THE DAILY FED
Retirement Gambit OK'd
Last fall, lawmakers were deeply critical of Treasury Secretary Robert Rubin's decision to dip into federal employee retirement funds to keep the government running during the budgetary stand-off. A panel of Republicans, led by Rep. Nick Smith, R-Mich., even urged Rubin's resignation. Many federal employees were also concerned that Rubin's actions might have put their retirement funds at risk.
The General Accounting Office, however, has concluded in a new report that Rubin's action was "in accordance with statutory authority provided by Congress." Rubin temporarily transferred money out of the retirement accounts to prevent the Treasury department from reaching its $4.9 trillion limit on borrowing (since raised to $5.5 trillion).
According to GAO, interest lost during the time the money was borrowed has been repaid to all but one of the retirement funds. The administration is requesting an appropriation from Congress to cover the remaining lost interest.