I 
112TH CONGRESS 
2D SESSION 
H. R. 6023 
To restrict conflicts of interest on the boards of directors of Federal reserve 
banks, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
JUNE 26, 2012 
Mr. DEFAZIO introduced the following bill; which was referred to the 
Committee on Financial Services 
A BILL 
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-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Federal Reserve Inde-
pendence Act’’. 
SEC. 2. FINDINGS. 
Congress finds the following: 
(1) In October 2011, the Government Account-
ability Office found the following: 
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(A) Allowing members of the banking in-
dustry to both elect and serve on the boards of 
directors of Federal reserve banks poses reputa-
tional risks to the Federal Reserve System. 
(B) Eighteen former and current members 
of the boards of directors of Federal reserve 
banks were affiliated with banks and companies 
that received emergency loans from the Federal 
Reserve System during the financial crisis. 
(C) Many of the members of the boards of 
directors of Federal reserve banks own stock or 
work directly for banks that are supervised and 
regulated by the Federal Reserve System. 
These board members oversee the operations of 
the Federal reserve banks, including salary and 
personnel decisions. 
(D) Under current regulations, members of 
a board of directors of a Federal reserve bank 
who are employed by the banking industry or 
own stock in financial institutions can partici-
pate in decisions involving how much interest to 
charge to financial institutions receiving loans 
from the Federal Reserve System, and the ap-
proval or disapproval of Federal Reserve credit 
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to healthy banks and banks in ‘‘hazardous’’ 
condition. 
(E) Twenty-one members of the boards of 
directors of Federal reserve banks were involved 
in making personnel decisions in the division of 
supervision and regulation under the Federal 
Reserve System. 
(F) The Federal Reserve System does not 
publicly disclose when it grants a waiver to its 
conflict of interest regulations. 
(2) Allowing currently employed banking indus-
try executives to serve as directors on the boards of 
directors of Federal reserve banks is a clear conflict 
of interest that must be eliminated. 
(3) No one who works for or invests in a firm 
receiving direct financial assistance from the Federal 
Reserve System should be allowed to sit on any 
board of directors of a Federal reserve bank or be 
employed by the Federal Reserve System. 
SEC. 3. END CONFLICTS OF INTEREST. 
(a) CLASS A MEMBERS.—The tenth undesignated 
paragraph of section 4 of the Federal Reserve Act (12 
U.S.C. 302) (relating to Class A) is amended by striking 
‘‘chosen by and be representative of the stockholding 
banks’’ and inserting ‘‘designated by the Board of Gov-
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ernors of the Federal Reserve System, from among per-
sons who are not employed in any capacity by a stock-
holding bank’’. 
(b) CLASS B.—The eleventh undesignated paragraph 
of section 4 of the Federal Reserve Act (12 U.S.C. 302) 
(relating to Class B) is amended by striking ‘‘be elected’’ 
and inserting ‘‘be designated by the Board of Governors 
of the Federal Reserve System’’. 
(c) LIMITATIONS ON BOARDS OF DIRECTORS.—The 
fourteenth and fifteenth undesignated paragraphs of sec-
tion 4 of the Federal Reserve Act (12 U.S.C. 303) (relat-
ing to Class B and Class C, respectively) are amended to 
read as follows: 
‘‘No employee of a bank holding company or other 
entity regulated by the Board of Governors of the Federal 
Reserve System may serve on the board of directors of 
any Federal reserve bank. 
‘‘No employee of the Federal Reserve System or 
board member of a Federal reserve bank may own any 
stock or invest in any company that is regulated by the 
Board of Governors of the Federal Reserve System, with-
out exception’’. 
SEC. 4. REPORTS TO CONGRESS. 
The Comptroller General of the United States shall 
report annually to Congress beginning 1 year after the 
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date of enactment of this Act to make sure that the provi-
sions in this Act are followed. 
Æ 
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