Fed Reserve Banks Have Own Rules

Sir, Your report "Greenspan praises law rushed in to improve corporate governance" (May 16) quotes Alan Greenpsan, chairman of the Federal Reserve, as saying that the Sarbanes-Oxley Act, which looks to most of us like the cause of a morass of unproductive bureaucracy, seems to him "surprisingly successful".

It should follow from Mr Greenspan's remarks with ineluctable logic that he will now impose upon the Federal Reserve Banks the same Sarbanes-Oxley Act he praises, so that they too can enjoy its remarkable advantages.

No doubt this announcement will be made shortly.

Currently, the Federal Reserve banks do not even follow Generally Accepted Accounting Principles in their own financial statements. While GAAP is required of everybody else, the Federal Reserve banks choose to follow their own special accounting rules created by the Federal Reserve itself.

Getting in compliance with Sarbanes-Oxley may cause them a good bit of work and expense, but I am sure they are eager to begin the process.

Alex J. Pollock is a resident fellow at AEI.

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