Each regional bank is
overseen by boards comprised of private citizens
. In addition to having three directors to represent banks,
there are six other directors who present a mix of local
businesses and community interests. Three of those directors are
selected by the Fed's Board of Governors in Washington, while
the remainder are selected in a local process.
San
Silicon Valley Francisco Fed no longer
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board
The 12 regional Federal Reserve banks are quasi-private
institutions overseen by the Fed in Washington. Their respective
boards watch over the banks directly and provide advice on
governance as well as local economic intelligence.
Most importantly, these boards also lead the process to
select new presidents when there are vacancies, although
directors from firms regulated by the Fed are not allowed to
participate in that process.
The directors of the Fed banks have been in the spotlight in recent years as the central bank
has faced criticism that bank directors lacked racial and gender diversity and were too weighted towards the business and banking community. The Fed has been working on expanding who serves in these roles.
The boards have also
created issues
for the Fed in years past. The New York Fed’s board was
heavily dominated by bankers at the onset of the global
financial crisis and even included the leader of Lehman
Brothers, a firm whose failure in the fall of 2008 is widely
seen as kicking off the most acute phase of the financial
crisis.
In 2019, the Chicago Fed’s then board chair
resigned her term early
as her employer faced legal trouble.
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(Reporting by Michael S. Derby; Editing by Leslie Adler and
Diane Craft)
