2 Lawmakers Propose Stripping Fed Presidents of Policy Vote
WASHINGTON -- Members of the Joint Economic Committee of Congress have introduced legislation to strip Federal Reserve Bank presidents of their say in setting monetary policy.
The 12 regional bank presidents would be relegated to the role of advisers to the Federal Open Market Committee, which sets targets for the money supply and interest rates. Five of the 12 presidents currently have voting seats on the panel, along with the seven governors of the Federal Reserve Board.
Restricting voting membership to the governors would make the central bank more accountable to Congress and the public, said the bill's sponsors, Sen. Paul Sarbanes, D-Md., and Rep. Lee Hamilton, D-Ind. They are chairman and vice chairman, respectively, of the Joint Economic Committee.
Appointed by Private-Sector
They point out that Fed governors are nominated by the President and confirmed by the Senate. Regional Fed presidents are appointed by private-sector bank directors.
One Fed watcher said the proposal would politicize the Fed, muffle regional say in monetary policy decisions, and promote easy money.
"It's just a lot of mischief," said Jerry Jordan, chief economist of First Interstate Bank Corp.