Fed's Lacker, George to Testify on Capitol Hill Next Week
August 31 2016 - 4:15PM
Dow Jones News
By Harriet Torry
Two regional Federal Reserve bank presidents who have opposed
proposed operational changes to their institutions will testify at
a congressional hearing on the topic next week.
Kansas City Fed President Esther George, and Richmond Fed
President Jeffrey Lacker are scheduled to testify Sept. 7 at 10
a.m. ET at a hearing before the House Committee on Financial
Services' Subcommittee on Monetary Policy and Trade on the regional
Fed banks' governance "and how it relates to the conduct of
monetary policy and economic performance."
Mr. Lacker, long a defender of the current structure of the
Federal Reserve system, has pushed back against calls to end the
quasi-private nature of the 12 regional Fed banks, and against
recent legal changes affecting their relationships with private
banks.
While the Washington-based Federal Reserve Board is purely part
of the government, with top officials chosen by the president and
subject to Senate approval, the regional Fed banks fall into a gray
area. They are essentially owned by local banks that purchase
shares in their respective regional bank and receive dividend
income in exchange.
The regional Fed banks are also overseen by boards of directors
drawn from the private sector. Some directors are selected by the
Fed in Washington, while others are elected by the banks that own
shares in the regional Fed. Regional Fed bank presidents are
selected and overseen by their local boards -- directors from
financial institutions don't participate in this process -- subject
to the approval of the Fed board in Washington.
Mr. Lacker has argued that the current setup gives the central
bank the "political independence" to make the best possible
monetary policy.
Ms. George last year voiced opposition to proposed changes to
the Fed's regional structure that would have seen billions of
dollars returned to banks which paid to be members of the Fed
system. The proposal ultimately wasn't included in the 2016 federal
spending package.
Write to Harriet Torry at harriet.torry@wsj.com
(END) Dow Jones Newswires
August 31, 2016 17:00 ET (21:00 GMT)
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