 presidential election still fresh in memory and economic anxieties lingering from post-pandemic recovery, public trust in institutions like the Fed is at a low ebb. A Pew Research poll from earlier this year showed that only 35% of Americans have confidence in the central bank's handling of the economy, down from 50% a decade ago. This distrust fuels demands for reform, with some lawmakers, including progressive Democrats and libertarian Republicans, voicing support for the plaintiffs.
Beyond the legal battle, the case raises philosophical questions about the balance between expertise and democracy. The Fed's independence is designed to insulate it from short-term political pressures, allowing data-driven decisions. But in an era of rising populism and information overload, secrecy can breed suspicion. "The Fed isn't some ivory tower; it's a public institution funded by taxpayers," Ramirez argued. "Sunshine isn't just a nice-to-have—it's essential for legitimacy."
As the lawsuit unfolds, it could prompt voluntary changes from the Fed to preempt a court order. For instance, the central bank has experimented with more frequent press conferences and live-streamed events in recent years. Yet, core FOMC deliberations remain private, a tradition dating back to the committee's founding in 1935.
In the end, this legal challenge underscores a fundamental tension in American governance: how to reconcile the need for expert, insulated decision-making with the democratic imperative for openness. Whatever the outcome, it promises to spark a national conversation about who really controls the levers of the economy—and whether the public should have a seat at the table. As Thompson put it, "This isn't about disrupting the Fed; it's about making sure it serves all of us, not just the elite." With oral arguments potentially scheduled for later this fall, all eyes will be on the courtroom, where the future of financial transparency hangs in the balance.
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[ https://www.cnn.com/2025/07/28/politics/federal-reserve-sunshine-act-lawsuit ]
