Housing Banking Committee Chairman Henry B. Gonzalez is focusing his eagle eyes on the Fed, and the central bank may never be the same.
The tenacious Texas Democrat is pecking at the Fed's periphery just now, but he plans to give the institution a great deal of attention next year.
He's keeping his agenda close to the vest, but more than likely he'll look into the role of the 12 regional presidents at Federal Open Market Committee meetings and the Fed's legendary secrecy.
A Nose for Scandal
When Mr. Gonzalez dips his claws in the water, he usually comes up with a big fish. His savings and loan hearings made Charlie Keating a household name, and his one-man crusade to expose illegal loans to Iraq by Italy's Banca Nationale del Lavoro have uncovered what appears to be a major scandal involving the Justice Department, the FBI, and the CIA.
Mr. Gonzalez attacked the Fed's penchant for confidentiality earlier this month, proposing that it videotape Federal Open Market Committee meetings for eventual public release.
His current gripe is "the deceptive practice that leads borrowers to believe that the prime rate is the lowest rate available, when in reality 75% of short-term business loans are made at a rate much lower than the current prime rate of 6%.
He says the Fed should make banks publish their lowest rates to be fair to small and midsize businesses instead of advertising a made-up base rate. To do otherwise is price discrimination, he says.
"Bank regulator should encourage a freely functioning loan market for bank lending, one that gives full and accurate information to all borrowers, based on an individual bank's cost of funds and competitive proficiency," he said.