While Eric Berliner's March 13 Commentary (Fed's Construction Spree Shows Reengineering Need, page 6) identified several important issues that should be and, in fact, are being closely studied by the Federal Reserve System, his article contains a number of inaccurate and misleading statements and incorrectly portrays the Federal Reserve as costly and inefficient in its operations.

Mr. Berliner implies that the vast majority of the Federal Reserve's resources are devoted to check and other competitive financial services. In fact, less than one-third of our total expenses are related to priced services. The Federal Reserve recovers all of its costs of providing these payment services to depository institutions through the fees we charge to institutions that use them. Our prices are set also to recover other costs, such as taxes, that would have been incurred and profits that would have been expected had the services been provided by a private firm. Consequently, our priced services have consistently contributed to the amount we have transferred to the Treasury. During the past decade, the Federal Reserve's priced services revenue has exceeded operating costs by almost $1 billion.

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