By Michael S. Derby
NEW YORK, May 27 (Reuters) – The Federal Reserve’s in-house watchdog said on Wednesday it’s looking into how the U.S. central bank’s Board of Governors reappoints the regional Fed presidents and their deputies to respective five-year terms.
The Inspector General said in a press release that it was assessing if the Washington-based board’s process “to approve the reappointment of Reserve Bank presidents and first vice presidents aligns with relevant Federal Reserve Administrative Manual requirements and leading practices.”
The watchdog also said it was examining “the quality and completeness of executive performance evaluations and other potentially relevant information necessary to assess the merits of a reappointment.”
The IG did not immediately respond to a request for comment about the inquiry and why it is happening now.
Interest in the reappointment process has grown in the wake of U.S. President Donald Trump’s aggressive pressure campaign against the Fed, with some observers fearing it could be used to push out regional policymakers who declined to back his demands for interest rate cuts.
The project is one of many reviews the IG is conducting, including a closely watched probe launched late last year into cost overruns associated with the renovation of the Fed’s headquarters in Washington. That investigation, which the government has since closed and turned over to the Fed’s IG, became a major flashpoint between the central bank, then-Fed chief Jerome Powell, and the Trump administration.
The IG has listed for some time a separate look into how Fed regional bank presidents and their seconds-in-command are selected. That process has been criticized for its opacity and limited opportunity for public comment.
The 12 regional Fed banks are quasi-private institutions overseen by local boards drawn from the private sector. Those boards select new presidents subject to the approval of the central bank. The regional bank presidents help set monetary policy, collect local economic intelligence and provide services to the financial sector.
They undergo a reappointment process every five years for new terms that in almost all cases sees them retaining their jobs.
The last reappointment cycle was completed late last year, with the Fed’s board unanimously approving the 11 officials up for reappointment. It also reappointed the Atlanta Fed’s first vice president, Cheryl Venable, who is serving as acting president until it finds a successor for Raphael Bostic, who retired earlier this year.
The prior reappointment cycle took place ahead of a trading controversy at the central bank that led to the departure of several of its policymakers. The Fed was criticized in some quarters for not spotting the financial issues during the reappraisal period, although then-Fed Governor Lael Brainard described the review process as “rigorous.”
(Reporting by Michael S. Derby; Editing by Paul Simao)
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