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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About the Author

 

Alex J.
Pollock
  • Alex J. Pollock is a resident fellow at the American Enterprise Institute (AEI), where he studies and writes about housing finance; government-sponsored enterprises, including Fannie Mae, Freddie Mac, and the Federal Home Loan Banks; retirement finance; and banking and central banks. He also works on corporate governance and accounting standards issues.


    Pollock has had a 35-year career in banking and was president and CEO of the Federal Home Loan Bank of Chicago for more than 12 years immediately before joining AEI. A prolific writer, he has written numerous articles on financial systems and is the author of the book “Boom and Bust: Financial Cycles and Human Prosperity” (AEI Press, 2011). He has also created a one-page mortgage form to help borrowers understand their mortgage obligations.


    The lead director of CME Group, Pollock is also a director of the Great Lakes Higher Education Corporation and the chairman of the board of the Great Books Foundation. He is a past president of the International Union for Housing Finance.


    He has an M.P.A. in international relations from Princeton University, an M.A. in philosophy from the University of Chicago, and a B.A. from Williams College.


  • Phone: 202.862.7190
    Email: apollock@aei.org
  • Assistant Info

    Name: Emily Rapp
    Phone: (202) 419-5212
    Email: emily.rapp@aei.org

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