Bessent says White House may 'veto' Federal Reserve presidents

Core Viewpoint - The U.S. Treasury Secretary Scott Bessent is advocating for a new requirement that Federal Reserve regional bank presidents must reside in their districts for at least three years prior to taking office, which could increase the White House's influence over the traditionally independent Federal Reserve [1][3]. Group 1: Proposed Changes - Bessent stated that there is a disconnect in how the Federal Reserve is framed and emphasized that candidates for regional bank president who have not lived in their district for three years would be vetoed [2]. - This proposal is part of a broader effort by the administration to exert more control over the Federal Reserve, which has historically maintained independence from political pressures [3]. Group 2: Federal Reserve Structure and Function - The Federal Reserve aims to manage inflation and support employment by setting a short-term interest rate that affects borrowing costs throughout the economy [4]. - The Federal Reserve's structure includes a seven-member board of governors in Washington and 12 regional banks that represent specific districts across the U.S. [4]. - Interest rate decisions involve votes from the seven governors and the president of the New York Fed, with four of the other regional presidents voting on a rotating basis, although all presidents participate in the interest-rate setting committee meetings [5]. Group 3: Criticism of Current Practices - Bessent has criticized the current practice where "three, maybe four" regional Fed presidents were appointed from outside their districts, with some residing in New York, questioning whether this aligns with the original design of the Federal Reserve [6].