Fed Should Improve Orientation for New Governors, Report Finds
December 14 2017 - 1:24PM
Dow Jones News
By Harriet Torry
The Federal Reserve could do a better job at showing the ropes
to new members of its board of governors, the central bank's Office
of Inspector General said Thursday.
New governors' orientation doesn't introduce them to their full
set of roles and responsibilities, the office said in a report.
The recommendation comes at a time of heavy turnover on the
board. Fed governor Jerome Powell is likely to win Senate
confirmation to become the next chairman in early February,
succeeding Janet Yellen.
Ms. Yellen plans to leave the board after Mr. Powell is sworn
in, which will open a seat on the seven-member board. There are
three openings now, and President Donald Trump has nominated
economist Marvin Goodfriend to one of them.
Mr. Trump's first nominee to the board, Randal Quarles, took
office in October.
When new members join, the board could better prepare the
governors for their various roles, the OIG said.
"Governors explained that they learn how committees function
when they begin serving on those committees and that there is
little guidance regarding governors' duties for policy areas for
which they are not responsible for oversight," the OIG said.
"Multiple Governors also noted that there is a significant
learning curve when joining the board," which a more detailed
orientation could help to reduce, according to the report.
The OIG also had some suggestions for improving communication
between governors while still complying with the Sunshine Act, a
law designed to ensure the public's right to know about policy
discussions.
The Fed recently adopted new rules determining how it would make
decisions when it has so many open seats.
The rules change the quorum requirements that govern Fed board
meetings and votes, making it possible in certain circumstances for
two governors to talk among themselves without triggering a formal
meeting that might have to be announced to the public in
advance.
According to the OIG, the Fed should review the Sunshine Act's
requirements to identify ways for governors to meet as a quorum,
including informal background discussions and gatherings like
lunches, that allow them to share information but don't constitute
official board business.
What's more, the report said the ways officials currently comply
with the Sunshine Act limits open communication among governors,
creates time inefficiencies and makes board officials apprehensive
about involving governors in certain discussions.
The Fed had no comment on the latest report, although a letter
from Ms. Yellen dated Dec. 4 and included in the report said the
findings "merit further attention."
Write to Harriet Torry at harriet.torry@wsj.com
(END) Dow Jones Newswires
December 14, 2017 13:09 ET (18:09 GMT)
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