Federal Reserve Board Governor Roger W. Ferguson Jr. warned examiners against blurring the line between supervision and consulting.
"Being perceived as being like consultants is useful, but it is not an unalloyed blessing," Mr. Ferguson told the Conference of State Bank Supervisors.
Banks hire consultants for their technical expertise or objectivity, he said. But they are forced to deal with examiners, who are responsible for ensuring the bank operates safely and does not endanger the financial system.
Also, examiners owe their allegiance to the public, not the bank. And examiners have greater influence over banks than consultants because they speak for the government. Finally, he noted that consultants can err with few repercussions, while a regulatory failure can spark an economic crisis.
"We can assist institutions by identifying weaknesses, and at times we can offer views toward resolution," he said. "Ultimately, however, we are forced to supervise and regulate banks in the interest of the public."
Rep. Joseph P. Kennedy 2d, D-Mass., announced Friday that he would not seek reelection this fall.
Rep. Kennedy, who is ranking Democrat on the House Banking Committee's housing subcommittee, has frequently criticized banks and other financial services firms for neglecting consumer interests. He has also been a vocal supporter of expanding the Community Reinvestment Act.
Rep. Kennedy said a desire to spend more time with his family and his brother Michael's recent death in a skiing accident had influenced his decison.
Rep. Carolyn Maloney, D-N.Y., continues to pressure the Fed.
The House of Representatives last week passed a measure sponsored by Rep. Maloney and Rep. Robert Ney, R-Ohio, that would order the Fed to comply with the Government Performance and Results Act. This 1993 law requires federal agencies to submit five-year plans to Congress that include performance measurements.
The Fed has voluntarily complied while arguing that it is not covered by the law because it would compromise the central bank's independence in conducting monetary policy.
"Why should the nation's central bank be excused from performing to the highest standard possible?" Rep. Maloney asked in a statement.
Last month Rep. Maloney complained on the House floor that the Fed was subsidizing the check processing services it supplies to banks by deducting pension fund surpluses from its expenses.
"The Federal Reserve is using its role as competitor and regulator in the check processing system to unfairly undercut the private sector," she said.
Senate Republicans harshly criticized President Clinton's ouster of a Federal Housing Finance Board member last week.
The White House informed Lawrence U. Costiglio, who is a Democrat, that his last day on the board, which governs the Federal Home Loan Bank System, will be March 23. He has repeatedly clashed with Finance Board Chairman Bruce Morrison, who is planning an overhaul of the system's investment policies.
Sen. Alfonse M. D'Amato, chairman of the Senate Banking Committee, called the termination of Mr. Costiglio "legally dubious" and promised a "vigorous" investigation of whether the administration is trying to grab control of the independent board.
In a March 12 letter to Sen. D'Amato, Mr. Costiglio said Mr. Morrison had abused his authority and that the composition of the board "would give the administration unfettered control" of the agency.
"Any attempt to compromise the independence and integrity of the board ... is a matter of grave concern," Sen. D'Amato said.
Sen. Lauch Faircloth, R-N.C., demanded that the administration reinstate Mr. Costiglio.
"If not, this committee should think very seriously ... about whether any more Clinton banking appointees will be confirmed," Sen. Faircloth said. He added that he would oppose reform of the Federal Home Loan banks unless the chairman's power is curbed.
David Burson, staff director of the Senate Banking Committee's international finance subcommittee, stepped down March 5 to join the corporate finance and banking practice of Stinson, Mag, & Frizzell, a law firm in Kansas City, Mo. He has been succeeded by Patricia Eveland, who was legislative director for Sen. Rod Grams. The Minnesota Republican, who is chairman of the subcommittee, also named Alan Brubaker as a staff member of the parent committee. Mr. Brubaker has been an aide to Rep. Doug Bereuter, R-Neb., since January 1995.
Patrick J. Cave on Feb. 23 became assistant vice president for the Council of Federal Home Loan banks. Mr. Cave was previously banking aide to Rep. Richard Baker, R-La.
Comptroller of the Currency Eugene A. Ludwig will receive an award from the Organization for a New Equality, a civil rights group dedicated to helping lower-income people gain access to credit and capital.
The group is hosting a fete here May 21. The nonprofit organization has worked with Mr. Ludwig on the revamping of Community Reinvestment Act regulations and other projects.