The Federal Reserve’s internal oversight office announced Wednesday it is conducting a review of procedures used by the central bank’s Board of Governors when reappointing regional Federal Reserve presidents and their second-in-command officers to five-year terms.
According to a press release from the Inspector General, the examination will determine whether the Washington-based board’s procedures “to approve the reappointment of Reserve Bank presidents and first vice presidents aligns with relevant Federal Reserve Administrative Manual requirements and leading practices.”
The oversight office also indicated it would evaluate “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 respond immediately to requests for additional details about the investigation or its timing.
Scrutiny of the reappointment procedures has intensified following 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.
This investigation represents one of several reviews the IG is pursuing, including a high-profile examination 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 maintained for some time a separate examination 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 most recent reappointment cycle concluded 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 previous reappointment cycle occurred before 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.”
