Rep. Barney Frank, D-Mass., the senior minority member of the House Financial Services Committee, on Tuesday introduced legislation that would remove the power regional Federal Reserve Bank presidents have to weigh in on interest-rate decisions.
The bill would cut the five rotating regional representatives from the 12-member Federal Open Market Committee. Eliminating the 12 regional presidents, who are selected by board members of their banks and approved by the Fed’s governors, will make interest-rate votes more democratic, Mr. Frank said in a statement.
“Under current law, more than one-third of the votes cast are made by regional Federal Reserve representatives — people who are neither appointed by the president nor subject to Senate confirmation,” Mr. Frank said in the statement. “These men and women are chosen by a self-perpetuating group of private citizens who disproportionally represent the private financial services industry.”
The measure wouldn’t affect the seven presidentially appointed Fed governors.
The proposal already has run into opposition from one regional Fed president and others may follow if the threat to their voting rights gains traction on Capitol Hill.
Thomas Hoenig, president of the Federal Reserve Bank of Kansas City, told reporters Tuesday in Washington that changing the makeup of the FOMC would be a “tragic mistake.”