Greenspan Faults GAO Report on Fed
The Federal Reserve Board yesterday rejected all but a few of the budget and management criticisms leveled at the central bank recently in a draft report on its operations by the General Accounting Office.</br></br>In a letter sent last week to the GAO and made public yesterday, Fed Chairman Alan Greenspan said the board ÛÏtakes exception to the broad implication of the draft report that the Federal Reserve has not exercised appropriate budget constraint and that it has not adequately addressed the changing technological and financial environment within which it operates.</br></br>ÛÏWe at the Federal Reserve recognize that expending taxpayersÛª funds outside of the appropriations process places a special obligation on us to be particularly diligent in the use and application of such funds," Greenspan said. The Fed finances its operations from interest it receives on its huge holding of U.S. Treasury securities, which backs the nationÛªs paper money, and 'from services it sells to private financial institutions and the Treasury.</br></br>47.6	percent from 1988 to 1994, the period covered by the GAO report. During the same period, discretionary federal spending rose only 17 percent. But Greenspan said that declining defense spending greatly affected that 17 percent figure. Non-defense discretionary spending rose 50.9 percent, he noted.</br></br>Greenspan also said that part of the increase in its budget since 1988 was due to added responsibility for supervision of U.S. operations of foreign banks, a ÛÏmajor upgradingÛ of Fed computer systems and the need to hire highly sidlled personnel to keep up with rapid changes in private financial markets. Meanwhile, as a result of automation and a decline of check processing volumes, several hundred other jobs have