Bessent is expected to advance a proposal that strengthens residency rules for regional U.S. Federal Reserve Bank presidents.


On December 3, 2025, U.S. Treasury Secretary Scott Bessent announced a plan to push for a new policy requiring that presidents of the 12 regional banks under the Federal Reserve System (the Fed) must have lived in their districts for at least three years prior to appointment. Reuters+2Investing.com+2

Speaking at the New York Times DealBook Summit, Bessent said he would ask the Board of Governors of the Federal Reserve System to veto any candidate for regional president who fails to meet that residency threshold. Reuters+2The Washington Post+2

This proposed change has stirred debate over regional representation, the structure of the Fed, and the balance between local insight and institutional independence.

Why Bessent Is Pushing for Residency Requirements

Upholding Regional Representation

Bessent argues that the essence of having regional Fed banks is that each region should be represented by someone with a real stake in — and knowledge of — that community’s economic conditions. He said that appointing presidents from outside their districts undermines that foundational premise. Al Jazeera+2Investing.com+2

He specifically criticized the trend of selecting former staff of the New York Federal Reserve Bank (NY Fed) for regional bank leadership roles elsewhere — citing examples such as current leaders with previous New York ties who now head banks in Dallas, Cleveland, and St. Louis. Investing.com+2The Telegraph+2

Reclaiming Fed Influence — and Possibly Aligning Policy Preferences

Some analysts read Bessent’s proposal as part of a broader effort by the administration to exert greater influence over the Fed’s leadership and — by extension — its monetary policy decisions. The administration favors lower interest rates; several non-local Fed presidents have publicly opposed further rate cuts. Imposing residency requirements and threatening vetoes may shift the composition of regional leaders in a direction more favorable to the White House’s economic stance. mint+3Al Jazeera+3AP News+3

How the Fed Is Currently Structured — and What Would Change

The Existing Setup

Under current arrangements, the Fed comprises a central board of seven governors in Washington, D.C., appointed by the president and confirmed by the Senate, and 12 regional banks, each headed by a president chosen by the local board of directors of that bank. Investing.com+2The Washington Post+2

Importantly: there is no existing law that requires a regional bank president to live in — or have lived in — the district they serve. The Washington Post+1

What Bessent Proposes

Bessent’s proposal would change that: all future regional Fed presidents would need to have resided in the district for at least three years before taking office. Furthermore, he says the Board of Governors should block the appointment of anyone who does not meet that criterion. Reuters+2MarketBeat+2

If enacted, this would represent a major shift — adding a residency requirement where none existed, and placing more power in Washington (via the Board of Governors) rather than in the local boards.

Reactions & Concerns

Support: Renewed Local Representation

Advocates of the change — including some scholars of central banking — argue that such residency requirements would reinforce the purpose of regional Fed banks, namely, to bring a wide spectrum of local economic conditions into the national monetary-policy discussion. Chicago Law Review+1

They suggest that requiring presidents to live in their district helps preserve “local insight and legitimacy,” especially in a system originally designed to give voice to diverse regional economies, not just Wall Street–heavy New York. Chicago Law Review+1

Concerns: Independence, Pool of Talent, and Legal Hurdles

Critics argue that introducing residency requirements — especially with veto power — could undermine the independence of the Fed, by giving the executive branch more control over who leads regional banks. The Washington Post+2National Newswatch+2

Others warn that forcing a strict residency threshold could shrink the pool of qualified candidates, especially for highly specialized roles. The existing structure allows regional boards to search widely for the best talent — regardless of where a person previously lived. Investing.com+2mint+2

Some legal scholars question whether such a requirement could be formalized without congressional action, since the current law governing the Fed does not mandate residency. The Washington Post+1

There is also concern that this may set a precedent: residency requirements could evolve into broader “loyalty tests” — shifting criteria from merit and expertise towards political and geographic background. Investing.com+1

What This Means for Monetary Policy & the Fed’s Balance

  • More regional representation? If implemented, the proposal could increase the share of regional presidents with strong local ties — potentially bringing more varied regional economic data and concern into policy discussions.

  • Greater political oversight? The veto power would increase central oversight of regional appointments, potentially making future Fed decisions less insulated from political considerations.

  • Impact on rate-setting debates: Because some of the current presidents with outside-district backgrounds are among the most vocal against rate cuts, putting in place residency requirements could reshape the ideological balance among Fed presidents — possibly tilting it toward candidates more aligned with the administration’s preference for lower interest rates.

  • Institutional precedent: Changing the criteria for appointments could open the door to more structural changes, raising questions about how much the Fed’s independence might be redefined in the years ahead.

Conclusion

Scott Bessent’s push to require regional Fed bank presidents to have lived in their districts for at least three years represents more than a simple personnel-policy tweak. It revisits — and potentially reshapes — the balance between local representation, institutional independence, and political influence at the center of U.S. monetary policymaking.

As the Fed — and broader markets — weigh the merits and risks of such a change, one thing is clear: how the regional voices are chosen matters. Whether this proposal becomes policy will say a lot about the future direction of the Fed and its role in reflecting regional economic realities across America.

Comments

Post a Comment

Popular posts from this blog

Image
 Macron Calls on China to Bridge Key Differences in Diplomatic Talks French President Emmanuel Macron’s recent diplomatic visit to China marked a pivotal moment in France-China and broader Europe-China relations. In a world facing instability, economic uncertainty, and growing geopolitical rifts, Macron used this visit to urge China to help bridge long-standing differences — especially on global peace, economic balance, and multilateral cooperation. His message was clear: both nations, despite their different political systems and priorities, must work together to reduce tensions and promote a fairer, more sustainable global order. Why This Diplomatic Visit Matters Macron’s trip came during a period of heightened international tensions. Conflicts across regions, global supply chain strains, and shifting alliances have increased pressure on major powers to engage in constructive communication. Europe and China share significant economic ties, yet disagreements on trade fairness, hum...
Read more
Image
 Nations Prepare to Roll Out New AI Regulations Worldwide in 2025 As artificial intelligence continues to advance at an unprecedented pace, governments around the world are facing increasing pressure to establish clear rules that ensure responsible development and safe deployment. The year 2025 is shaping up to be a major turning point, as multiple nations prepare to roll out new AI regulations designed to protect users, promote transparency, and strengthen accountability. These upcoming frameworks aim to strike a balance—supporting innovation while addressing risks such as misinformation, algorithmic bias, data privacy concerns, and the misuse of autonomous technologies. In this post, we’ll explore what these new regulations may look like, why countries are accelerating their efforts, and how global cooperation could shape the future of AI governance. --- Why 2025 Is Becoming a Pivotal Year for AI Regulation Over the past decade, the adoption of AI has expanded far beyond tech com...
Read more
Image
 Researchers Identify Breakthrough Therapy for Rare Illness In a major milestone for modern medicine, researchers have identified a breakthrough therapy for a rare and life-threatening illness, offering new hope to patients and families worldwide. Rare diseases, often referred to as “orphan diseases,” affect a small percentage of the population but collectively impact millions of people globally. For decades, many of these conditions lacked effective treatments due to limited research funding and complex biological mechanisms. The newly identified therapy marks a turning point, demonstrating how advances in medical science, genetics, and biotechnology can transform patient outcomes. Experts believe this discovery could not only improve survival rates but also enhance quality of life for those living with the condition. This development highlights the growing importance of precision medicine and international research collaboration. --- Understanding the Rare Illness The illness in ...
Read more