Sen. Pat Toomey, R-Pa., and six other GOP senators introduced legislation that would make significant changes to the Federal Reserve's regional bank system, pushing back on what they call an overly political Fed.
"Despite their narrow and non-partisan statutory mandates, the Fed and regional Fed banks have increasingly inserted themselves into politically charged issues like global warming and social justice," Mr. Toomey said in a news release Wednesday, announcing the bill. "Congress has a responsibility to ensure the Fed does not become a political actor. This legislation will further that important goal by reforming the Fed to make it more accountable to Congress and the American people."
The bill calls for the presidents of the regional Fed banks to become presidentially appointed, Senate-confirmed positions, as well as the Fed's general counsel.
In an effort "to address problems with left-leaning political bias and limit the concentration of power in Washington," the bill also trims the number of regional banks to five from 12, the news release states, which it said would increase congressional oversight and ensure all the presidents of such banks have permanent seats on the Federal Open Market Committee.
Regional Fed banks serve their geographic districts in several ways, including distributing paper currency and coins, processing online payments, monitoring commercial banks for compliance, and collecting economic research from their regions, according to the Federal Reserve website.
Mr. Toomey, along with other critics, has expressed concern over the banks' growing research interests. In June 2021, Mr. Toomey called out the San Francisco, Minneapolis, Atlanta, and Boston Fed banks for not complying with his request for documents pertaining to their research, which he viewed as partisan. The San Francisco Fed has published several research papers related to climate change, including one as recently as October.
In April, Mr. Toomey criticized Minneapolis Fed President Neel Kashkari for publicly supporting a Minnesota constitutional amendment focused on education.
The bill also includes provisions to more strictly enforce that regional Fed bank presidents come from their districts, as well as apply the Anti-Lobbying Act to Federal Reserve employees and officials.
The Republican-sponsored legislation awaits an uncertain future as Democrats maintain control of the Senate next Congress. Mr. Toomey, who is retiring at the end of his term, also introduced a bill with Sen. Elizabeth Warren, D-Mass., earlier this month aimed at increasing transparency for the Fed. The bills are unlikely to pass before Congress adjourns, meaning they will have to be reintroduced in the next Congress.