Senate GOP Warns Regional Fed Against Political Pressure in Hunt for Chiefs
(Bloomberg) -- Republicans on the Senate Banking Committee warned the boards of Federal Reserve banks in Boston and Dallas not to let politics influence their search for new presidents, and instead choose people who would avoid “mission creep” at the central bank.
The Republicans, led by Senator Pat Toomey of Pennsylvania, wrote that they want candidates who would adhere to the “narrow statutory mission” of the Fed without regard to political pressure. They voiced their concerns in letters Tuesday to Christina Paxson, chair of the board of the Federal Reserve Bank of Boston, and Greg Armstrong, chair of the Dallas Fed.
All 12 Republicans on the Senate Banking Committee signed the letter, including former chairmen Richard Shelby of Alabama and Mike Crapo of Idaho.
The senators pointed to a push by Democrats to get Fed Chair Jerome Powell to redouble efforts at making diverse hires for the two openings left by the resignations of Eric Rosengren and Robert Kaplan.
Rosengren, the president of the Boston Fed, and Kaplan, the president of the Dallas Fed, last month announced they were stepping down. The moves followed revelations about their stock trading in 2020. Rosengren cited a chronic health condition when he announced his early retirement.
“It is highly disconcerting to learn that political actors in D.C. are seeking to insert themselves into this selection process, which has long been independent, nonpartisan, and merit-based,” the senators wrote.
Representative Joyce Beatty, an Ohio Democrat, tried at a Sept. 30 hearing to get Powell to commit to considering diverse candidates.
“I can absolutely guarantee you that we will work hard in both of these processes to find and give a fair shot to diverse candidates for those two jobs,” Powell said. “It’ll be a big focus of both of those processes.”
The regional banks nominate their presidents but the picks must be approved by the Federal Reserve Board of Governors.
A spokesperson for the Dallas Fed declined to comment.
Joel Werkema, spokesman for the Boston Fed, acknowledged that the letter had been received. “We’re certain the search committee will take all input they receive into thoughtful consideration,” he said.
“As this committee has discovered, several Regional Federal Reserve banks, including yours, have embraced politically charged social causes outside of the Federal Reserve’s historical mission and statutory mandate,” the Republicans wrote to Paxson. “This mission creep threatens the credibility and independence of the Federal Reserve.”
Toomey criticized Powell in a recent interview with Bloomberg News for tolerating the politicization of the Fed, including the central bank’s involvement in issues like racial justice and climate change.
“The role and purpose of the Regional Federal Reserve Banks is to limit the concentration of power in D.C. and represent the economic interests of their respective regions, not to engage in partisan politics,” the GOP senators wrote.
‘Any Outside Attempt’
They also asked for notification of “any outside attempt to influence your selection of a new president.”
The letters come amid a broader effort by Democrats to both increase diversity at the Federal Reserve and expand its focus. As a candidate, President Joe Biden -- who will have several nominations to make at the Fed board in Washington, pledged that his choices would be diverse and interested in issues like climate change and racial justice.
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