WASHINGTON (AP) — Treasury Secretary Scott Besant said Wednesday he will push a new requirement that the presidents of the Federal Reserve’s regional banks stay in their district for at least three years before taking office, a move that could give the White House more power over the independent agency.
In remarks at the New York Times’ DealBook Summit, Besant criticized many of the Fed’s regional bank presidents, not the districts they now represent, as “disconnected from the original framing” of the Fed.
Besant said three of the 12 regional presidents have ties to New York: two previously worked at the New York Federal Reserve, while a third worked at a New York investment bank.
“So, do they represent their district?” he asked. “I’m going to start advocating, going forward, not retroactively, that regional Fed presidents stay in their district for at least three years.”
Besant added that he was not sure whether Congress should weigh in on such a change. Under current law, the Fed’s Washington, D.C.-based board can block the appointment of regional Fed presidents.
“I believe you’re just going to say, unless someone has been in the district for three years, we’re going to veto them,” Besant said.
Besant has intensified his criticism of the Fed’s 12 regional bank presidents in recent weeks after several of them made clear in a series of speeches that they opposed the Fed’s key rate cut at its next meeting in December. President Donald Trump has criticized the Fed for not cutting short-term interest rates more quickly. When the Fed lowers its rates it can lower borrowing costs for mortgages, auto loans, and credit cards over time.
Adding a residency requirement for regional bank presidents would represent another effort by the White House to exert more control over the Fed, an institution traditionally independent of day-to-day politics.
The Federal Reserve seeks to control prices and support hiring by setting short-term interest rates that influence the cost of borrowing in the economy. It has a complex structure that includes a seven-member board of governors based in Washington as well as 12 regional banks covering specific districts across the United States.
Seven governors and the president of the New York Fed vote on each interest rate decision, while four of the remaining 11 presidents vote on a rotating basis. But all chairmen attend meetings of the Fed’s interest rate-setting committee.
