US Treasury Secretary Scott Bessent speaks during an event on ‘Trump Accounts’ for kids in the Roosevelt Room of the White House, on Dec. 2, in Washington. (AP)
WASHINGTON, Dec 4, (AP): US Treasury Secretary Scott Bessent said Wednesday he would push a new requirement that the Federal Reserve’s regional bank presidents live in their districts for at least three years before taking office, a move that could give the White House more power over the independent agency. In comments at the New York Times’ DealBook Summit, Bessent criticized several presidents of the Fed’s regional banks, saying that they were not from the districts that they now represent, “a disconnect from the original framing” of the Fed.
Bessent said that 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 am going to start advocating, going forward, not retroactively, that regional Fed presidents must have lived in their district for at least three years.”
Bessent added that he wasn’t sure if Congress would need to 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 that you would just say, unless someone’s lived in the district for three years, we’re going to veto them,” Bessent said.
Bessent has stepped up 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 cutting the Fed’s key rate at its next meeting in December. President Donald Trump has sharply criticized the Fed for not lowering its short-term interest rate more quickly.
When the Fed reduces its rate it can over time lower borrowing costs for mortgages, auto loans, and credit cards. 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 that has traditionally been independent from day-to-day politics.
The Federal Reserve seeks to keep prices in check and support hiring by setting a short-term interest rate that influences borrowing costs across the economy. It has a complicated structure that includes a seven-member board of governors based in Washington as well as 12 regional banks that cover specific districts across the United States.
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