WASHINGTON Sen. Jack Reed, D-R.I., reintroduced legislation Monday that would require the president of the Federal Reserve Bank of New York to be nominated by the White House and confirmed by the Senate.
The move comes after the New York Fed came under fire last fall when a widely read report raised questions about whether regulators at the bank were "captured" by the financial institutions they are supposed to oversee. Critics claim that the New York Fed has been slow to implement changes to distance examiners from industry influence and that more public oversight in the confirmation process could help shed light on the agency's problems. The bill would also require the New York Fed president to testify before the banking committees in the House and Senate at least once per year.
"This legislation is about holding the New York Fed accountable. We should have every expectation that the New York Fed has the public interest in mind to the fullest extent when it conducts its duties. Given that the bank plays an outsized role in implementing our nation's monetary policy and enforcing our banking laws, it's too influential to be left unchecked," said Reed, a senior member of the Senate Banking Committee.
Under the current process, the New York Fed president is chosen by members of the New York Fed's board and approved by the Fed's Board of Governors in Washington. Reed previously worked on similar language during the writing of the Dodd-Frank Act, but the provision did not make it into the final version of the law.