Federal Reserve's Shift Away from Executive Committee, 1933-1955

From 1933 to 1955, the Federal Open Market Committee (FOMC) experimented with an executive committee structure that delegated some decision-making power to a smaller group of five members. The idea was for this committee to bridge the gap between policy decisions and operational executions.

This setup allowed for more frequent meetings, sometimes as often as every two weeks, compared to the FOMC's average six times a year during this period. However, delineating the boundary between policy decisions and operations proved difficult. The executive committee members sought broader authority to initiate transactions on their own accord, rather than relying on approval from the full conference.

One notable debate occurred in 1952-1953 regarding whether to intervene in the long end of the market or limit actions only to the short end. The FOMC ultimately decided to restrict the executive committee's authority to operating in the short-term market, while retaining control over decisions for longer-term securities.