Federal Reserve supervisory agencies are reviewing the renomination process for regional Fed presidents

Source: Global Market Report

The Federal Reserve's internal oversight body said on Wednesday that it is investigating how the Fed Board reappoints the presidents and their deputies of the regional Federal Reserve Banks, allowing them to serve additional five-year terms.

In a press release, the Office of Inspector General stated it is evaluating whether the Washington-based Federal Reserve Board's “process for approving the reappointment of Federal Reserve Bank Presidents and First Vice Presidents” complies with the relevant requirements and best practices of the Federal Reserve Administrative Manual.

The oversight agency also said it is reviewing “the quality and completeness of executive performance evaluations, as well as other potentially relevant information required for determining reappointment eligibility.”

Attention on this reappointment process has increased following strong pressure from former U.S. President Trump on the Federal Reserve; some observers worry it could be used to remove regional Fed officials who refuse to support Trump’s calls for interest rate cuts.

The 12 regional Federal Reserve Banks are quasi-private institutions overseen by local boards drawn from the private sector. These boards select new presidents but require Federal Reserve approval. Regional Fed presidents help formulate monetary policy, gather local economic intelligence, and provide services to the financial industry.

They undergo a reappointment process every five years to begin a new term; in almost all cases, they retain their posts.

The last reappointment process was completed at the end of last year, and the Federal Reserve Board unanimously approved the appointments of 11 officials for renewed terms.