WASHINGTON -- For Federal Reserve Board Chairman Alan Greenspan, even praise from House Banking Committee Chairman Henry B. Gonzalez can wind up feeling like a slap in the face.
The Texas Democrat, who chairs the House Banking Committee, praised Mr. Greenspan and the other governors last week for promptly notifying the public of their recent short-term interest rate hike.
But, then came the slap. Rep, Gonzalez said if the governors can inform the public so quickly about monetary policy issues, then they should be able to tell the people about their foreign currency interventions just as soon.
"Federal Reserve Chairman Greenspan's objections to prompt release of certain interventions in the foreign exchange market to news wire services are reminiscent of what he and other Fed officials said last year about prompt disclosure of domestic monetary policy changes," Rep. Gonzalez said in a Aug. 25 statement.
Rep. Gonzalez followed up his statement with a letter to Mr. Greenspan in which he blasted the Fed's handling of foreign exchange operations.
He began by criticizing Mr. Greenspan's failure to resolve a question from an earlier letter calling on the Fed to cut costs in order to cover the $15,000 needed to reconcile the foreign currency accounts.
Rep. Gonzalez then accused Mr. Greenspan of misstating an earlier request that the Fed notify the media every time it completes a foreign currency intervention. He said his suggestion, contrary to Mr. Greenspan's interpretation, never applied to interventions the Fed needs to keep secret.
Instead, the Fed should notify the press once the other party learns of the transaction. He said immediate Fed notification would eliminate the advantage the company with the information could gain.
Finally, the congressman reiterated his view that the Fed lacks the legislative authority to conduct foreign currency interventions.
Rep. Gonzalez asked Mr. Greenspan to respond within two weeks. Fed spokesman Bob Moore declined to comment on the letter.