Pay, Politicking of Bank Board Employees Are Probed

Some employees at the Federal Home Loan Bank Board have been illegally exempted from laws limiting the pay and political campaign activities of federal workers, congressional auditors have concluded.

In a report that will be made public Monday, the General Accounting Office says that workers in three bank board subsidiaries are federal employees and the bank board had no authority to bypass federal laws governing them. Among the employees potentially affected by the GAO’s conclusion is Gerald P. Carmen, a former Reagan fund-raiser who ran the General Services Administration in the early 1980s.

Along with the pay problem, “of equal, if not greater concern,” is the bank board decision to exempt the subsidiaries’ employees from conflict-of-interest laws all federal employees must comply with, the report said.

‘Could Be Devastating’

“Obviously this could be devastating,” bank board spokesman Karl Hoyle said of the report.

The report throws into question the pay policy of the subsidiaries, which employ several hundred people and whose managers often earn salaries of $100,000 or more for performing government work. Federal workers generally can earn no more than $75,500.

Contracts Questioned

The report also throws into question millions of dollars in contracts the bank board has awarded through the subsidiaries without following standard government procurement procedures that usually require competitive bidding. The divisions routinely hire property management firms and legal firms without public bidding.

Sen. David Pryor (D-Ark.), who requested the GAO study, said he is trying to determine if the GAO has the authority to force the bank board to revoke the special treatment or if Congress will have to seek remedies. Although the GAO is traditionally a research and auditing agency, an obscure law dating from the 1920s also may give it the power to order the changes.