Treasury Secretary Scott Besent said Wednesday he would push a new requirement that the heads of the Federal Reserve’s regional banks must live in their regions for at least three years before taking office, a move that could give the White House more power.
Washington– Treasury Secretary Scott Besent said Wednesday he would push a new requirement that the heads of the Federal Reserve’s regional banks must live in their regions for at least three years before taking office, a move that could give the White House more power over… Independent agency.
In comments at the New York Times’ DealBook Summit, Besant said that “there’s a disconnect with the Fed framework” and added that “unless someone lives in their district for three years, we’re going to veto it.”
Besant has intensified his criticism of the Fed’s 12 regional bank presidents in recent weeks after several of them explained… A series of letters They oppose cutting the Federal Reserve’s key interest rate at its next meeting in December. President Donald Trump strongly criticized the Federal Reserve for not lowering its short-term interest rate more quickly. When the Fed lowers interest rates, over time it can lower borrowing costs for mortgages, auto loans, and credit cards.
The possibility of the administration vetoing regional bank heads would represent another effort by the administration to exert more control over the Fed, an institution that has traditionally been independent of day-to-day politics.
The Federal Reserve seeks to keep prices in check and support employment by setting a short-term interest rate that affects borrowing costs throughout the economy. It has a complex structure that includes a seven-member board of governors headquartered in Washington, as well as 12 regional banks covering specific regions across the United States.
The seven governors and the head of the New York Fed vote on every interest rate decision, while four of the remaining eleven presidents vote on a rotating basis. But all presidents participate in the meetings of the Federal Reserve’s interest rate-setting committee.
That’s why regional Fed banks should bring their regions’ perspective into the Fed’s interest rate decisions and “break New York’s dominance” of setting interest rates, Bessent argued last month in an interview on CNBC.
But now, he said last month, “three, maybe four” Fed chairs have been appointed from outside their districts, some of whom live in New York.
“I’m not sure that’s the way the Fed was designed,” he said in the interview.