Prof. Jayanth R. Varma’s Financial Markets Blog

A blog on financial markets and their regulation

Financial Regulators and the Media

Nouriel Roubini’s Global Economics Blog has an aside on the
interaction of Fed Chairmen with the media.

In 1987, the relatively inexperienced Greenspan did not know how to
properly communicate his message and he rattled markets. He presented
his views in the wrong forum by giving an interview to a Sunday
television news show where he expressed his concerns about inflation;
the next day stock markets sharply wobbled. He learned his lesson,
realized the risks to his reputation, made a mea culpa, never again
gave a TV interview for the following 20 years and became altogether
Delphic in his public pronunciations. Ditto for Bernanke: after a
congressional testimony on April 27th that was read by investors as
dovish, he made the famous flap with CNBC anchor Maria Bartimoro
telling her that he had been misunderstood and was more hawkish than
the market perceived him. The next day – when Bartimoro reported
this – equity markets sharply contracted and Bernanke’s reputation
was shaken. Bernanke then made his own public mea culpa and you can be
sure that – like Greenspan – he will never speak again to any TV
reporter, either in private or in public.

This set me thinking about the issue of financial regulators
interacting with the media. Should the selective disclosure
regulations that apply to corporate managements apply to financial
regulators? In principle, I think the answer is yes. The ideal
solution would be for every financial regulator to maintain a blog and
use that as the primary means of communicating with the outside
world. If the regulator wants to respond to a reporter’s query,
the response should be on the blog with due credit to the reporter who
raised the query. If the media wants sound bytes and visuals that is
fine so long as the regulator does not go beyond what is there on the
blog. If there is any deviation, that should hit the blog very

Transparency is imperative and a blog is today the most transparent
medium available.


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