Rebutting a report this week from the General Accounting Office, Federal Reserve Chairman Alan Greenspan told lawmakers Tuesday that his agency has held the line on expenses.

At his renomination hearing before the Senate Banking Committee, Mr. Greenspan said the Fed's increasing oversight duties and technology expenses are to blame for the 50% increase in operating expenses from 1988 to 1994.

"I find it extraordinary that our expenditure increases have not been substantially more," he said.

Lawmakers also quizzed nominees to the Fed board - Alice M. Rivlin, director of the Office of Management and Budget, and Laurence H. Meyer, a Washington University economics professor. Though Mr. Greenspan fielded several questions about bank regulation, Ms. Rivlin and Mr. Meyer were asked mainly about their views on the economy.

Both Ms. Rivlin and Mr. Meyer begged off when Sen. Alfonse M. D'Amato, the Banking Committee chairman, asked if they support forcing banks to buy private deposit insurance in return for permission to offer higher risk investment products than now allowed.

"That's an idea worthy of consideration," said Ms. Rivlin, nominated to be the Fed's vice chairman.

Mr. Meyer said he is still brushing up on bank regulation. "I am now involved in a crash course in these areas," he said.

Republican committee members were quick to praise all three nominees and predicted their swift confirmation. The committee plans to vote on the nominations Wednesday.

"President Clinton's renomination of Chairman Greenspan is well deserved," said Sen. D'Amato.

"Every one of these nominees deserves to be confirmed," said Sen. Phil Gramm, R-Texas.

Sen. Paul Sarbanes, the panel's ranking Democrat, pressed Mr. Greenspan to explain the GAO's report, which showed that Fed expenses rose at twice the rate of inflation during the six-year period.

Mr. Greenspan, who said his agency keeps a close eye on spending, defended the Fed's $3.7 billion surplus to cover potential future losses. He also opposed GAO suggestions that the Fed recoup some of its costs by imposing exam fees on state-chartered banks. The proposals were included in a draft of the congressional watchdog's report on the Fed released Monday.

"At the moment, on average, state members pay a total level of fees greater than national banks are charged," he said.

In later questioning, Mr. Greenspan rejected suggestions that the rapid pace of bank mergers is reducing credit available to small business. Nevertheless, he pledged to monitor small-business lending.

"If we detect small-business lending problems as a result of the consolidating industry, I can assure it will get our attention quickly and we will take remedial measures," he said.

Mr. Greenspan also denied that the $800 billion of outstanding credit- card debt is posing a risk to banks or the economy.

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