Strengthening Federal Reserve System Accountability Act of 2023

Subjects: Finance and Financial Sector


<html><body><pre>[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 1663 Introduced in Senate (IS)]

&lt;DOC&gt;






118th CONGRESS
  1st Session
                                S. 1663

  To amend the Federal Reserve Act to limit banker representation on 
 boards of directors of Federal Reserve banks, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                              May 17, 2023

   Ms. Warren (for herself and Mr. Scott of Florida) 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 limit banker representation on 
 boards of directors of Federal Reserve banks, and for other purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Strengthening Federal Reserve System 
Accountability Act of 2023''.

SEC. 2. BANKER REPRESENTATION ON FEDERAL RESERVE BANK BOARDS.

    (a) Class A Directors.--
            (1) Eligibility.--The tenth undesignated paragraph of 
        section 4 of the Federal Reserve Act (12 U.S.C. 302) is 
        amended--
                    (A) by inserting ``with $50,000,000,000 or less in 
                assets'' before the period at the end; and
                    (B) by inserting ``The Reserve bank, in 
                consultation with the Board of Governors of the Federal 
                Reserve System, may remove a Class A director if, after 
                the director is elected, the assets of the bank of the 
                director grow rapidly greater than $50,000,000,000. No 
                individual may serve as a Class A director if the 
                individual represents a bank that has a CAMELS rating 
                of 3 or higher or outstanding Matters Requiring 
                Attention or Matters Requiring Immediate Attention 
                above the average number for banks of similar size and 
                complexity.'' after the period at the end.
            (2) Nomination and election.--The 16th undesignated 
        paragraph of section 4 of the Federal Reserve Act (12 U.S.C. 
        304) is amended--
                    (A) in the third sentence, by inserting ``with 
                $50,000,000,000 or less in assets'' after ``member 
                bank''; and
                    (B) by striking the first and second sentences.
    (b) Election of Class B Directors.--
            (1) In general.--The 11th undesignated paragraph of section 
        4 of the Federal Reserve Act (12 U.S.C. 302) is amended by 
        striking ``three members,'' and all that follows through the 
        period at the end and inserting ``6 members who shall be 
        designated by the Board of Governors of the Federal Reserve 
        System. They shall be elected to represent the public, without 
        discrimination on the basis of race, creed, color, sex, or 
        national origin, and with due but not exclusive consideration 
        to the interests of agriculture, commerce, industry, services, 
        labor, and consumers. When the necessary subscriptions to the 
        capital stock have been obtained for the organization of any 
        Federal reserve bank, the Board of Governors of the Federal 
        Reserve System shall appoint the class B directors and shall 
        designate one of such directors as chairman of the board to be 
        selected. Pending the designation of such chairman, the 
        organization committee shall exercise the powers and duties 
        appertaining to the office of chairman in the organization of 
        such Federal reserve bank.''.
            (2) Technical and conforming amendments.--
                    (A) The 16th undesignated paragraph of section 4 of 
                the Federal Reserve Act (12 U.S.C. 304) is amended--
                            (i) in the first sentence, as redesignated 
                        by subsection (a)(2)(B) of this section, by 
                        striking ``and one candidate for director of 
                        Class B''; and
                            (ii) in the third sentence, as redesignated 
                        by subsection (a)(2)(B) of this section, by 
                        striking ``and Class B''.
                    (B) Section 4 of the Federal Reserve Act is 
                amended--
                            (i) in the fifth paragraph of the fourth 
                        undesignated paragraph, by striking ``and Class 
                        C'';
                            (ii) by striking the 12th undesignated 
                        paragraph;
                            (iii) by striking the 15th undesignated 
                        paragraph (12 U.S.C. 303);
                            (iv) by striking the 17th undesignated 
                        paragraph (12 U.S.C. 304); and
                            (v) by striking the 20th undesignated 
                        paragraph.
    (c) Financial Institutions Regulated by the Board of Governors.--
Section 4 of the Federal Reserve Act is amended--
            (1) in the 14th undesignated paragraph (12 U.S.C. 303), by 
        striking ``No director of class B shall be an officer, 
        director, or employee of any bank.'' and inserting ``No 
        individual who served as an officer, director, or employee of 
        any bank or other financial institution regulated by the Board 
        of Governors of the Federal Reserve System during the preceding 
        5-year period shall serve as a director of class B.''; and
            (2) by striking the 15th undesignated paragraph (12 U.S.C. 
        303).

SEC. 3. RESERVE BANK DIRECTOR RESPONSIBILITIES.

    (a) In General.--The eighth undesignated paragraph of section 4 of 
the Federal Reserve Act (12 U.S.C. 301) is amended by inserting after 
the period at the end of the second sentence the following: ``The board 
of directors may not be involved in bank examinations or supervisory 
processes, including the selection, appointment, and compensation of 
all Federal reserve bank officers whose primary duties involve 
supervisory matters, budgetary matters, and any other decisions or 
deliberations that pertain to supervisory activities.''.
    (b) Term Limits.--The 24th undesignated paragraph of section 4 of 
the Federal Reserve Act (12 U.S.C. 308) is amended by inserting ``No 
director of a Federal reserve bank may serve more than 2 full terms.'' 
after the period at the end of the second sentence.

SEC. 4. FEDERAL RESERVE TRANSPARENCY AND INDEPENDENCE.

    (a) Director Elections.--
            (1) Class a.--The 19th undesignated paragraph of section 4 
        of the Federal Reserve Act (12 U.S.C. 304) is amended by 
        inserting ``, which shall be published on the website of each 
        Federal reserve bank not later than 3 years after such 
        declaration'' before the period at the end of the fifth 
        sentence.
            (2) Class b.--The 11th undesignated paragraph of section 4 
        of the Federal Reserve Act (12 U.S.C. 302) is amended by 
        inserting ``The list of the final 3 candidates considered for 
        such designation shall be published on the website of the Board 
        of Governors of the Federal Reserve System not earlier than 3 
        years after the date of its completion.'' after the period at 
        the end of the second sentence.
    (b) Director and President Selection Input.--Section 4 of the 
Federal Reserve Act is amended by inserting after the 20th undesignated 
paragraph (12 U.S.C. 305) the following:
    ``The Federal reserve banks and the Board of Governors of the 
Federal Reserve System shall develop processes for allowing public 
comment and input for nominating Class A directors and designating 
Class B directors, and appointing presidents. Each Federal reserve bank 
shall publish a public contact for such nominations, designations, and 
appointments. The Board of Governors of the Federal Reserve System 
shall disclose any vote or veto by a member of the Board for a Class B 
director or a president not later than 3 years after such vote or veto. 
The Board of Governors of the Federal Reserve System shall release a 
public statement after the date on which a president is selected 
describing the involvement of the Board in the selection process.''.
    (c) Office Staff for Members of the Board of Governors of the 
Federal Reserve System.--Section 11(l) of the Federal Reserve Act (12 
U.S.C. 248(l)) is amended by inserting ``Of amounts made available for 
staff of the Federal Reserve System, each member of the Board of 
Governors may employ not more than 4 individuals for the purpose of 
staffing the member's office, with such individuals selected by such 
member and the salaries of such individuals set by such member.'' after 
the period at the end.
    (d) Vote by Board of Governors on Certain Settlements.--Section 10 
of the Federal Reserve Act is amended--
            (1) by redesignating paragraph (12) (12 U.S.C. 247b) as 
        paragraph (11); and
            (2) by adding at the end the following:
            ``(12)(A) The Board of Governors of the Federal Reserve 
        System shall vote, at a properly noticed public meeting of the 
        Board, on whether to resolve any enforcement action if the 
        resolution of that action involves the payment of not less than 
        $5,000,000 in compensation, penalties, or fines, or other 
        payments.
            ``(B) The results of the vote of each member of the Board 
        under subparagraph (A) shall--
                    ``(i) be included at the appropriate place in the 
                official minutes of the Board; and
                    ``(ii) be made publicly available on the website of 
                the Board.''.
    (e) Term Limits; Review.--The fifth paragraph of the fourth 
unenumerated paragraph of section 4 of the Federal Reserve Act (12 
U.S.C. 341) is amended by inserting ``A president may continue to serve 
after the expiration of the term of office to which the president was 
appointed until the earlier of the date on which a successor has been 
appointed and qualified, the date on which the next session of Congress 
subsequent to the expiration of such term expires, or the date on which 
the President of the United States removes the president. No appointed 
president shall serve more than a total of 10 years, not including any 
such continuation in service. The Board of Governors of the Federal 
Reserve System, in consultation with the relevant Reserve bank board of 
directors, shall initiate a review of the Reserve bank president and 
vice President and the appropriateness of their removal in the event of 
a bank failure in the Reserve district. The Board of Governors shall 
also publish the results of the review not later than 90 days following 
the bank failure.'' after the period at the end of the fourth sentence.

SEC. 5. FEDERAL RESERVE ETHICS.

    Section 4 of the Federal Reserve Act, as amended by section 4(b) of 
this Act, is amended by adding at the end the following:
    ``Each director, president, and vice president shall comply with 
the same rules for investment and trading activity prescribed by the 
Board of Governors of the Federal Reserve System. Each director shall 
disclose any financial interest in the same manner as presidents. Each 
Federal reserve bank shall publicly disclose and explain any rationale 
for waivers granted to directors from conflict of interest rules. The 
Comptroller General of the United States shall annually review conflict 
of interest rules of the Federal reserve banks and the Board of 
Governors of the Federal Reserve System and implementation of and 
compliance with such rules.''.
                                 &lt;all&gt;
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