-21 we strongly oppose providing anyone access to these files except those charged with the responsibility for the lending function. At a time when financial markets are already nervous, when citizens of this country are fearful of the inflationary impact of the growing Federal deficit, and when foreign central banks are looking to the Federal Reserve for leadership in international financial matters, enactment of this legislation would be particularly unfortunate. We see no need to risk damaging effects upon our efforts toward international financial negotiations or reinforcing the financial uncertainties at home. Staff Memorandum Board of Governors of the Federal Reserve System Securities Transactions Federal Reserve Banks In 1974, the Federal Reserve Banks issued, redeemed, and exchanged U. S. Government securities valued at $3.08 trillion. The bulk of System open market operations are for the purpose of offsetting the potentially destabilizing market impact of short-run variations in member bank reserves arising from such technical factors as movements in bank float and changes in the Treasury deposit balance at Federal Reserve Banks. To achieve this purpose, the Federal Reserve makes extensive use of repurchase agreements and matched sale purchase transactions. volume of such transactions in 1974 amounted to somewhat more The than $172 billion (or twice that if both the sale and purchase. are included), or about 88 per cent of the total of system open market transactions of approximately $195 billion. When the System uses repurchase agreements and matched sale-purchase transactions, market participants immediately understand that the System is only temporarily supplying (absorbing) reserves, and that this process will be reversed in a short period. The knowledge that the process is self-reversing enables the market to avoid possible misinterpretation of System activities. Staff Memorandum Page 2 Volume of System Open Market Operations Transactions NOTE: Data for repurchase agreements and matched sale-purchase transactions reflect the initial side of these transactions only. Thus, for example, the total for repurchase agreements is the sum of purchases made by the System under such contracts, and does not include the subsequent resale of securities back to their original owners. 61-502 O 75 - 19 Reference is made to your inquiry concerning H.R. 8948, 94th Congress, which would amend the Accounting and Auditing Act of 1950 to provide for audit by the Comptroller General of the Internal Revenue Service and of the Bureau of Alcohol, Tobacco, and Firearms. H.R. 8948 was passed by the House on October 20, 1975, and has been referred to your Subcommittee. The need for legislation in this area was fully discussed in my testimony before your Subcommittee on October 2, 1975, in connection with S. 2352. We believe the language of H.R. 8948 will resolve the impasse which has existed between the General Accounting Office and the Internal Revenue Service, the Bureau of Alcohol, Tobacco, and Firearms over the right of the General Accounting Office to audit these activities. We are satisfied that the language will give us the audit authority we need and at the same time provide appropriate safeguards to prevent disclosures of individual taxpayer information. We strongly recommend that H.R. 3948 be given favorable consideration. Sincerely yours, (SIGNED) ELMER B. STAATS Comptroller General Replies to Issues Raised by the National Concerning S. 2268, 94th Congress Title I Enforcement of Decisions and Settlements Title I would enable the Comptroller General to institute a civil action in the United States District Court for the District of Columbia, should the Comptroller General and the Attorney General differ as to the legality of a proposed use of appropriated funds. The National. Security Industrial Association believes that under this provision it would appear that the Comptroller General could set aside the rulings of the boards of contract appeals. We disagree. Title I would not allow the Comptroller General to set aside rulings lawfully issued by a board of contract appeals. That issue was settled by S & E Contractors v. United States, 406 U.S. 1 (1972), wherein the Supreme Court held that our jurisdiction does not extend to the review of board of contract appeals decisions. In proposing this legislation, there was no intent to seek authority to supersede the decisions of bodies lawfully constructed to render such decisions, nor are we asking that GAO be provided with any new authority and control over executive agencies and boards. See $320(a). GAO has, for fifty years, exercised the authority accorded to it by law to settle and adjust independently all claims and demands by or against the United States Government. Title I is intended only to preserve the independence of this process by affording to GAO access to a judicial forum in those few instances where the Comptroller General and the Attorney |