The Federal Reserve would no longer regulate banks under sweeping legislation to be introduced next year by Rep. Henry B. Gonzalez, D-Tex.
Rep. Gonzalez, chairman of the House Banking Committee, will propose limiting the Fed's role strictly to monetary policy.
"We should divest the Fed of the regulatory weights that it cannot handle well and still do monetary policy," he said in an interview.
Regulation of banks would be vested in a new superregulatory agency.
Other changes contemplated:
* All 12 regional bank presidents would have to be confirmed by the Senate, and their pay would be cut to less than the $129,500 that Alan Greenspan receives. Some are now paid double that amount.
* The General Accounting Office would audit the Fed, and the Fed's annual budget would become public.
* Minutes of Federal Open Market Committee meetings would be published in 60 days.
* Congress would become the overseer of the Fed's $30 billion "swap" fund, which is used to intervene in foreign exchange markets.
Is he tilting a windmills?
"It's going to be difficult, but that's no reason for not trying," said the congressman.
Rep. Gonzalez is not to be underestimated. He already has some ammunition to use against the Fed. He said recent minutes from meetings of the 12 district banks show expense items that "raise an eyebrow and thus warrant public scrutiny."
He said the Fed has paid relocation expenses of some employees in excess of 20% of their salaries. One payment was $181,000, including a $40,000 income tax reimbursement.
Club Fees Paid
He said they also pay club memberships, including Rotary, and wants to know how these activities are essential to central-bank functions.
Rep. Gonzalez also wants details of the cost of check clearing and money handling so the public can judge how efficiently the Fed is managing costs.
Rep. Gonzalez had some harsh words for the regional bank boards, accusing them of "making a sham out of the public participation and director diversity concepts" promoted by the Federal Reserve Reform Act of 1977.
The Fed, in keeping with its tradition of secrecy, had no comment.