Sept. 12 (Bloomberg) -- U.S. Representative Barney Frank, the top Democrat on the House Financial Services Committee, is renewing a push to remove Federal Reserve regional presidents from voting on central bank interest-rate decisions.
Frank, of Massachusetts, will submit a new version of legislation to cut the voting rights of five rotating regional representatives from the 12-member Federal Open Markets Committee, he said today. The revision of Frank’s May proposal calls for replacing them with four presidential appointees, according to a position paper released by his office.
Eliminating regional presidents, who are selected by board members of their banks and approved by Fed governors, will make interest-rate votes more democratic, Frank said in the paper. The 7-3 vote at the last FOMC meeting in August underlined the need to replace the presidents, who have become a “significant constraint on national economic policy making,” he said.
Regional presidents “are neither elected nor appointed by officials who are themselves elected,” Frank wrote in the paper. “They are part of a self-perpetuating group of private citizens who select each other and who are treated as equals in setting federal monetary policy with officials appointed by the President and confirmed by the Senate.”
The revisions address concerns that the input of regional representatives would go unheeded, while also adding a diversity of viewpoints, said Frank, whose May proposal has yet to attract co-sponsors.
Thomas Hoenig, president of the Federal Reserve Bank of Kansas City, told reporters at the time that changing the makeup of the FOMC would be “a tragic mistake.
--Editors: Gregory Mott, William Ahearn
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