U.S. Treasury Secretary Scott Bessant said on Wednesday he would push for a new requirement that Fed regional bank presidents live in their regions for at least three years before taking office, a move that could give the White House greater power. independent agency.
“This is out of touch with the Fed’s framework,” Bessant said in comments at the New York Times’ DealBook Summit, adding, “Unless someone has lived in their district for three years, we’re going to veto them.”
In recent weeks, Bessant has stepped up his criticism of the Fed’s 12 regional bank presidents, after several of them made it clear in a statement. Lecture series They oppose cutting the Fed’s key interest rate at its next meeting in December. President Donald Trump has sharply criticized the Federal Reserve for not lowering short-term interest rates more quickly. When the Fed lowers interest rates, it can lower borrowing costs for mortgages, car loans and credit cards over time.
The prospect of the government “vetoing” regional bank presidents would represent another effort by the government to exert more control over the Federal Reserve, an institution that has traditionally been independent of day-to-day politics.
The Fed seeks to control prices and support hiring by setting short-term interest rates that affect borrowing costs across the economy. Its complex structure includes a seven-member board of governors in Washington and 12 regional banks covering specific regions of the United States.
Seven governors and the president of the New York Fed vote on every interest rate decision, while four of the remaining 11 presidents take turns voting. But all presidents attend meetings of the Fed’s rate-setting committee.
Bessant told CNBC last month that regional Fed banks were created to incorporate regional perspectives into the Fed’s interest rate decisions and “break New York’s control over rate setting.”
But now, he said last month, “three, maybe four” Fed chairs were appointed from outside their districts, including some who live in New York.
“I’m not sure that’s how the Fed is designed,” he said in the interview.