The reappointment process for the 12 regional Federal Reserve bank presidents is underway, and it’s being closely watched for signs of potential challenges to the central bank’s independence. Typically, the process is routine and results in the reappointment of the regional bank chiefs by a majority of the Fed’s Board of Governors. However, the surprise retirement announcement of Atlanta Fed President Raphael Bostic has cast a spotlight on the process, which comes as President Donald Trump seeks to expand his influence over the Fed.
Trump has been critical of the Fed and its interest rate policies, and has taken steps to increase his sway over the central bank, including trying to fire Fed Governor Lisa Cook. The White House has not commented on Trump’s preferences for the regional Fed bank reappointments, which are due to be completed by February. The reappointment process has historically been a rubber stamp, but a legal opinion from Trump’s first term argues that the Fed’s board has the power to replace regional presidents, potentially allowing for more presidential influence.
The regional Fed bank presidents play a crucial role in setting interest rates and supervising banks, and their independence is seen as essential for maintaining the integrity of the financial system. However, Trump’s efforts to expand his influence over the Fed have raised concerns about the potential erosion of central bank independence. A successful ouster of regional Fed presidents and influence over their successors could lead to a significant change in the way monetary policy is formulated.
The Fed’s unique structure, which includes a board of governors and 12 regional banks, makes it distinct from other independent agencies. While Trump has pushed the boundaries of his authority, the Fed’s independence is backed by research showing that economic outcomes tend to worsen as central bank independence is eroded. The reappointment process for regional Fed bank presidents is underway, and it remains to be seen how Trump will exert his influence over the process.
Analysts believe that all current regional bank presidents will be reappointed in the current round, but the threat of removal will remain. The fact that a spotlight is being cast on this issue is seen as a warning sign that Fed independence is not safe. The reappointment process is expected to be completed before the current terms end in February, and it will be closely watched for signs of potential challenges to the central bank’s independence.
In recent decades, the reappointment of regional Fed bank presidents has been unanimously approved by the Fed’s Board of Governors. However, with Trump appointing more board members, including Governor Stephen Miran, who is expected to return to the White House in 2026, the pressure to exert influence over the Fed could build. The dozen Fed regional presidents are a diverse group, including former executives, economists, and former officials from Republican and Democratic administrations. Their independence is seen as essential for maintaining the integrity of the financial system, and any attempts to undermine their independence could have significant consequences for the economy.