WASHINGTON -- House Banking Committee Chairman Henry B. Gonzalez reprimanded the Federal Reserve on Thursday for paying employees' membership fees in private organizations.
According to documents obtained by Congress, the Fed spent $346,257 in 1990 on private memberships. While many of the expenditures were for professional groups like the American Bar Association and the American Economics Association, others went to social and civic groups like the Rotary Club, Toastmasters, and Boy Scouts.
In a letter to Fed Chairman Alan Greenspan, the Texas Democrat urged that the entire organization's policy be brought in line with that of the federal government.
Done at District Level
Fed spokesman Joseph Coyne said the Washington-based Board of Governors already follows federal standards on private memberships: Government agencies cannot pay for them unless specific exceptions are made by Congress.
Each of the 12 district banks has its own Policy on such memberships, he said, but in general they pay only for those that serve the interests of the Fed.
"Selecting favored clubs and associations is not a proper function for the central bank," said Rep. Gonzalez.
Data given to Congress on Fed expenditures show $38,403 for memberships at the New York Fed alone in 1990, a congressional staff member said. The Omaha branch of the Kansas City Fed, an outpost with fewer than 200 employees, spent $2,324 on memberships.
Business Purpose Required
At the Kansas City Fed, "there's got to be a business purpose that benefits the Fed and ultimately the public," said the district bank's spokesman, Barry Robinson.
Rep. Gonzalez's reprimand was the latest in a series of attacks on the central bank. He recently criticized the high salaries paid to district bank presidents, and said the Fed is lax in hiring women and minorities.
"Because the Federal Reserve budget does not require a congressional appropriation, the banking committee has an even stronger obligation to closely monitor it," he wrote to Mr. Greenspan.
Rep. Gonzalez also expressed concern on Thursday about the Fed's use of outside consultants, which he said cost nearly $9 million in 1990. He indicated he would be looking more closely at the practice in the future.