Magazine article American Banker

GAO Chief Urges Safeguards on Any Expanded Audit of Fed

Magazine article American Banker

GAO Chief Urges Safeguards on Any Expanded Audit of Fed

Article excerpt

WASHINGTON -- Comptroller General Charles A. Bowsher told Congress Wednesday that his agency could expand its role in auditing the Federal Reserve, but said safeguards should be legislated to maintain the central bank's independence.

Among other precautions, Mr. Bowsher said the General Accounting Office should be prohibited from disclosing confidential documents and should be subject to certain time delays in receiving access to some information from the Fed.

"With these safeguards, we could not use our expanded authority to undertake contemporaneous reviews of the Federal Reserve's monetary policy decision-making functions," he said.

Disruption of Markets

"Also, immediate disclosure of information about Federal Reserve decisions in a situation such as the stock market break of October 1987, might not be in the public interest because it could disrupt the financial markets," he added.

Mr. Bowsher did not urge expansion of the GAO's role in auditing the Fed, saying only that its access to information should be "commensurate with the types of audits Congress wants us to do."

He did say, however, that a proposal to require financial audits of the district Federal Reserve banks and the board of governors would be useful.

"If the restrictions on our access were removed, we would be better able to assess the quality of financial controls and auditing in the Federal Reserve System and make recommendations for improvements," he said.

House Banking Committee chairman Henry B. …

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