Republican Senators Offer Proposal to Reshape the Federal Reserve
7 Republican United States senators on December 21, 2022 put forward a bill designed to restructure the Federal Reserve’s 12 regional banks. This proposal came at a time when there are increasing concerns about the Fed becoming too political.
As he was leaving office, former Senator Pat Toomey published a news release where and 6 other Senators called for regional Fed bank presidents to receive presidential nominations and be confirmed by the Senate. In doing so, regional Fed presidents would go through the same requirements that individuals must go through to join the Fed’s Board of Governors.
One of the notable provisions of this legislative proposal would reduce the 12 regional Fed banks to 5. “This will enable more effective congressional oversight and ensure that all presidents of Fed regional banks have permanent seats on the Federal Open Market Committee,” the news release stated.
According to a Reuters report, “Regional Fed leaders contribute to monetary policy debates, gather local economic intelligence and vote on interest rate decisions on a rotating basis.”
In addition, the bill would have the Fed’s general counsel subjected to Senate confirmation.
Per Toomey’s press release, the legislation has the goal of limiting the Fed’s power, which they believe is being misused and is deviating from its mission.
Over the last few years, the Fed has increasingly gone woke. For example, it has shifted its research interests to matters such as climate change and racial inequality. The Fed’s woke pivot has naturally provoked a backlash from the Right, who view this move as an unproductive distraction.
Reuters illustrated why there are many concerns about the regional Fed bank structure:
The structure of regional Fed banks has long made reformers, both on the left and right, uncomfortable. They are quasi-private institutions technically owned by private banks in their respective districts, and are overseen by local boards of directors drawn from the private sector. Leaders of these regional Fed boards are chosen by their private boards, although they must be approved by the board in Washington before taking office.
While there are valid concerns about the Fed’s influence, reformers should focus more on trying to abolish it in the long-term. Since its founding in 1913, the Fed’s policies are the primary drivers of inflation and allow for unprecedented expansions in government growth. In the present, America’s mass inflation is largely the product of the Fed’s loose monetary schemes — one of the many dangers
All told, it’s good to see politicians talk about reforming the Fed. However, these proposals must be followed up with measures