The Board of Governors of the Federal Reserve System will now be required to have at least one member with community banking experience after the Senate approved an amendment to the Terrorist Risk Insurance Act, which was reauthorized by the Senate on Thursday.
The amendment, which was introduced by Senator David Vitter, R-La., was added to the TRIA by a 97-0 vote in the Senate, with three abstentions. The subsequent reauthorization of the TRIA was approved by a 93-4 margin, with three abstentions as well.
The amendment states, “In selecting members of the Board, the President shall appoint at least 1 member with demonstrated primary experience working in or supervising community banks having less than $10,000,000,000 in total assets.”
The Wall St. Journal sheds more light on how the amendment came to be.
Presenting his amendment to the Senate floor, Mr. Vitter said it would help introduce balance to a Federal Reserve that has come to lean too heavily on officials with academic and “megabank” experience.
“There’s an unmistakable trend away from having adequate representation from folks with community bank experience,” he said.
Of the five members of the Fed Board currently, three are economists and two are lawyers.
During her testimony before the Senate Banking Committee this week, Fed Chair Janet Yellen was asked what she thought about the potential change to the Fed Board rules.
“The board has many different needs,” Ms. Yellen said during testimony before the Senate Banking Committee, in response to a question from Mr. Vitter. “I think if we were to sit down and make a list of all of the kinds of expertise that are needed and are useful, there would be more than seven items on that list. And I would, you know, prefer to see appointments made in light of the priorities, including for a community banker, rather than for the indefinite future locking in and earmarking particular seats for particular purposes.”