Section 1 Short title
This Act may be cited as the “Strengthening Federal Reserve System Accountability Act of 2023”.
Strengthening Federal Reserve System Accountability Act of 2023
A BILL
To amend the Federal Reserve Act to limit banker representation on boards of directors of Federal Reserve banks, and for other purposes.
Sec. 2 Banker representation on Federal Reserve bank boards
Class A directors—
Eligibility— The tenth undesignated paragraph of section 4 of the Federal Reserve Act (12 U.S.C. 302) is amended—
by inserting “with $50,000,000,000 or less in assets” before the period at the end; and
by inserting “The Reserve bank, in consultation with the Board of Governors of the Federal Reserve System, may remove a Class A director if, after the director is elected, the assets of the bank of the director grow rapidly greater than $50,000,000,000. No individual may serve as a Class A director if the individual represents a bank that has a CAMELS rating of 3 or higher or outstanding Matters Requiring Attention or Matters Requiring Immediate Attention above the average number for banks of similar size and complexity.” after the period at the end.
Nomination and election— The 16th undesignated paragraph of section 4 of the Federal Reserve Act (12 U.S.C. 304) is amended—
in the third sentence, by inserting “with $50,000,000,000 or less in assets” after “member bank”; and
by striking the first and second sentences.
Election of Class B directors—
In general— The 11th undesignated paragraph of section 4 of the Federal Reserve Act (12 U.S.C. 302) is amended by striking “three members,” and all that follows through the period at the end and inserting “6 members who shall be designated by the Board of Governors of the Federal Reserve System. They shall be elected to represent the public, without discrimination on the basis of race, creed, color, sex, or national origin, and with due but not exclusive consideration to the interests of agriculture, commerce, industry, services, labor, and consumers. When the necessary subscriptions to the capital stock have been obtained for the organization of any Federal reserve bank, the Board of Governors of the Federal Reserve System shall appoint the class B directors and shall designate one of such directors as chairman of the board to be selected. Pending the designation of such chairman, the organization committee shall exercise the powers and duties appertaining to the office of chairman in the organization of such Federal reserve bank.”.
Technical and conforming amendments—
The 16th undesignated paragraph of section 4 of the Federal Reserve Act (12 U.S.C. 304) is amended—
in the first sentence, as redesignated by subsection (a)(2)(B) of this section, by striking “and one candidate for director of Class B”; and
in the third sentence, as redesignated by subsection (a)(2)(B) of this section, by striking “and Class B”.
Section 4 of the Federal Reserve Act is amended—
in the fifth paragraph of the fourth undesignated paragraph, by striking “and Class C”;
by striking the 12th undesignated paragraph;
by striking the 15th undesignated paragraph (12 U.S.C. 303);
by striking the 17th undesignated paragraph (12 U.S.C. 304); and
by striking the 20th undesignated paragraph.
Financial institutions regulated by the Board of Governors— Section 4 of the Federal Reserve Act is amended—
in the 14th undesignated paragraph (12 U.S.C. 303), by striking “No director of class B shall be an officer, director, or employee of any bank.” and inserting “No individual who served as an officer, director, or employee of any bank or other financial institution regulated by the Board of Governors of the Federal Reserve System during the preceding 5-year period shall serve as a director of class B.”; and
by striking the 15th undesignated paragraph (12 U.S.C. 303).
Sec. 3 Reserve Bank director responsibilities
In general— The eighth undesignated paragraph of section 4 of the Federal Reserve Act (12 U.S.C. 301) is amended by inserting after the period at the end of the second sentence the following: “The board of directors may not be involved in bank examinations or supervisory processes, including the selection, appointment, and compensation of all Federal reserve bank officers whose primary duties involve supervisory matters, budgetary matters, and any other decisions or deliberations that pertain to supervisory activities.”.
Term limits— The 24th undesignated paragraph of section 4 of the Federal Reserve Act (12 U.S.C. 308) is amended by inserting “No director of a Federal reserve bank may serve more than 2 full terms.” after the period at the end of the second sentence.
Sec. 4 Federal Reserve transparency and independence
Director elections—
Class A— The 19th undesignated paragraph of section 4 of the Federal Reserve Act (12 U.S.C. 304) is amended by inserting “, which shall be published on the website of each Federal reserve bank not later than 3 years after such declaration” before the period at the end of the fifth sentence.
Class B— The 11th undesignated paragraph of section 4 of the Federal Reserve Act (12 U.S.C. 302) is amended by inserting “The list of the final 3 candidates considered for such designation shall be published on the website of the Board of Governors of the Federal Reserve System not earlier than 3 years after the date of its completion.” after the period at the end of the second sentence.
Director and president selection input— Section 4 of the Federal Reserve Act is amended by inserting after the 20th undesignated paragraph (12 U.S.C. 305) the following:
“The Federal reserve banks and the Board of Governors of the Federal Reserve System shall develop processes for allowing public comment and input for nominating Class A directors and designating Class B directors, and appointing presidents. Each Federal reserve bank shall publish a public contact for such nominations, designations, and appointments. The Board of Governors of the Federal Reserve System shall disclose any vote or veto by a member of the Board for a Class B director or a president not later than 3 years after such vote or veto. The Board of Governors of the Federal Reserve System shall release a public statement after the date on which a president is selected describing the involvement of the Board in the selection process.”
Office staff for members of the Board of Governors of the Federal Reserve System— Section 11(l) of the Federal Reserve Act (12 U.S.C. 248(l)) is amended by inserting “Of amounts made available for staff of the Federal Reserve System, each member of the Board of Governors may employ not more than 4 individuals for the purpose of staffing the member’s office, with such individuals selected by such member and the salaries of such individuals set by such member.” after the period at the end.
Vote by Board of Governors on certain settlements— Section 10 of the Federal Reserve Act is amended—
by redesignating paragraph (12) (12 U.S.C. 247b) as paragraph (11); and
by adding at the end the following:
“(12)
“(A) The Board of Governors of the Federal Reserve System shall vote, at a properly noticed public meeting of the Board, on whether to resolve any enforcement action if the resolution of that action involves the payment of not less than $5,000,000 in compensation, penalties, or fines, or other payments.
“(B) The results of the vote of each member of the Board under subparagraph (A) shall—
“(i) be included at the appropriate place in the official minutes of the Board; and
“(ii) be made publicly available on the website of the Board.”
Term limits; review— The fifth paragraph of the fourth unenumerated paragraph of section 4 of the Federal Reserve Act (12 U.S.C. 341) is amended by inserting ‘‘A president may continue to serve after the expiration of the term of office to which the president was appointed until the earlier of the date on which a successor has been appointed and qualified, the date on which the next session of Congress subsequent to the expiration of such term expires, or the date on which the President of the United States removes the president. No appointed president shall serve more than a total of 10 years, not including any such continuation in service. The Board of Governors of the Federal Reserve System, in consultation with the relevant Reserve bank board of directors, shall initiate a review of the Reserve bank president and vice President and the appropriateness of their removal in the event of a bank failure in the Reserve district. The Board of Governors shall also publish the results of the review not later than 90 days following the bank failure.’’ after the period at the end of the fourth sentence.
Sec. 5 Federal Reserve ethics
Section 4 of the Federal Reserve Act, as amended by section 4(b) of this Act, is amended by adding at the end the following:
“Each director, president, and vice president shall comply with the same rules for investment and trading activity prescribed by the Board of Governors of the Federal Reserve System. Each director shall disclose any financial interest in the same manner as presidents. Each Federal reserve bank shall publicly disclose and explain any rationale for waivers granted to directors from conflict of interest rules. The Comptroller General of the United States shall annually review conflict of interest rules of the Federal reserve banks and the Board of Governors of the Federal Reserve System and implementation of and compliance with such rules.”