A new requirement proffered by Treasury Secretary Scott Bessent could alter how Federal Reserve regional bank presidents are chosen and give the White House more power of the central bank.
Bessent said Wednesday in comment at the New York Times’ DealBook Summit that he would push a new requirement that the Federal Reserve’s regional bank presidents live in their districts for at least three years before taking office.
He criticized several presidents of the Fed’s regional banks, according to a report in Yahoo Finance, and said that they were not from the districts that they now represent.
Bessent called it, “a disconnect from the original framing” of the Fed.
He said that three of the 12 regional presidents have ties to New York. Two of them previously worked at the New York Federal Reserve, while a third worked at a New York investment bank.
“So, do they represent their district?” he asked. “I am going to start advocating, going forward, not retroactively, that regional Fed presidents must have lived in their district for at least three years.”
Bessent Says 3 Recent Appointees Have Ties to New York
All of the three regional presidents cited by Bessent are relatively recent appointees.
Lorie Logan was named president of the Dallas Fed in August 2022, after holding a senior position at the New York Fed as the manager of the Fed’s multitrillion dollar portfolio of mostly government securities.
Alberto Musalem became president of the St. Louis Fed in April 2024, and from 2014-2017 was an executive vice president at the New York Fed.
Beth Hammack was appointed president of the Cleveland Fed in August 2024, after she had an extended career at Goldman Sachs.
The Treasury Secretary added that he wasn’t sure if Congress would need to weigh in on such a change. Under current law, the Fed’s Washington, D.C.-based board can block the appointment of regional Fed presidents.
“I believe that you would just say, unless someone’s lived in the district for three years, we’re going to veto them,” Bessent said.
In recent weeks, Bessent has been more critical of the Fed’s 12 regional bank presidents after several of them made clear in a series of speeches that they opposed cutting the Fed’s key rate at its next meeting in December, according to reports.
President Donald Trump also has sharply criticized the Fed for not lowering its short-term interest rate more quickly. A Fed rate reduction can, over time, lower borrowing costs for mortgages, auto loans, and credit cards.
Traditionally, The Fed Has Been Independent from Politics
Yahoo Finance said that adding a residency requirement for regional bank presidents would represent another effort by the White House to exert more control over the Fed, which traditionally has been independent from day-to-day politics.
Regional Fed presidents are appointed by boards made up of local and business community leaders.
Currently, Trump is weighing a pick to replace Chairman Jerome Powell when he finishes his term in May.
Trump said over the weekend that “I know who I am going to pick,” but at a Cabinet meeting Tuesday said he wouldn’t announce his choice until early next year.
Top Trump economic adviser Kevin Hassett is widely considered Trump’s most likely choice.
