Senate Banking Committee Chairman Alfonse M. D'Amato Thursday asked Chairman Alan Greenspan to explain the Federal Reserve Board's supervision of Daiwa Bank Ltd.'s New York branch, which has disclosed $1.1 billion in trading losses that had been building for 11 years.
The New York Times quoted an anonymous official of the Federal Reserve Bank of New York as saying his office discovered problems at Daiwa in 1992.
Sen. D'Amato asked Mr. Greenspan to detail what corrective measures were ordered after violations were discovered and explain why the Fed waited a year after poor controls were discovered to conduct a follow-up exam.
"I am astounded that the Federal Reserve did not require immediate correction of the problem and, once detected, allowed it to continue for over three years," Sen. D'Amato wrote.
Sen. D'Amato also called for more stringent regulation of foreign banks operating in the United States. "It is time to reexamine the current structure of foreign bank supervision," he wrote.