Reed calls for boosting oversight of New York Fed

A Senate Democrat on Monday reintroduced legislation aimed at ramping up the accountability of the New York Federal Reserve. 

Sen. Jack Reed (D-R.I.) is pressing for a bill that would require a congressional confirmation process for the president of the New York Fed over concerns about the bank’s ability to effectively monitor Wall Street’s behavior.

{mosads}”If the governors of the Federal Reserve System are required to be confirmed by the Senate, then the president of the Federal Reserve Bank of New York, who played a central and perhaps more powerful role in overseeing taxpayer dollars during the financial crisis, should also be subject to public scrutiny,” he said in a statement.

Reed said that measure aims to boost public scrutiny of the Fed branch because of the unique role the bank plays in implementing monetary policy and enforcing banking laws because “it’s too influential to be left unchecked.”

Reed, a senior member of the Senate Banking Committee, said it is “past time that we add meaningful layers of accountability so that we can be better assured of the New York Fed’s ability to address potential financial pitfalls in advance.”

The legislation is being reintroduced ahead of Tuesday’s Senate Banking Committee hearing with Federal Reserve Chairman Janet Yellen on her semiannual monetary policy report to Congress.

Reed added similar legislation in the Senate-passed version of the 2010 Dodd–Frank law but the language was eventually stripped out.

The president of the New York Fed, like other regional Fed banks, is appointed to a five-year term by a subset of the board of directors of the regional bank, with the approval of the Fed’s board of governors.

The New York Fed’s president is not only a permanent member of the Federal Open Market Committee (FOMC) but also is its vice chairman.

In addition, the New York branch supervises some of the nation’s largest banks, protects the U.S. dollar in foreign exchange markets and implements monetary policy around securities markets.

Reed’s legislation also would require the head of the New York Fed to testify before the Senate Banking Committee and the House Financial Services Committee at least once a year.