What This Bill Does
This bill changes how the Federal Reserve chooses members of its bank boards to prevent conflicts of interest. The bill stops bank employees and Federal Reserve employees from holding certain positions or owning stock in companies that the Federal Reserve regulates.
Who It Affects
- Board members at Federal reserve banks
- Employees of bank holding companies (parent companies that own banks)
- Employees of the Federal Reserve System
- The Board of Governors of the Federal Reserve System
- Congress
Key Provisions
- The Board of Governors must choose Class A board members from people who do not work for any stockholding bank, instead of letting stockholding banks choose them (Sec. 2(a))
- The Board of Governors must choose Class B board members instead of letting them be elected (Sec. 2(b))
- No employee of a bank holding company or entity regulated by the Federal Reserve can serve on any Federal reserve bank board (Sec. 2(c))
- No Federal Reserve System employee or Federal reserve bank board member can own stock or invest in any company regulated by the Federal Reserve System without exception (Sec. 2(c))
- The Comptroller General must report to Congress yearly on whether the bill's rules are being followed (Sec. 3)
What Changes
Board members can no longer come from banks that the Federal Reserve regulates. Federal Reserve employees and board members cannot own stock in regulated companies.
Important Definitions
None defined in bill text
Effective Date
Not specified in bill text
II
118TH CONGRESS
1ST SESSION
S. 957
To amend the Federal Reserve Act to restrict conflicts of interest on the
boards of directors of Federal reserve banks, and for other purposes.
IN THE SENATE OF THE UNITED STATES
MARCH 23, 2023
Mr. SANDERS 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 restrict conflicts of
interest on the boards of directors of Federal reserve
banks, and for other purposes.
Be it enacted by the Senate and House of Representa-
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tives of the United States of America in Congress assembled,
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SECTION 1. SHORT TITLE.
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This Act may be cited as the ‘‘Federal Reserve Inde-
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pendence Act’’.
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SEC. 2. ENDING CONFLICTS OF INTEREST.
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(a) CLASS A MEMBERS.—The tenth undesignated
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paragraph of section 4 of the Federal Reserve Act (12
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U.S.C. 302) (relating to Class A) is amended by striking
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‘‘chosen by and be representative of the stockholding
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•S 957 IS
banks’’ and inserting ‘‘designated by the Board of Gov-
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ernors of the Federal Reserve System, from among per-
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sons who are not employed in any capacity by a stock-
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holding bank’’.
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(b) CLASS B.—The eleventh undesignated paragraph
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of section 4 of the Federal Reserve Act (12 U.S.C. 302)
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(relating to Class B) is amended by striking ‘‘be elected’’
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and inserting ‘‘be designated by the Board of Governors
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of the Federal Reserve System’’.
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(c) LIMITATIONS ON BOARDS OF DIRECTORS.—The
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fourteenth and fifteenth undesignated paragraphs of sec-
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tion 4 of the Federal Reserve Act (12 U.S.C. 303) (relat-
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ing to Class B and Class C, respectively) are amended to
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read as follows:
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‘‘No employee of a bank holding company or other
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entity regulated by the Board of Governors of the Federal
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Reserve System may serve on the board of directors of
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any Federal reserve bank.
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‘‘No employee of the Federal Reserve System or
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board member of a Federal reserve bank may own any
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stock or invest in any company that is regulated by the
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Board of Governors of the Federal Reserve System, with-
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out exception.’’.
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SEC. 3. REPORTS TO CONGRESS.
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Not later than 1 year after the date of enactment
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of this Act, and annually thereafter, the Comptroller Gen-
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eral of the United States shall submit to Congress a report
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regarding the adherence to the provisions of this Act and
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the amendments made by this Act.
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Æ
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