US Treasury Secretary Scott Bessent has announced plans to implement a new requirement for regional Federal Reserve bank presidents to live in their districts for at least three years before taking office. This move is seen as an attempt by the Trump administration to exert greater control over the independent agency, which has traditionally been free from day-to-day politics.
The proposal represents another effort by the administration to influence the Fed's decision-making process, particularly on interest rates. The Fed's short-term rate sets borrowing costs for mortgages, auto loans, and credit cards, and its actions have a significant impact on the economy.
Bessent's comments came during an interview at the New York Times' DealBook Summit, where he criticized the Fed's 12 regional bank presidents for not aligning with the administration's views on interest rates. Several of these presidents had expressed opposition to cutting the short-term rate at its next meeting in December, which has sparked criticism from President Trump.
The proposed residency requirement is seen as a way for the administration to vet potential candidates before they are appointed to the Fed's Board of Governors or regional bank positions. This move would represent a departure from the traditional selection process, where the governors and presidents vote on interest-rate decisions without considering personal characteristics or backgrounds.
Critics argue that this proposal undermines the independence of the Fed, which is designed to ensure that US central bank policy reflects input from officials across the country. The seven-member Board of Governors based in Washington, as well as 12 regional banks covering specific districts, are meant to represent diverse perspectives on monetary policy.
Bessent's comments also highlight the complicated structure of the Federal Reserve, with a complex system of governance that involves a seven-member board and rotating presidents. This has led to criticism from some quarters that the Fed's decision-making process is overly politicized.
The proposal is seen as part of a broader effort by the Trump administration to exert more control over the Fed and shape its policy agenda. The move is likely to be closely watched by economists, policymakers, and regulators, who will assess its implications for the US economy and financial system.
The proposal represents another effort by the administration to influence the Fed's decision-making process, particularly on interest rates. The Fed's short-term rate sets borrowing costs for mortgages, auto loans, and credit cards, and its actions have a significant impact on the economy.
Bessent's comments came during an interview at the New York Times' DealBook Summit, where he criticized the Fed's 12 regional bank presidents for not aligning with the administration's views on interest rates. Several of these presidents had expressed opposition to cutting the short-term rate at its next meeting in December, which has sparked criticism from President Trump.
The proposed residency requirement is seen as a way for the administration to vet potential candidates before they are appointed to the Fed's Board of Governors or regional bank positions. This move would represent a departure from the traditional selection process, where the governors and presidents vote on interest-rate decisions without considering personal characteristics or backgrounds.
Critics argue that this proposal undermines the independence of the Fed, which is designed to ensure that US central bank policy reflects input from officials across the country. The seven-member Board of Governors based in Washington, as well as 12 regional banks covering specific districts, are meant to represent diverse perspectives on monetary policy.
Bessent's comments also highlight the complicated structure of the Federal Reserve, with a complex system of governance that involves a seven-member board and rotating presidents. This has led to criticism from some quarters that the Fed's decision-making process is overly politicized.
The proposal is seen as part of a broader effort by the Trump administration to exert more control over the Fed and shape its policy agenda. The move is likely to be closely watched by economists, policymakers, and regulators, who will assess its implications for the US economy and financial system.
They're trying to micromanage every single thing about the Fed? Like, what's next? Are they gonna make 'em wear matching outfits or something? 
I'm all for transparency and accountability, but come on! This residency requirement is just another way to inject politics into the Fed's decision-making process. It's like they're trying to game the system. Newsflash: the Fed's job is to keep the economy stable, not to make Trump happy. 
. I mean, isn't that just another way to inject politics into an institution that's supposed to be independent? It feels like they're trying to pack it with people who share their views on interest rates rather than making sure we have diverse perspectives across the country 
. The Fed is meant to be a neutral force, not a tool for the administration's agenda. What's next? Are they going to start requiring them to wear uniforms or something? 
! Like, the government's trying to take away the Fed's independence? That's not cool at all 
. I mean, can't they just let the experts do their job without all the drama? 
The Fed's been doing its thing for ages and we don't need some new rule to tell them what to do... or who to hire 
. The Fed has always been about keeping an eye on inflation and whatnot, not just following orders. If they start making decisions based on who's living in their district, that's a recipe for disaster 
. And what about the whole 'independence' thing? Doesn't someone need to shake things up every now and then? 
Newsflash: if you want to shape monetary policy, maybe try working within the system instead of trying to dismantle it piece by piece 
The whole point of having regional bank presidents is to get diverse perspectives from across the country, not just regurgitate what Washington wants to hear 
Bessent's comments just seem like a thinly veiled attempt to exert more control and screw with the Fed's decision-making process 
. And let's be real, who gets picked for these positions anyway? The ones with the right connections and not-so-subtle nods from the administration? That's just a recipe for disaster 
. I'm all about keeping those regional banks independent, you know? They're supposed to represent diverse perspectives, not just rubber-stamp whatever the boss wants 
... think about it, we're talking about an independent agency that's supposed to make decisions for the country without being swayed by personal agendas or party lines. but now they're trying to vet candidates based on their views aligning with the admin's, what does that say about the value of diversity and free thinking in our institutions? 
[Image of a person trying to break free from chains with a fedora on]
The last thing we need is more politics in the financial system... trust me, it'll lead to some shady stuff going down 
they're not exactly independent if trump is egging them on all the time 
it's like trying to control a wild animal 
, but at least this residency thing could help keep some fresh blood in there 
. I'm not sure if this move will actually help the economy, but one thing's for sure – it's gonna be a wild ride 
.