I

103D CONGRESS

1ST SESSION H. R. 28

To promote accountability, diversity, and the public interest in the operation

of the Federal Reserve System, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

JANUARY 5, 1993

Mr. GONZALEZ introduced the following bill; which was referred to the

Committee on Banking, Finance and Urban Affairs

MARCH 15, 1993

Additional sponsors: Mr. CRAMER, Mr. FRANK of Massachusetts, Mr.

HINCHEY, Mr. GUTIERREZ, Mr. RUSH, Mrs. MALONEY, Mr. KLEIN, Ms.

ROYBAL-ALLARD, Mr. WYNN, Mr. FLAKE, Mr. MFUME, Mr. CHAPMAN,

Mr. DEFAZIO, and Mr. BILIRAKIS

A BILL

To promote accountability, diversity, and the public interest

in the operation of the Federal Reserve System, and

for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Federal Reserve Sys5 tem Accountability Act of 1993’’.
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1 SEC. 2. PUBLIC ACCOUNTABILITY OF PRESIDENTS AND

2 BOARDS OF DIRECTORS OF FEDERAL RE3 SERVE BANKS.

4 ‘‘(a) IN GENERAL.—Section 4 of the Federal Reserve

5 Act (12 U.S.C. 341, 301 et seq.) is amended to read as

6 follows:

7 ‘‘SEC. 4. FEDERAL RESERVE BANKS.

8 ‘‘(a) GENERAL CORPORATE POWERS.—Upon the fil9 ing of an organization certificate with the Comptroller of

10 the Currency in accordance with this Act, a Federal re11 serve bank shall become a body corporate and as such,

12 and in the name designated in such organization certifi13 cate, shall have the following powers:

14 ‘‘(1) CORPORATE SEAL.—To adopt and use a

15 corporate seal.

16 ‘‘(2) SUCCESSION.—To have succession until

17 dissolved by an Act of Congress or until forfeiture

18 of franchise for violation of law.

19 ‘‘(3) CONTRACT AUTHORITY.—To make con20 tracts.

21 ‘‘(4) LITIGATION AUTHORITY.—To sue and be

22 sued, complain and defend, in any court of law or

23 equity.

24 ‘‘(5) APPOINTMENT OF OFFICERS OTHER THAN

25 THE PRESIDENT.—To appoint, by the board of di26 rectors, vice presidents and such other officers and
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1 employees as are not otherwise provided for in this

2 Act, to define their duties, require bonds for them

3 and fix the penalty thereof, and to dismiss at pleas4 ure such officers or employees.

5 ‘‘(6) ADOPTION OF BY-LAWS AND OTHER AD6 MINISTRATIVE AUTHORITY.—To prescribe by the

7 board of directors, by-laws not inconsistent with law,

8 regulating the manner in which its general business

9 may be conducted, and the privileges granted to it

10 by law may be exercised and enjoyed.

11 ‘‘(7) INCIDENTAL POWERS.—To exercise by the

12 board of directors, or duly authorized officers or

13 agents, all powers specifically granted by the provi14 sions of this Act and such incidental powers as shall

15 be necessary to carry on the business of banking

16 within the limitations prescribed by this Act.

17 ‘‘(8) CIRCULATING NOTES.—Upon deposit with

18 the Treasurer of the United States of any bonds of

19 the United States in the manner provided by exist20 ing law relating to national banks, to receive from

21 the Comptroller of the Currency circulating notes in

22 blank, registered and countersigned as provided by

23 law, equal in amount to the par value of the bonds

24 so deposited, such notes to be issued under the same

25 conditions and provisions of law as relate to the
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1 issue of circulating notes of national banks secured

2 by bonds of the United States bearing the circulat3 ing privilege, except that the issue of such notes

4 shall not be limited to the capital stock of such Fed5 eral reserve bank.

6 ‘‘(b) PRESIDENT AND FIRST VICE PRESIDENT.—

7 ‘‘(1) OFFICE OF THE PRESIDENT.—

8 ‘‘(A) IN GENERAL.—Each Federal reserve

9 bank shall have a president who shall be the

10 chief executive officer of the bank and all other

11 executive officers and all employees of the bank

12 shall be directly responsible to the president.

13 ‘‘(B) APPOINTMENT.—The president of

14 each Federal reserve bank shall be appointed by

15 the President of the United States, by and with

16 the consent of the Senate, without discrimina17 tion on the basis of race, creed, color, sex, or

18 national origin.

19 ‘‘(C) DIVERSIFIED REPRESENTATION.—In

20 appointing the presidents of the Federal reserve

21 banks, the President shall include representa22 tives of agriculture, small business, labor,

23 consumer and community organizations,

24 women, and minorities.

25 ‘‘(2) OFFICE OF THE FIRST VICE PRESIDENT.—
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1 ‘‘(A) IN GENERAL.—Each Federal reserve

2 bank shall have a first vice president who shall,

3 in the absence or disability of the president or

4 during a vacancy in the office of president,

5 serve as chief executive officer of the bank.

6 ‘‘(B) TIME LIMIT ON SERVICE AS ACTING

7 CHIEF EXECUTIVE OFFICER.—The first vice

8 president of a Federal reserve bank may serve

9 as the chief executive officer of the bank under

10 subparagraph (A) for not more than 120 days.

11 ‘‘(3) TERMS.—The president of any Federal re12 serve bank shall be appointed for a term of 5 years.

13 ‘‘(4) VACANCIES.—Whenever a vacancy shall

14 occur in the office of the president, the vacancy shall

15 be filled in the manner in which the original appoint16 ment was made and the person so appointed shall

17 hold office until the expiration of the term to which

18 such person’s predecessor was appointed.

19 ‘‘(c) BOARD OF DIRECTORS.—

20 ‘‘(1) IN GENERAL.—Each Federal reserve bank

21 shall be conducted under the supervision and control

22 of a board of directors.

23 ‘‘(2) DUTIES OF DIRECTORS.—

24 ‘‘(A) IN GENERAL.—The board of directors

25 shall perform the duties usually appertaining to
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1 the office of directors of banking associations

2 and all such duties as are prescribed by law.

3 ‘‘(B) ADMINISTRATION OF AFFAIRS EX4 TENSION OF CREDIT.—Each board of directors

5 of a Federal reserve bank—

6 ‘‘(i) shall administer the affairs of the

7 bank fairly and impartially and without

8 discrimination in favor of or against any

9 member bank; and

10 ‘‘(ii) may, subject to the provisions of

11 law and the orders of the Board of Gov12 ernors of the Federal Reserve System, ex13 tend to each member bank such discounts,

14 advancements, and accommodations as

15 may be safely and reasonably made with

16 due regard for the claims and demands of

17 other member banks, the maintenance of

18 sound credit conditions, and the accommo19 dation of commerce, industry, and agri20 culture.

21 ‘‘(3) REGULATION BY BOARD OF GOVERNORS

22 OF EXTENSION OF CREDIT.—The Board of Gov23 ernors of the Federal Reserve System may prescribe

24 regulations defining (within the limitations of this

25 Act) the conditions under which discounts, advance-
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1 ments, and the accommodations may be extended by

2 a Federal reserve bank to member banks.

3 ‘‘(4) REGULATION BY BOARD OF DIRECTORS OF

4 EXTENSION OF CREDIT.—

5 ‘‘(A) COLLECTION AND REVIEW OF INFOR6 MATION.—Each Federal reserve bank shall keep

7 itself informed of the general character and

8 amount of the loans and investments of its

9 member banks with a view to ascertaining

10 whether undue use is being made of bank credit

11 for the speculative carrying of or trading in se12 curities, real estate, or commodities, or for any

13 other purpose inconsistent with the mainte14 nance of sound credit conditions.

15 ‘‘(B) CONSIDERATION OF INFORMATION IN

16 MAKING CREDIT DECISIONS.—In determining

17 whether to grant or refuse any advance, redis18 count, or other credit accommodation, a Fed19 eral reserve bank shall give consideration to the

20 information maintained pursuant to subpara21 graph (A).

22 ‘‘(5) REPORT TO BOARD OF GOVERNORS OF

23 UNDUE USE OF CREDIT.—The chairperson of the

24 board of directors of each Federal reserve bank shall

25 report to the Board of Governors of the Federal Re-
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1 serve System any undue use of bank credit by any

2 member bank, together with the chairperson’s rec3 ommendation.

4 ‘‘(6) SUSPENSION OF MEMBER BANK FROM USE

5 OF CREDIT FACILITIES.—Whenever, in the judgment

6 of the Board of Governors of the Federal Reserve

7 System, any member bank is making such undue use

8 of bank credit, the Board may, in the Board’s dis9 cretion and after reasonable notice and an oppor10 tunity for a hearing, suspend such bank from the

11 use of the credit facilities of the Federal Reserve

12 System and may terminate or renew the suspension

13 at any time.

14 ‘‘(d) NUMBER AND CLASSES OF DIRECTORS AND RE15 LATED REQUIREMENTS.—

16 ‘‘(1) IN GENERAL.—The board of directors of

17 each Federal reserve bank shall consist of a total of

18 9 members divided into 2 classes, designated as

19 classes A and B.

20 ‘‘(2) CLASS A DIRECTORS.—Class A shall con21 sist of 3 members elected in accordance with sub22 section (e) by the stock-holding banks without dis23 crimination on the basis of race, creed, color, sex, or

24 national origin who shall be representative of such

25 banks.
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1 ‘‘(3) CLASS B DIRECTORS.—Class B shall con2 sist of 6 members appointed in accordance with sub3 section (f) by the Board without discrimination on

4 the basis of race, creed, color, sex, or national origin

5 who shall represent the public and be representative

6 of the public.

7 ‘‘(4) CHAIRPERSON.—The Board shall des8 ignate 1 of the class B members of any Federal re9 serve bank to serve as the chairperson of the board

10 of directors of such bank.

11 ‘‘(5) INELIGIBILITY OF MEMBERS OF CON12 GRESS.—No Senator or Representative in Congress

13 shall be a member of the Board of Governors of the

14 Federal Reserve System or an officer or a director

15 of a Federal reserve bank.

16 ‘‘(6) TERMS OF DIRECTORS.—

17 ‘‘(A) IN GENERAL.—Each member of the

18 board of directors of a Federal reserve bank

19 shall be elected or appointed, as the case may

20 be, for a term of 3 years.

21 ‘‘(B) INTERIM APPOINTMENTS.—Any di22 rector elected or appointed to fill a vacancy oc23 curring before the expiration of the term for

24 which the director’s predecessor was elected or
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1 appointed shall be elected or appointed only for

2 the remainder of such term.

3 ‘‘(7) VACANCIES.—Any vacancy on the board of

4 directors of any Federal reserve bank shall be filled

5 in the manner in which the original selection was

6 made.

7 ‘‘(e) NOMINATION AND ELECTION OF CLASS A DI8 RECTORS.—

9 ‘‘(1) DESIGNATION OF VOTING BLOCS.—

10 ‘‘(A) IN GENERAL.—The Board of Gov11 ernors of the Federal Reserve System shall clas12 sify the member banks of the district of each

13 Federal reserve bank into 3 general groups,

14 designating each group by number.

15 ‘‘(B) CRITERIA.—In classifying member

16 banks into groups pursuant to subparagraph

17 (A), the Board shall take such action as may be

18 reasonable to ensure that each group consists

19 as nearly as may be of banks of similar capital20 ization.

21 ‘‘(2) NOMINATION PROCESS.—Subject to para22 graphs (3) and (4)—

23 ‘‘(A) BANK NOMINATIONS.—Each member

24 bank shall be permitted to nominate to the

25 chairperson of the board of directors of the
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1 Federal reserve bank of the district 1 candidate

2 for director of Class A.

3 ‘‘(B) PREPARATION OF LISTS OF NOMI4 NEES.—The candidates nominated by the mem5 ber banks of each group shall be listed by the

6 chairperson of the board of directors of the

7 Federal reserve bank of the district, indicating

8 by whom nominated, and a copy of the list for

9 such group shall, within 15 days after the com10 pletion of the list, be furnished by the chair11 person to each member bank of the group.

12 ‘‘(3) ELECTION PROCESS.—Subject to para13 graph (4)—

14 ‘‘(A) APPOINTMENT OF ELECTOR FOR

15 EACH BANK.—Each member bank, by a resolu16 tion of the board or by an amendment to the

17 bank’s by-laws, shall authorize the bank’s presi18 dent, cashier, or some other officer to cast the

19 vote of the member bank in the elections of

20 class A directors.

21 ‘‘(B) PREFERENTIAL BALLOT.—Before the

22 end of the 15-day period beginning on the date

23 of the receipt of the list of candidates in accord24 ance with paragraph (2)(B), the officer ap25 pointed by a member bank pursuant to sub-
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1 paragraph (A) shall certify to the chairperson

2 of the board of directors of the Federal reserve

3 bank of the district the officer’s 1st, 2d, and

4 other choices for class A director from such list

5 upon a preferential ballot upon a form fur6 nished by the chairperson of the board of direc7 tors of the Federal reserve bank of the district

8 by making a cross opposite the name of such

9 1st, 2d, and other choices but shall not vote

10 more than 1 choice for any 1 candidate.

11 ‘‘(C) COUNTING THE BALLOTS.—

12 ‘‘(i) 1ST COLUMN WINNER.—Any can13 didate having a majority of all votes cast

14 in the column for 1st choice on the ballot

15 for any group shall be declared elected.

16 ‘‘(ii) TAKING 2D COLUMN INTO AC17 COUNT.—If no candidate has been declared

18 elected by any group under clause (i), the

19 candidate who has the highest number of

20 votes after taking into account the total

21 number of votes cast for each candidate in

22 the columns for 1st and 2d choice on the

23 ballot for such group by a majority of the

24 electors voting in such group shall be de25 clared elected.
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1 ‘‘(iii) TAKING OTHER CHOICES INTO

2 ACCOUNT.—If no candidate has been de3 clared elected by any group under clause

4 (i) or (ii), the candidate who has the high5 est number of votes after taking into ac6 count the total number of votes cast for

7 each candidate in the columns for 1st, 2d,

8 and other choices on the ballot for such

9 group shall be declared elected.

10 ‘‘(4) RULES GOVERNING ELIGIBILITY OF DIREC11 TORS AND ELECTORS.—

12 ‘‘(A) ELIGIBILITY OF DIRECTORS ON BASIS

13 OF GROUP.—No individual who is a director or

14 officer of a member bank shall be eligible to

15 serve as a Class A director unless nominated

16 and elected by banks which are members of the

17 same group as the member bank of which such

18 individual is an director or officer.

19 ‘‘(B) SPECIAL RULE IN CASE OF CAN20 DIDATE SERVING MORE THAN 1 BANK.—If any

21 individual is a director or officer of more than

22 1 member bank, subparagraph (A) shall be ap23 plied by taking into account only the member

24 bank (of which such individual is the director or

25 officer) which has the largest aggregate re-
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1 sources of all of the banks of which such indi2 vidual is a director or officer.

3 ‘‘(C) ELECTORS FOR HOLDING COMPA4 NIES.—

5 ‘‘(i) IN GENERAL.—If 2 or more mem6 ber banks in a Federal reserve district are

7 subsidiaries of the same bank holding com8 pany (as defined in section 2 of the Bank

9 Holding Company Act of 1956), only 1

10 member bank affiliate of such holding com11 pany shall be eligible to participate in the

12 nomination or election of class A directors

13 for such district under this subsection by

14 such member banks.

15 ‘‘(ii) DESIGNATION OF ELIGIBLE PAR16 TICIPANT.—Any bank holding company

17 which has 2 or more member bank subsidi18 aries in a Federal reserve district shall des19 ignate 1 such bank as the eligible bank for

20 purposes of clause (i).

21 ‘‘(iii) RULE APPLICABLE TO BANK

22 WHICH IS A BANK HOLDING COMPANY.—A

23 member bank which is a bank holding

24 company (as defined in section 2 of the

25 Bank Holding Company Act of 1956) shall
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1 be treated as a subsidiary of a bank hold2 ing company for purposes of determining

3 the number of member banks within a

4 bank holding company which are eligible to

5 participate in the nomination or election of

6 class A directors and the designation of the

7 bank pursuant to clauses (i) and (ii).

8 ‘‘(D) INELIGIBILITY OF OFFICERS AND

9 EMPLOYEES OF BANKS CONTROLLED BY A FOR10 EIGN GOVERNMENT.—

11 ‘‘(i) IN GENERAL.—A director, officer,

12 employee, or controlling shareholder of—

13 ‘‘(I) any foreign bank which is

14 controlled by the government of a for15 eign country; or

16 ‘‘(II) any branch or agency of, or

17 company controlled by, any such for18 eign bank,

19 shall not be eligible for appointment or

20 election to the board of directors of any

21 Federal reserve bank.

22 ‘‘(ii) PROHIBITION ON PARTICIPATION

23 IN NOMINATION AND ELECTION OF CLASS

24 A DIRECTORS.—A foreign bank which is

25 controlled by the government of a foreign
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1 country and a branch or agency of, or

2 company controlled by, any such foreign

3 bank may not participate in the nomina4 tion or election of class A directors.

5 ‘‘(iii) DETERMINATION OF CON6 TROL.—Any foreign government which,

7 under section 2 of the Bank Holding Com8 pany Act of 1956, would be a bank holding

9 company with respect to a foreign bank

10 if—

11 ‘‘(I) such government were a

12 company (as defined in such Act)

13 which is subject to the Act; and

14 ‘‘(II) the foreign bank were a

15 bank within the meaning of the Act,

16 shall be deemed to control the foreign bank

17 for purposes of this section.

18 ‘‘(iv) APPLICABILITY OF SECTION 2

19 OF THE BANK HOLDING COMPANY ACT.—

20 Section 2 of the Bank Holding Company

21 Act of 1956 shall apply to—

22 ‘‘(I) any determination by the

23 Board, pursuant to clause (iii), of the

24 applicability of this subparagraph to

25 any foreign bank; and
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1 ‘‘(II) the procedures for making

2 and reviewing any such determination.

3 ‘‘(f) PROVISIONS RELATING TO CLASS B DIREC4 TORS.—

5 ‘‘(1) DIVERSIFIED REPRESENTATION.—In ap6 pointing class B members of the board of directors

7 of each Federal reserve bank, the Board shall in8 clude representatives of agriculture, small business,

9 labor, consumer and community organizations,

10 women, and minorities.

11 ‘‘(2) ELIGIBILITY PROVISION.—No individual

12 may be appointed as the director of a Federal re13 serve bank who—

14 ‘‘(A) has resided in such bank’s district for

15 less than 2 years; or

16 ‘‘(B) has been a director, officer, employee,

17 or controlling shareholder of a depository insti18 tution (as defined in section 19(b)(1)(A)) or

19 any affiliate of a depository institution at any

20 time during the preceding 2-year period.

21 ‘‘(3) INELIGIBILITY OF CLASS B DIRECTORS

22 FOR OTHER OFFICES.—No class B director may be

23 a director, officer, employee, or shareholder of any

24 depository institution (as defined in section

25 19(b)(1)(A)) or depository institution holding com-
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1 pany (as defined in section 3(w)(1) of the Federal

2 Deposit Insurance Act).

3 ‘‘(g) CHAIRPERSON AND FEDERAL RESERVE AGENT;

4 DEPUTY CHAIRPERSON.—

5 ‘‘(1) CHAIRPERSON AND FEDERAL RESERVE

6 AGENT.—The Board shall designate 1 of the class B

7 members as the chairperson of the board of directors

8 of a Federal reserve bank and as the Federal reserve

9 agent for the district of such bank.

10 ‘‘(2) PROVISIONS RELATING TO CHAIR11 PERSON.—

12 ‘‘(A) REPORTS TO AND REPRESENTATION

13 OF THE BOARD OF GOVERNORS.—The chair14 person of the board of directors of a Federal re15 serve bank shall—

16 ‘‘(i) make regular reports to the

17 Board; and

18 ‘‘(ii) shall act as the official represent19 ative of the Board for the performance of

20 the functions conferred upon the Board by

21 this Act.

22 ‘‘(B) COMPENSATION.—The chairperson of

23 the board of directors of a Federal reserve bank

24 shall receive an annual compensation to be fixed
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1 by the Board and paid monthly by the Federal

2 reserve bank.

3 ‘‘(3) DEPUTY CHAIRPERSON.—The Board shall

4 designate 1 of the class B directors of the board of

5 directors of each Federal reserve bank as the deputy

6 chairperson of such board of directors who shall, in

7 the absence or disability of the chairperson or during

8 a vacancy in the office of chairperson, serve as

9 chairperson of the board of directors.

10 ‘‘(4) OTHER ACTING CHAIRPERSON.—In the ab11 sence or disability of the chairperson and deputy

12 chairperson of the board of directors of a Federal

13 district bank or during a vacancy in the offices of

14 chairperson and deputy chairperson, the Board shall

15 designate another class B director as the acting

16 chairperson of the board of directors.

17 ‘‘(h) ASSISTANT FEDERAL RESERVE AGENTS.—

18 ‘‘(1) APPOINTMENT.—The Federal reserve

19 agent shall appoint 1 or more assistant Federal re20 serve agents from among individuals with tested

21 banking experience.

22 ‘‘(2) DUTIES AND POWERS OF ASSISTANTS.—

23 Assistant Federal reserve agents shall—

24 ‘‘(A) assist the Federal reserve agent in

25 the performance of the duties of the office; and
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1 ‘‘(B) shall have power to act in the Federal

2 reserve agent’s name and stead during the ab3 sence or disability of such agent or a vacancy

4 in the office of the Federal reserve agent.

5 ‘‘(3) BONDS.—The Board of Governors of the

6 Federal Reserve System shall require such bonds of

7 the assistant Federal reserve agents as the Board

8 may deem necessary for the protection of the United

9 States.

10 ‘‘(4) COMPENSATION.—Assistant Federal re11 serve agents shall receive an annual compensation,

12 to be fixed and paid in the same manner as that of

13 the Federal reserve agent.

14 ‘‘(i) COMPENSATION AND EXPENSES OF DIRECTORS,

15 OFFICERS, AND EMPLOYEES.—

16 ‘‘(1) TRAVEL EXPENSES.—Directors of Federal

17 reserve banks shall receive, in addition to any com18 pensation otherwise provided, a reasonable allowance

19 for necessary expenses in attending meetings of their

20 respective boards, which amounts shall be paid by

21 the respective Federal reserve banks.

22 ‘‘(2) COMPENSATION SUBJECT TO REVIEW.—

23 Any compensation that may be provided by boards

24 of directors of Federal reserve banks for directors,

25 officers, or employees shall be subject to the ap-
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1 proval of the Board of Governors of the Federal Re2 serve System.

3 ‘‘(j) PUBLICATION OF RESULTS OF ELECTIONS AND

4 APPOINTMENTS OF DIRECTORS.—Notice of the appoint5 ment or election of any member of the board of directors

6 of any Federal reserve bank shall be published by the

7 Board or the Federal reserve bank as soon as practicable

8 after the appointment or election in newspapers of general

9 circulation in the district of the bank.

10 ‘‘(k) DEFINITIONS.—For purposes of this section and

11 section 3(b)(3)—

12 ‘‘(1) CONSUMER AND COMMUNITY ORGANIZA13 TION.—The term ‘consumer and community organi14 zation’ means any organization which has more than

15 a 2-year history of representing consumer or com16 munity interests in the provision of banking services,

17 services in connection with meeting credit needs, or

18 housing and financial consumer protections.

19 ‘‘(2) MINORITY.—The term ‘minority’ has the

20 meaning given to such term in section 1204(c)(3) of

21 the Financial Institutions Reform, Recovery, and

22 Enforcement Act of 1989.’’.

23 (b) EFFECTIVE DATE.—The amendment made by

24 subsection (a) shall take effect at the end of the 1-year

25 period beginning on the date of the enactment of this Act,
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1 except that regulations necessary to carry out the effect

2 of the amendment may be prescribed by the Board of Gov3 ernors of the Federal Reserve System before the end of

4 such period.

5 (c) STAGGERED APPOINTMENTS.—

6 (1) TERMINATION OF TERMS OF BOARD OF DI7 RECTORS OF FEDERAL RESERVE BANKS.—Notwith8 standing any provision of section 4 of the Federal

9 Reserve Act (as in effect on the day before the date

10 of the enactment of this Act), the term of office of

11 any member of the board of directors and any presi12 dent of any Federal reserve bank shall terminate at

13 the end of the 1-year period referred to in subsection

14 (b).

15 (2) APPOINTMENT OF PRESIDENTS OF FED16 ERAL RESERVE BANKS.—Of the presidents of the

17 Federal reserve banks first appointed after the end

18 of the 1-year period referred to in subsection (b)—

19 (A) 3 shall be appointed for a term of 5

20 years;

21 (B) 3 shall be appointed for a term of 4

22 years;

23 (C) 2 shall be appointed for a term of 3

24 years;
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1 (D) 2 shall be appointed for a term of 2

2 years; and

3 (E) 2 shall be appointed for a term of 1

4 year,

5 as designated by the President at the time of the ap6 pointment.

7 (3) ELECTION OF CLASS A MEMBERS.—Of the

8 class A members of the boards of directors of each

9 Federal reserve bank first elected after the end of

10 the 1-year period referred to in subsection (b)—

11 (A) 1 shall be elected for a term of 3

12 years;

13 (B) 1 shall be elected for a term of 2

14 years; and

15 (C) 1 shall be elected for a term of 1 year,

16 as designated by the Board of Governors of the Fed17 eral Reserve System.

18 (4) APPOINTMENT OF CLASS B MEMBERS.—Of

19 the class B members of the boards of directors of

20 each Federal reserve bank first appointed after the

21 end of the 1-year period referred to in subsection

22 (b)—

23 (A) 2 shall be appointed for a term of 3

24 years;
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1 (B) 2 shall be appointed for a term of 2

2 years; and

3 (C) 2 shall be appointed for a term of 1

4 year,

5 as designated by the Board of Governors of the Fed6 eral Reserve System.

7 SEC. 3. INDEPENDENT AUDITS OF FEDERAL RESERVE

8 BOARD AND FEDERAL RESERVE BANKS RE9 QUIRED.

10 (a) IN GENERAL.—The Federal Reserve Act is

11 amended by inserting after section 11A (12 U.S.C. 248a)

12 the following new section:

13 ‘‘SEC. 11B. INDEPENDENT AUDITS.

14 ‘‘The financial statement of the Board and each Fed15 eral reserve bank shall be audited annually in accordance

16 with generally accepted auditing standards by an inde17 pendent certified public accountant.’’.

18 (b) REPEAL OF EXCEPTIONS TO GAO AUDIT AU19 THORITY.—Section 714(b) of title 31, United States Code,

20 is amended by striking ‘‘Audits of the Federal Reserve

21 Board and Federal reserve banks may not include—’’ and

22 all that follows through the period at the end.
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1 SEC. 4. PROMPT PUBLIC DISCLOSURE OF OPEN MARKET

2 COMMITTEE MEETINGS.

3 Section 12A of the Federal Reserve Act (12 U.S.C.

4 263) is amended by adding at the end the following new

5 subsection:

6 ‘‘(d) PROMPT PUBLIC DISCLOSURES OF MEET7 INGS.—

8 ‘‘(1) TRANSCRIPTION AND VIDEOTAPE OF EACH

9 MEETING.—A written copy of the minutes of each

10 meeting of the Federal Open Market Committee and

11 a transcription and a videotape of the discussion at

12 each such meeting shall be made available to the

13 public before the end of the 60-day period beginning

14 on the date of the meeting and shall be treated as

15 a Government publication for purposes of making

16 such material available to depository libraries

17 through the facilities of the Superintendent of Docu18 ments in accordance with chapter 19 of title 41,

19 United States Code.

20 ‘‘(2) PROMPT DISCLOSURE OF POLICY AC21 TIONS.—An explicit, written description of any de22 termination, decision, directive, or other conclusion

23 made by the Federal Open Market Committee at

24 any meeting of the committee, including any direc25 tive or instruction sent to any Federal reserve bank

26 or Federal reserve agent in connection with any
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1 open market operation shall be made available to the

2 public by the end of the 1-week period beginning on

3 the date of the meeting.

4 ‘‘(3) MEETING INCLUDES EXECUTIVE SES5 SION.—For purposes of this subsection, the term

6 ‘meeting’ includes any executive session of the Fed7 eral Open Market Committee or any informal meet8 ing or other occasion at which a quorum of the

9 members of the committee are present.’’.

10 SEC. 5. ELIGIBILITY REQUIREMENTS FOR BOARD OF DI11 RECTORS OF BRANCHES OF FEDERAL RE12 SERVE BANKS.

13 Section 3 of the Federal Reserve Act (12 U.S.C. 521)

14 is amended—

15 (1) in the 1st paragraph—

16 (A) by striking ‘‘SEC. 3. The Board of

17 Governors of the Federal Reserve System’’ and

18 inserting the following:

19 ‘‘SEC. 3. FEDERAL RESERVE BANK BRANCH OFFICES.

20 ‘‘(a) ESTABLISHMENT OF BRANCHES.—The Board’’;

21 and

22 (B) by striking the 2d and 3d sentences;

23 (2) in the 2d paragraph, by striking ‘‘The

24 Board of Governors of the Federal Reserve System’’

25 and inserting the following:
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1 ‘‘(c) DISCONTINUANCE OF BRANCHES.—The Board’’;

2 (3) in the 3d paragraph, by striking ‘‘No Fed3 eral Reserve Bank’’ and inserting the following:

4 ‘‘(d) CONSTRUCTION OF BRANCH BUILDINGS.—No

5 Federal reserve bank’’; and

6 (4) by inserting after subsection (a) (as so des7 ignated by the amendment made by paragraph

8 (1)(A) of this section) the following new subsection:

9 ‘‘(b) MANAGEMENT OF BRANCHES.—

10 ‘‘(1) BOARD OF DIRECTORS.—Subject to such

11 regulations as the Board may prescribe, each branch

12 of a Federal reserve bank shall be under the super13 vision of a board of directors composed of not fewer

14 than 3 members and not more than 7 members ap15 pointed as follows:

16 ‘‘(A) A majority of 1 of the members ap17 pointed by the Federal reserve bank.

18 ‘‘(B) The remainder of the members ap19 pointed by the Board.

20 ‘‘(2) TERMS.—Members of the board of direc21 tors of a branch of a Federal reserve bank shall hold

22 office at the pleasure of the Board.

23 ‘‘(3) DIVERSIFIED REPRESENTATION.—In ap24 pointing members of the board of directors of any

25 branch of a Federal reserve bank, the Board and the
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1 bank shall include representatives of agriculture,

2 small business, labor, consumer and community or3 ganizations, women, and minorities.

4 ‘‘(4) ELIGIBILITY PROVISION.—No individual

5 may be appointed by the Board as a member of the

6 board of directors of a branch of a Federal reserve

7 bank who—

8 ‘‘(A) has resided in such bank’s district for

9 less than 2 years; or

10 ‘‘(B) has been a director, officer, employee,

11 or controlling shareholder of a depository insti12 tution (as defined in section 19(b)(1)(A)) or

13 any affiliate of a depository institution at any

14 time during the preceding 2-year period.

15 ‘‘(5) INELIGIBILITY OF DIRECTORS APPOINTED

16 BY THE BOARD FOR OTHER OFFICES.—No member

17 of the board of directors of a branch of a Federal

18 reserve bank who was appointed to such position by

19 the Board may be a director, officer, employee, or

20 shareholder of any depository institution (as defined

21 in section 19(b)(1)(A)) or depository institution

22 holding company (as defined in section 3(w)(1) of

23 the Federal Deposit Insurance Act).’’.
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1 SEC. 6. FEDERAL RESERVE DISTRICT ADVISORY COUNCILS.

2 Section 4 of the Federal Reserve Act (as amended

3 by section 2) is amended by adding after subsection (k)

4 (as added by section 2 of this Act) the following new sub5 section:

6 ‘‘(l) FEDERAL RESERVE DISTRICT ADVISORY COUN7 CILS.—

8 ‘‘(1) ESTABLISHMENT.—Each Federal reserve

9 bank shall establish at least 1 advisory council con10 sisting of representatives of agriculture, small busi11 ness, labor, consumer and community organizations,

12 women, and minorities to advise the bank on issues

13 relating to the bank.

14 ‘‘(2) MEETINGS.—Each council established

15 under paragraph (1) for any Federal reserve district

16 shall meet at least once during the 1st 6-month pe17 riod and once during the 2d 6-month period of each

18 year.

19 ‘‘(3) BANK DIRECTOR ATTENDANCE AT ADVI20 SORY COUNCIL MEETINGS.—At least 1 member of

21 the board of directors of any Federal reserve bank

22 shall attend each meeting of each advisory council

23 established by such bank.

24 ‘‘(4) RECOMMENDATIONS OF COUNCIL.—Each

25 advisory council established by any Federal reserve

26 bank shall promptly submit to the bank any rec-
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1 ommendation which the council determines is appro2 priate.’’.

3 SEC. 7. REPEAL OF EXEMPTION OF FEDERAL RESERVE

4 BOARD AND FEDERAL RESERVE BANKS FROM

5 TITLE VII OF THE CIVIL RIGHTS ACT OF 1964.

6 Section 701(b) of the Civil Rights Act of 1964 (42

7 U.S.C. 2000e(b)) is amended by adding at the end the

8 following new sentence: ‘‘The term ‘employer’ includes the

9 Board of Governors of the Federal Reserve System and

10 each Federal reserve bank.’’.

11 SEC. 8. FEDERAL RESERVE ACCOUNTABILITY COMMISSION.

12 (a) ESTABLISHMENT.—There is hereby established

13 the Federal Reserve Accountability Commission (hereafter

14 in this Act referred to as the ‘‘Commission’’).

15 (b) DUTIES OF THE COMMISSION.—The Commission

16 shall conduct studies on the following issues:

17 (1) APPROPRIATENESS OF EXISTING FEDERAL

18 RESERVE DISTRICTS.—The appropriateness of the

19 designation of Federal reserve cities and the bound20 aries of the Federal reserve districts as of the date

21 of the enactment of this Act, taking into account

22 personal income in each of the districts and the per23 centage of gross domestic product which is attrib24 utable to each district, population distribution and

25 other demographic patterns and trends, the needs of
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1 the business community (including small businesses)

2 and consumers and other retail users of financial

3 services, and evolving methods and patterns of com4 munication.

5 (2) APPROPRIATENESS OF STOCK PURCHASE

6 REQUIREMENTS AND DIVIDEND PAYMENTS.—The

7 appropriateness of—

8 (A) the requirement that national banks

9 and State member banks purchase stock in

10 Federal reserve banks; and

11 (B) the rate of dividends paid by Federal

12 reserve banks to shareholders.

13 (3) VALUATION OF AND FEASIBILITY OF

14 TRANSFERRING CHECK CLEARING SERVICES.—An

15 assessment of the fair market value of the check

16 clearing system of the Board of Governors of the

17 Federal Reserve System and the feasibility of divest18 ing a portion of the check clearing system, taking

19 into account the economic benefits to be derived

20 from, and efficiencies to be achieved as a result of,

21 the divestment.

22 (4) EFFECT OF FED OPERATIONS ON LOW- AND

23 MODERATE-INCOME FAMILIES.—The extent to which

24 the regulations of the Board of Governors of the
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1 Federal Reserve System and the operations of the

2 Board and the Federal reserve banks have—

3 (A) reduced or otherwise affected the avail4 ability of credit to low- and moderate-income

5 families, including residential mortgage loans;

6 (B) reduced or otherwise affected the

7 availability of financial services (other than

8 credit) for low- and moderate-income families

9 and neighborhoods; and

10 (C) increased or otherwise affected the cost

11 to low- and moderate-income families for ob12 taining financial services, including credit.

13 (5) APPROPRIATENESS OF ABOLISHING SWAP

14 FUND.—The appropriateness of prohibiting the

15 Board of Governors of the Federal Reserve System

16 from engaging in reciprocal currency exchanges (so

17 called ‘‘swap’’ operations) or maintaining any fund

18 or account for such exchanges other than by direc19 tion of the Secretary of the Treasury.

20 (6) APPROPRIATENESS OF SALARY AND CLASSI21 FICATION STRUCTURE.—The appropriateness of the

22 salary and classification structure for employees of

23 the Board of Governors of the Federal Reserve Sys24 tem and the Federal reserve banks.

25 (c) MEMBERSHIP.—
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1 (1) NUMBER AND APPOINTMENT.—The Com2 mission shall consist of 9 members appointed as fol3 lows:

4 (A) 3 appointed by the President.

5 (B) 3 appointed by the Speaker of the

6 House of Representatives, 2 of whom shall be

7 appointed from among individuals proposed by

8 the majority leader and 1 of whom shall be ap9 pointed from among individuals proposed by the

10 minority leader.

11 (C) 3 appointed by the President pro tem12 pore of the Senate, 2 of whom shall be ap13 pointed from among individuals proposed by the

14 majority leader and 1 of whom shall be ap15 pointed from among individuals proposed by the

16 minority leader.

17 (2) POLITICAL AFFILIATION.—Not more than 2

18 members appointed by the President may be of the

19 same political party.

20 (3) TERMS.—Each member shall be appointed

21 for the life of the Commission.

22 (4) BASIC PAY.—

23 (A) RATES OF PAY.—Members shall serve

24 without pay.
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1 (B) TRAVEL EXPENSES.—Each member

2 shall receive travel expenses, including per diem

3 in lieu of subsistence, in accordance with sec4 tions 5702 and 5703 of title 5, United States

5 Code.

6 (C) QUORUM.—5 members of the Commis7 sion shall constitute a quorum but a lesser

8 number may hold hearings.

9 (D) CHAIRPERSON; VICE CHAIRPERSON.—

10 The Chairperson and Vice Chairperson of the

11 Commission shall be designated by the Presi12 dent from among the members appointed by the

13 President at the time of the appointment.

14 (E) MEETINGS.—The Commission shall

15 meet at the call of the Chairperson or a major16 ity of the members.

17 (d) DIRECTOR AND STAFF OF COMMISSION; EX18 PERTS AND CONSULTANTS.—

19 (1) DIRECTOR.—The Commission shall have a

20 Director who shall be appointed by the Chairperson

21 with the approval of the Commission.

22 (2) STAFF.—With the approval of the Commis23 sion, the Director may appoint and fix the pay of

24 such personnel as the Director considers appro25 priate.
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1 (3) APPLICABILITY OF CERTAIN CIVIL SERVICE

2 LAWS.—The Director and staff of the Commission

3 may be appointed without regard to the provisions

4 of title 5, United States Code, governing appoint5 ments in the competitive service, and may be paid

6 without regard to the provisions of chapter 51 and

7 subchapter III of chapter 53 of that title relating to

8 classification and General Schedule pay rates, except

9 that an individual so appointed may not receive pay

10 in excess of the annual rate of basic pay payable for

11 level V of the Executive Schedule.

12 (4) EXPERTS AND CONSULTANTS.—With the

13 approval of the Commission, the Director may pro14 cure temporary and intermittent services under sec15 tion 3109(b) of title 5, United States Code.

16 (5) STAFF OF FEDERAL AGENCIES.—Upon the

17 request of the Chairperson, the head of any Federal

18 department or agency may detail, on a reimbursable

19 basis, any of the personnel of that department or

20 agency to the Commission to assist the Commission

21 in carrying out the Commission’s duties under this

22 Act.

23 (e) POWERS OF COMMISSION.—

24 (1) HEARINGS AND SESSIONS.—The Commis25 sion may, for the purpose of carrying out this sec-
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1 tion, hold hearings, sit and act at times and places,

2 take testimony, and receive evidence as the Commis3 sion considers appropriate.

4 (2) POWERS OF MEMBERS AND AGENTS.—Any

5 member or agent of the Commission may, if author6 ized by the Commission, take any action which the

7 Commission is authorized to take by this section.

8 (3) OBTAINING OFFICIAL DATA.—

9 (A) IN GENERAL.—The Commission may

10 secure directly from the Board of Governors of

11 the Federal Reserve System and any other de12 partment or agency of the United States infor13 mation necessary to enable the Commission to

14 carry out this Act.

15 (B) REQUEST.—Upon the request of the

16 Chairperson or Vice Chairperson of the Com17 mission, the Board of Governors of the Federal

18 Reserve System and the head of any other de19 partment or agency referred to in subparagraph

20 (A) shall furnish the requested information to

21 the Commission.

22 (4) MAILS.—The Commission may use the

23 United States mails in the same manner and under

24 the same conditions as other departments and agen25 cies of the United States.
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1 (5) ADMINISTRATIVE SUPPORT SERVICES.—

2 Upon the request of the Commission, the Adminis3 trator of General Services shall provide to the Com4 mission, on a reimbursable basis, the administrative

5 support services necessary for the Commission to

6 carry out the Commission’s responsibilities under

7 this section.

8 (f) FINAL REPORT.—

9 (1) REQUIRED.—The Commission shall trans10 mit a final report to the President, the Board of

11 Governors of the Federal Reserve System, and the

12 Congress before the end of the 18-month period be13 ginning on the date of the enactment of this Act.

14 (2) CONTENTS.—The final report shall contain

15 a detailed statement of the findings and conclusions

16 of the Commission, together with the Commission’s

17 recommendations for legislative and administrative

18 actions as the Commission considers appropriate.

19 (g) TERMINATION.—

20 (1) IN GENERAL.—The Commission shall termi21 nate not later than 30 days after submitting the

22 final report pursuant to subsection (e).

23 (2) APPLICABILITY OF FEDERAL ADVISORY

24 COMMITTEE ACT.—The Federal Advisory Committee

25 Act shall not apply to the Commission.
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1 (h) AUTHORIZATION OF APPROPRIATIONS.—

2 There is authorized to be appropriated for fiscal years

3 1994 and 1995 a total of $1,000,000 to carry out this

4 section.

5 SEC. 9. RECESS APPOINTEES AND ACTING PRESIDENTS OF

6 FEDERAL RESERVE BANKS PROHIBITED

7 FROM PARTICIPATING IN DECISIONS OF THE

8 FEDERAL OPEN MARKET COMMITTEE.

9 (a) IN GENERAL.—Section 12A of the Federal Re10 serve Act (12 U.S.C. 263) is amended by adding after sub11 section (d) (as added by section 4 of this Act) the following

12 new subsection:

13 ‘‘(e) VOTING ELIGIBILITY REQUIREMENT.—No indi14 vidual may vote in any meeting of the Committee or other15 wise participate in making any final determination of the

16 Committee or approving any directive or instruction sent

17 to any Federal reserve bank or Federal reserve agent in

18 connection with any open market operation unless such

19 individual votes or otherwise participates by virtue of a

20 position held by such individual to which the individual

21 has been appointed by the President, by and with the ad22 vice and consent of the Senate.’’.

23 (b) TECHNICAL AND CONFORMING AMENDMENTS.—

24 Section 12A(a) of the Federal Reserve Act (12 U.S.C.

25 263) is amended—
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1 (1) in the 1st sentence, by striking ‘‘or first vice

2 presidents’’; and

3 (2) in the 3d sentence, by striking ‘‘or first vice

4 president’’.

5 SEC. 10. FEDERAL RESERVE BANKS TREATED AS AGENCIES

6 FOR PURPOSES OF FREEDOM OF INFORMA7 TION ACT.

8 Section 552(f) of title 5, United States Code, is

9 amended by inserting ‘‘Federal reserve bank,’’ after ‘‘Gov10 ernment controlled corporation,’’.

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