authority of the government accountability office ( gao ) over the federal reserve has recently been discussed. as you know, the federal reserve is subject to frequent audits by the gao on a broad range of our functions. for example, the supervisory and regulatory functions of the federal reserve are subject to audit by the gao to the same extent as the supervisory and regulatory functions of the other federal banking agencies. thus, the gao has full authority to – and does in fact – audit the manner in which the federal reserve supervises and regulates bank holding companies on a consolidated basis. moreover, if the congress were to provide the federal reserve with responsibility for serving as the consolidated supervisor of systemically important financial firms that are not bank holding companies, the gao would, under existing law, have full authority to audit the federal reserve ’ s supervision and regulation of such firms as well. we would expect the gao to actively use that authority, as it does today. indeed, as of june 29, 2009, the gao had 19 engagements under way involving the federal reserve, including 14 that were initiated at the request of the congress. in addition, since the beginning of 2008, the gao has completed 26 engagements involving the federal reserve, including engagements related to the basel ii capital framework, risk - management oversight, the bank secrecy act, and the board ’ s regulation b, which implements the equal credit opportunity act. the congress also recently clarified the gao ’ s ability to audit the term asset - backed securities loan facility ( talf ), a joint treasury - federal reserve initiative, in conjunction with the gao ’ s reviews of the performance of treasury ’ s troubled asset relief program ( tarp ). the federal reserve has been working closely with the gao to provide that agency with access to information and personnel to permit it to fully understand the terms, conditions, and operations of the talf so that the tarp can be properly audited. at the same time, the congress granted the gao new authority to conduct audits of the credit facilities extended by the federal reserve to “ single and specific ” companies under the authority provided by section 13 ( 3 ) of the federal reserve act, including the loan facilities provided to, or created for, american international group and bear stearns. these facilities are markedly different from the widely available credit facilities – such as the discount window access for depository institutions, the primary dealer credit facility, and the commercial paper funding facility – that the federal reserve either has historically used or has recently established to address broad credit

alan greenspan : federal deposit insurance reform testimony of mr alan greenspan, chairman of the board of governors of the us federal reserve system, before the committee on banking, housing, and urban affairs, u. s. senate, 23 april 2002. * * * chairman sarbanes, senator gramm, it is a pleasure to appear before this committee to present the views of the board of governors of the federal reserve system on deposit insurance reform. i will be addressing general reform issues, as proposed by the federal deposit insurance corporation ( fdic ) in the spring of 2001, rather than any specific bill. consequently, i will be expressing the broad views of the federal reserve board on the issues associated with modifications of deposit insurance. at the outset, i should note that last year's fdic report highlighted the significant issues and developed an integrated framework for addressing them. in broad terms, while the board opposes any increase in coverage, we support the framework for other reform issues that the fdic report constructed. benefits and costs of deposit insurance deposit insurance was adopted in this country as part of the legislative framework for limiting the impact of the great depression on the public. in the environment of the record number of bank failures of the time, deposit insurance in this country was designed mainly to protect the unsophisticated depositor with limited financial assets from the loss of their modest savings. references were made to the " rent money " and the initial 1934 limit placed on deposit insurance was $ 2, 500, promptly doubled to $ 5, 000, a level maintained for the next sixteen years. i should note that the $ 5, 000 of insurance coverage in 1934, consistent with the original intent of congress, is equal to less than $ 60, 000 today, based on the personal consumption deflator in the gdp accounts. despite its initial quite limited intent, the congress over the intervening decades has raised the maximum amount of coverage five times to its current $ 100, 000 level. the last increase, in 1980, was a more than doubling of the cap level and was clearly designed to let depository institutions, particularly thrifts, offer an insured deposit free of the then prevailing interest rate ceilings on such instruments, which applied only to deposits below $ 100, 000. insured deposits of exactly $ 100, 000 thus became fully insured instruments in 1980, but were not subject to an interest rate ceiling. the efforts of thrifts to use $ 100, 000 cds to stem their liquid