12 FED BANKERS TESTIFY

                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: THURSDAY, March 11, 1993                   TAG: 9303110088
SECTION: BUSINESS                    PAGE: A11   EDITION: METRO 
SOURCE: Associated Press
DATELINE: WASHINGTON                                LENGTH: Medium
12 FED BANKERS TESTIFY
The nation's Federal Reserve bank presidents said Wednesday the economy shows numerous signs of improvement - with the notable exceptions of New England and California, where huge job losses and defense cutbacks continue to depress growth.
The 12 Fed presidents delivered a generally upbeat report at an unprecedented group appearance before the Senate Banking Committee. Republicans charged the session was called by Democrats solely to strong-arm Fed officials into adopting a potentially inflationary monetary stance to accommodate President Clinton.
In the testimony and in the Fed's latest economic outlook, released Wednesday, central-bank officials found the economy has been generally improving since the beginning of the year.
They noted that retail sales were strong in January, factory output has grown, demand for business loans has been rising and most regions of the country were enjoying strong housing activity.
The exceptions to the good news were in California and New England, two regions hit hard by the plunge in real estate prices and cutbacks in the defense industry.
Richard F. Syron, president of the Fed's regional bank in Boston, said New England had suffered a 12 percent drop in payroll employment since 1989, the worst of any recession since World War II. The employment decline in the country as a whole has been 2 percent.
Robert T. Parry, president of the San Francisco Fed, said the outlook for the nine Western states in his region was dominated by the "long and deep recession gripping California." He said California faces fallout from further cutbacks in defense industries and lingering problems in commercial real estate.
Both Syron and Parry, however, said they were looking for some improvement in their regions this year as improved activity in other parts of the country helps to offset local weakness.
The other Fed presidents said the worst of their recessionary problems appeared to be over.
Jerry Jordan, president of the Cleveland Fed, said "the Rust Belt has indeed begun to regain some of its old luster;" Robert Forrestal, head of the Atlanta Fed, said the Southeast should grow at a faster rate than the rest of the country this year.
While Federal Reserve Chairman Alan Greenspan has gone out of his way to endorse Clinton's economic program, Democrats in Congress still worry that the new administration could be sabotaged by the regional bank presidents, who are picked by boards dominated by commercial bankers and generally are more worried about inflationary threats than the Fed board in Washington, which is nominated by the president and confirmed by the Senate.
Senate Banking Chairman Donald W. Riegle Jr., D-Mich., requested the joint appearance of the regional bank presidents, the first time in the Fed's 80-year history they had testified before Congress at the same time, to drive home the point that all economic policymakers are accountable to the public.
Riegle and Sen. Paul Sarbanes, D-Md., have introduced legislation to strip the voting power of the regional presidents on the FOMC.
Sarbanes noted that all 12 officials were white males, that no minorities had ever been chosen and only one woman had ever been picked as a regional Fed president.
But Sen. Connie Mack, R-Fla., charged that the hearing was "an arrogant display of congressional power" with "the clear intent to intimidate the Federal Reserve into an easier monetary policy."

by Archana Subramaniam by CNB