US Representative Barney Frank

© AFP/Getty Images/File Alex Wong

AFP

WASHINGTON (AFP) – A US lawmaker proposed a bill Tuesday which he said would make the Federal Reserve’s interest rate-setting “more democratic” by removing from the process Fed governors with private-sector links.

Democratic Representative Barney Frank suggested that five of the central bank’s 12-member panel which sets US interest rates, the Federal Open Market Committee (FOMC), were more beholden to private-sector banking interests than to the public.

Frank’s office said he was submitting legislation that would exclude the five — who are chosen to lead regional Fed units by the private financial institutions of each region — from voting on rate decisions.

“Under current law, more than one-third of the votes cast are made by regional Federal Reserve representatives — people who are neither appointed by the president nor subject to Senate confirmation,” Frank said in a statement.

“These men and women are chosen by a self-perpetuating group of private citizens who disproportionally represent the private financial services industry. Although it is useful to have the advice of the representatives of private interests, they should not vote on this extremely important issue of public policy,” he said.

The legislation proposed by Frank, the senior Democrat on the House of Representatives Financial Services Committee, would leave the rate decision to the seven Fed governors appointed by the president.

It “would make one of the most important functions of the Federal Reserve — the setting of interest rates — more democratic,” the statement said.

“The legislation thus increases transparency and accountability on the FOMC,” it said.

© AFP — Published at Activist Post with license