How a Federal Reserve President is Selected
The responsibility for appointing a new president is held by the Class B and Class C members of the Reserve Bank’s board of directors in concurrence with the Federal Reserve Board of Governors.
Eligible directors form a committee and most often work with an executive search firm to conduct an extensive search to identify qualified candidates. The committee typically considers candidates from a wide range of industries and backgrounds, including candidates both within and outside the Federal Reserve System, who meet the position’s qualifications.
The Bank’s Class B and Class C directors then formally appoint a candidate, subject to the approval of the Board of Governors.
The Federal Reserve is the central bank of the United States. The system consists of the Board of Governors in Washington as well as 12 independent reserve banks spread across the country. Each of these regional reserve banks has its own board of directors and a president. The board of directors provides important on-the-ground information to support the monetary policy process as well as oversight of the bank. The president is the chief executive officer and is responsible for the work of the reserve bank which includes monetary policy, supervision of banks, payment systems, economic research and more.
Every so often a reserve bank needs to select a new president but it takes more than posting a classified ad to fill this key position. A reserve bank president needs to have the right knowledge, leadership and experience to do this job. Potential reserve bank presidents can be found in different places. Some are academics or administrators from colleges and universities. Others have experience in the Federal Reserve System itself with backgrounds in economic research, banking or policy. Still others can come from a range of financial firms or community-focused institutions. All come with a desire for public service.
The process for selecting a new reserve bank president is delineated in federal law, one that has its origins from over 100 years ago, the Federal Reserve Act. So how does it work? A reserve bank’s nine member board has three types of directors, Class A, B and C. Since Class A directors are bankers, they are not involved in the selection process. Class B and Class C directors represent the public and those who are not affiliated with the supervised entity are the ones who participate in the process. Typically the eligible B and C directors will form a search committee and work with an external search firm to seek out a broad and diverse pool of qualified candidates.
After candidates are interviewed and their qualifications are evaluated, the search committee will forward their top choices to the Board of Governors in Washington. That review process includes one-on-one meetings with each of the Governors. Once candidates are considered by the Board of Governors, the reserve bank’s eligible Class B and C directors, the non-banker directors subject to the approval of the Board of Governors, appoint the new reserve bank president.
For more information on the requirements of the position and how to apply, please see the job description.