Gonzalez Asks For GAO Audit Of Fed Loans
WASHINGTON - Rep. Henry B. Gonzalez, chairman of the House Banking Committee, has asked the Federal Reserve Board to submit to a congressional audit of its discount-window lending operations.
The Texas Democrat also is seeking a full accounting of $98 million in loans the Fed extended to Lincoln Savings and Loan Association, Irvine, Calif., a subsidiary of Charles H. Keating Jr.'s American Continental Corp.
The Fed made the loans to Lincoln during four months beginning in April 1989, when the thrift was seized by federal regulators. The funds were provided under a little-used "backstop funding" mechanism set up by the Bush administration to deal with liquidity crises at troubled thrifts. The loans have been repaid.
Big Depositors Favored?
Outlining his requests in a July 25 letter to Fed Chairman Alan Greenspan, Rep. Gonzalez asserted that Fed loans to shaky banks have let big depositors withdraw uninsured funds before institutions are shuttered.
To get a closer look at Fed lending to member banks, Rep. Gonzalez said, he wants the General Accounting Office, Congress' investigative arm, to audit all discount-window activity for the past five years.
He asked the Fed to name institutions - open or failed - that have tapped the discount window in the past 12 months and to disclose how much they borrowed. He is asking that such data be given monthly to his panel.
The House Banking Committee has approved legislation that would limit the Fed's ability to lend to prop up ailing banks. The Senate Banking Committee is expected to consider similar limits when it marks up its comprehensive banking reform bill.