[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 1663 Introduced in Senate (IS)]
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118th CONGRESS
1st Session
S. 1663
To amend the Federal Reserve Act to limit banker representation on
boards of directors of Federal Reserve banks, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
May 17, 2023
Ms. Warren (for herself and Mr. Scott of Florida) introduced the
following bill; which was read twice and referred to the Committee on
Banking, Housing, and Urban Affairs
_______________________________________________________________________
A BILL
To amend the Federal Reserve Act to limit banker representation on
boards of directors of Federal Reserve banks, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Strengthening Federal Reserve System
Accountability Act of 2023''.
SEC. 2. BANKER REPRESENTATION ON FEDERAL RESERVE BANK BOARDS.
(a) Class A Directors.--
(1) Eligibility.--The tenth undesignated paragraph of
section 4 of the Federal Reserve Act (12 U.S.C. 302) is
amended--
(A) by inserting ``with $50,000,000,000 or less in
assets'' before the period at the end; and
(B) 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.
(2) Nomination and election.--The 16th undesignated
paragraph of section 4 of the Federal Reserve Act (12 U.S.C.
304) is amended--
(A) in the third sentence, by inserting ``with
$50,000,000,000 or less in assets'' after ``member
bank''; and
(B) by striking the first and second sentences.
(b) Election of Class B Directors.--
(1) 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.''.
(2) Technical and conforming amendments.--
(A) The 16th undesignated paragraph of section 4 of
the Federal Reserve Act (12 U.S.C. 304) is amended--
(i) 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
(ii) in the third sentence, as redesignated
by subsection (a)(2)(B) of this section, by
striking ``and Class B''.
(B) Section 4 of the Federal Reserve Act is
amended--
(i) in the fifth paragraph of the fourth
undesignated paragraph, by striking ``and Class
C'';
(ii) by striking the 12th undesignated
paragraph;
(iii) by striking the 15th undesignated
paragraph (12 U.S.C. 303);
(iv) by striking the 17th undesignated
paragraph (12 U.S.C. 304); and
(v) by striking the 20th undesignated
paragraph.
(c) Financial Institutions Regulated by the Board of Governors.--
Section 4 of the Federal Reserve Act is amended--
(1) 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
(2) by striking the 15th undesignated paragraph (12 U.S.C.
303).
SEC. 3. RESERVE BANK DIRECTOR RESPONSIBILITIES.
(a) 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.''.
(b) 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.
(a) Director Elections.--
(1) 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.
(2) 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.
(b) 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.''.
(c) 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.
(d) Vote by Board of Governors on Certain Settlements.--Section 10
of the Federal Reserve Act is amended--
(1) by redesignating paragraph (12) (12 U.S.C. 247b) as
paragraph (11); and
(2) 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.''.
(e) 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.''.
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