The top Democrat on the House Financial Services Committee is pushing to give the president the authority to choose Fed leaders, while at the same time limiting the voting rights of those regional Fed presidents on central bank interest rate decisions.
Rep. Barney Frank, D-Mass., told Bloomberg TV’s Lisa Murphy that “Giving non-elected officials picked by non-elected people, private citizens, who come from the financial community, the right to vote on an important national policy is inconsistent with democracy.”
The bill submitted by the congressman Tuesday authorizes the president to appoint four Federal Reserve presidents, in addition to the Federal Reserve chairman, to ensure you have “geographic diversity.”
“[I]n a recent couple of months, it’s become clear there’s a real split between the Federal Reserve regional presidents who represent the financial community and those people appointed by the president and confirmed by the Senate, led by Ben Bernanke,” Frank explained. “And the presidents have on the whole been opposed to the efforts that Bernanke has been undertaking to help stimulate the economy.
“It’s now clear that it’s not simply a theoretical problem with democracy, but you have a constituency, the Federal Reserve presidents, representing the financial people who get to appoint them, opposing those people appointed by the president and confirmed by the Senate on a matter of national policy,” Frank added.
Murphy then challenged the congressman about the Federal Reserve’s quasi-independence and the need for opposing views and healthy debate among fed presidents.
“But not independent of the basic tenets of democracy,” Frank replied. “Yes, they are supposed to be independent. They are not like the secretary of the Treasury, et cetera. But what we have here is independence from any public input … Federal Reserve presidents pick the people to be on regional boards. They are overwhelmingly from the financial community. They don’t represent the broad diversity of America’s economy. They should not be the ones voting.”