Title III — Diversifying the Federal Open Market Committee to Reflect a 21st Century Economy Act

The Federal Reserve Act delineates specific requirements for the seven governors charged with oversight of the Federal Reserve System.

In a reflection of the Federal Reserve System’s decentralized structure that broadly distributes power and responsibility across the Nation, the Act mandates that the presidentially appointed governors come from a wide range of geographic locations and professional backgrounds. Specifically, the first undesignated paragraph under section 10 of the Federal Reserve Act states that “In selecting the members of the Board, not more than one of whom shall be selected from any one Federal Reserve District, the President shall have due regard to a fair representation of the financial, agricultural, industrial, and commercial interests and geographical divisions of the country.”.

The Federal Open Monetary Committee consists of members of the Board of Governors and the President or Vice President of the Federal Reserve Bank of New York on a permanent basis and rotates voting membership among the remaining Regional Reserve Banks.

The existing structure of the Federal Open Market Committee places too much authority in the hands of Washington and New York at the expense of the remainder of the United States.

Monetary policy should be conducted in the interest of all Americans and that policy goal is best achieved by a Federal Open Market Committee that provides greater representation and voice in policy decisions to the entire Nation as represented by the Regional Reserve Banks. This objective is best achieved by reforming the voting membership of the Federal Open Market Committee to include all Regional Reserve Banks on a permanent basis.

by striking “five representatives of the Federal Reserve banks to be selected as hereinafter provided.” and inserting “1 representative from each of the Federal Reserve banks.”; and

by striking “and, beginning with the election for the term commencing March 1, 1943, shall be elected annually as follows: One by the board of directors of the Federal Reserve Bank of New York, one by the boards of directors of the Federal Reserve Banks of Boston, Philadelphia, and Richmond, one by the boards of directors of the Federal Reserve Banks of Cleveland and Chicago, one by the boards of directors of the Federal Reserve Banks of Atlanta, Dallas, and St. Louis, and one by the boards of directors of the Federal Reserve Banks of Minneapolis, Kansas City, and San Francisco. In such elections each board of directors shall have one vote; and the details of such elections may be governed by regulations prescribed by the committee, which may be amended from time to time.” and inserting “and shall be elected by the board of directors of the Federal Reserve bank that they are to represent.”.