Federal Reserve Bank under Fire: Big Spending, Bad Management, Politics Fuel Scrutiny
Woellert, Lorraine, Hill, Patrice, The Washington Times (Washington, DC)
The Federal Reserve Bank, an institution that has operated with freewheeling independence for 83 years, lately has been feeling the pressure of public scrutiny.
The nation's central bank has been under fire in recent months from a faction on Capitol Hill and criticized in at least two government audits.
So far there's no consensus on what's at the root of all the attention, but there are at least two schools of thought: systemic mismanagement and overspending, and election-year politics.
Rep. Henry B. Gonzalez, Texas Democrat and ranking minority member of the House Banking and Financial Services Committee, has been leading the Hill's assault against the bank, as he did routinely when he was the committee chairman. This week he released a General Accounting Office draft report that said monthly reports at the Fed's Los Angeles office were routinely inaccurate and that bank management directed the filing of the incorrect reports.
"The [Los Angeles] bank's inability to precisely summarize currency activity from its cash inventory records raises serious questions about the integrity of its accounting and internal controls," the GAO reported. "The Federal Reserve Board needs to take appropriate steps to assure itself that such problems do not exist in the accounting and internal controls at other Federal Reserve banks."
That was just one of the problems the GAO uncovered. A June report detailed a system of overspending and mismanagement and spotlighted the Fed's propensity for building big new offices and flying executives around with a fleet of 47 Learjets.
The GAO called the Fed "increasingly expensive to operate," pointing out that between 1988 and 1994 its operating costs rose 48 percent to $2 billion.
During that time, the rest of the federal government shed about 2 percent of its workers, while staffing at the Fed increased about 4 percent, the GAO reported. Salary costs went up about 44 percent, compared with an increase of 33 percent for the federal government.
Fed Chairman Alan Greenspan has pointed out that Congress greatly increased the Fed's workload during that time. …