Fed Bank Presidents Get Five-Year Renewals in Setback to Reform
Trump’s “constrained discretion” on display instead of “you’re fired”
The Federal Reserve announced yesterday that it was reappointing all the regional bank presidents and first vice presidents, extending the five year terms that had been set to expire on February 28, 2026.
It seems like an action to preserve the status quo against a push by President Trump and other voices in Congress, the markets, and the press who want changes at the Fed. Those changes could improve the central bank’s performance and restore the intellectual energy and viewpoint diversity that used to be a feature of the Federal Reserve structure, and especially its regional banks.
New York has a permanent voting seat on the Open Market Committee that sets monetary policy. The presidents of the other 11 regional Fed banks take turns as voting members.
Trump has criticized the Fed Chairman, Jerome Powell, as “too late” and has pushed for lower interest rates.
The Fed has also come in for criticism for a $700 million cost overrun on its $2.5 or $3 billion headquarters renovation project; for active personal trading by Fed bankers ahead of bank decisions; for excessive hiring disconnected to results (Treasury Secretary Bessent describes it as “universal basic income for PhD economists. I don’t know what they do. They’re never right … If air traffic controllers did this, no one would get in an airplane”); and for research veering into topics such as climate change and racial equity that can seem far afield from monetary policy. A Fed senior adviser from 2010 to 2021 was indicted for conspiracy to commit economic espionage to benefit China, and a bank examiner at the Federal Reserve Bank of Richmond pleaded guilty to using confidential information to reap profits by trading in bank stocks.
Bessent has said he’ll push to require new regional bank presidents to have lived in their districts for at least three years. There’s also been some discussion about updating the regional structure to better account for changing realities like the rise of Florida as a financial capital.
Yet the reappointments, while a setback to efforts to overhaul the Fed, don’t entirely foreclose change either at the personnel or structural level.
Trump will pick a replacement for Powell as chair. If Powell resigns as a governor when his term as chair expires, Trump may get another governor pick, too. The courts are also considering whether Trump can remove Fed Governor Lisa Cook, who is under scrutiny for describing multiple properties as “primary” residences on mortgage applications.
There’s also a term limit for the regional bank presidents that, as I understand it, overrides the five-year term extension. David Wessel of Brookings explains: “Presidents of the regional Fed banks can serve until they’re 65—unless appointed after turning 55, in which case they can serve for a maximum of 10 years or until they’re 75, whichever comes first.” That means that Richmond Fed president Thomas Barkin must leave by January 2028, New York Fed president John Williams must leave by June 2028, and San Francisco Fed president Mary Daly must leave by October 2028, according to Wessel. There’s also an opening in Atlanta, where Raphael Bostic has announced he’ll leave effective February 28, 2026. A Fed investigation found Bostic “violated Federal Open Market Committee rules and Reserve Bank policies governing blackout periods, financial disclosures, prohibited holdings, and preclearance requirements.”
The Fed announcement spoke of “the unanimous concurrence of Federal Reserve Board members,” indicating that Trump’s appointees as Fed governors—Christopher Waller, Stephen Miran, and Michelle Bowman—all backed the reappointment of the regional presidents and vice presidents.
I spent the day yesterday at a conference in the David Rubenstein Treehouse at Harvard (more about the conference later) and one of the speakers was the chief economist of the White House Council of Economic Advisers, Aaron Hedlund. He spoke of how the “neoliberal” status quo of “globalism,” “open borders,” technocracy,” “trust in elites,” “institutionalism,” “rules,” and “market fundamentalism” is giving way to a new emphasis on “sovereignty,” “skepticism of elites,” “market pragmatism,” and “constrained discretion.”
The reappointment of the regional bank presidents and vice presidents—and in particular the three Trump governors backing the reappointment—stuck me as a good example of “constrained discretion.”
The replacement for rules is not “no guardrails.” The replacement for rules is not “I am the state.” There are still constraints. The constraint here may be that Trump doesn’t yet have the votes to purge the regional bank presidents, or that his team fears the market reaction if they did so, or that it’s not a fight obscure enough that Trump does not think it is worth the trouble, because the rates will come down eventually anyway as inflation fades thanks to market forces (such as declining rents). Yet if Trump’s discretion is constrained, so too is that of Jerome Powell. He plays the regional bank presidents like a calliope. At some point, though, he’ll be gone. As insulated as the Fed is from democratic accountability, eventually it, too, will feel the effects of declining trust in elites and in institutions. That trust is earned, and without results, it can erode rapidly enough. A five-year renewal may sound good, but no one—especially no one in Congress, which has the monetary power under the Constitution—should forget that one reason Trump is president is his readiness, when needed, to say, “you’re fired.”
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The bank examiner at the FRB - Richmond pleaded guilty to using confidential information to trade bank stocks and made an aggregate profit of $771,678.
I have worked as a bank examiner, and it strains credulity that in the course of a bank examination (or otherwise), he would have acquired confidential information enabling such profits.