Home Business A Battle for Influence Within the Fed Is Brewing

A Battle for Influence Within the Fed Is Brewing


Powell, whose term is up early next year, is being considered for a second run by the White House. This is no time for drama. As the Fed seeks to defuse criticism, its leadership in Washington is likely to grab more influence over appointments at the regional banks, which are now made by boards typically composed of local lenders, businesses and non-profits. Powell also has ordered a comprehensive review of stock-trading policies. “It is now clearly seen as not adequate to the task of sustaining the public’s trust,” he told a press conference last week. It would be a mistake to see the fracas with Rosengren and Kaplan as simply the product of some ill-timed transactions. Tensions have long simmered between the Board of Governors in Washington, which includes the chair, vice chair and vice chair for supervision, and the dozen district Federal Reserve banks. The leaders of most district banks, who rotate among voters on the interest-rate setting Federal Open Market Committee, get to weigh in policy. Yet, unlike governors, they are not nominated by the White House or confirmed by the Senate. They typically earn more than governors, and often even the chair, the most powerful economic official on the planet. (Fed chairs are among the lowest paid among global monetary honchos.) 

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