[1]U.S. Senator Richard Shelby (R-Alabama), Chairman of the Senate Banking Committee [2], has legislation in the works that would significantly change the U.S. Federal Reserve Board of Governors [3], according to media reports [4].
Citing "multiple sources briefed on the bill," the Hill reported that Shelby's proposed legislation calls for the establishment of a congressional commission to restructure the Fed. Barring a joint resolution of disapproval from Congress, the Fed would be required to implement whatever changes the commission suggests.
Senator Jack Reed (D-Rhode Island) has reportedly included in the draft of the legislation a provision that would make the appointment of the president of the Federal Reserve Bank of New York subject to Senate approval. Currently, the president of each of the 12 regional Federal Reserve Banks is selected by a search committee and subject to approval of the Federal Reserve Board of Governors.
According to the report from the Hill, a group of bipartisan lawmakers has expressed concern recently that the New York Fed is too powerful, especially considering its close physical proximity to Wall Street.
Even though the bill being drafted is bipartisan, some Democrats on the Senate Banking Committee, including Ranking Member Sherrod Brown (D-Ohio) have reportedly expressed concerns about the bill, believing it could pave the way to make further amendments to the controversial Dodd-Frank Wall Street Reform and Consumer Protection Act.
Whether or not Shelby's bill can get a floor vote will depend on getting the support of the moderate Democrats on the Committee, according to reports.
Spokespersons from both Reed's and Shelby's offices did not immediately respond to a request for comment.
The draft of the bill also includes a provision that provides a formula for raising interest rates by requiring the Fed's policymakers to use a mechanical rule for establishing monetary policy; a provision to reduce the amount of time it takes the Fed to publish transcripts from the Federal Open Market Committee; a provision to increase the threshold for designating a financial institution as "systemically important" from $50 billion to $500 billion; and a provision to increase the threshold for regulators to define a "small bank" from $10 billion to $50 billion in assets, according to reports.