Trump White House Outlines Proposal That Could Narrow Pipeline for Future Fed Leaders

Treasury Secretary Scott Bessent has a proposal that could reshape how some of the Fed’s most influential positions are filled. (Michael M. Santiago/Getty Images)

Key Points

• Treasury Secretary Scott Bessent said the White House is considering a residency requirement for future regional Federal Reserve presidents.
• The proposal would require regional Fed presidents to have lived in their districts for three years, not affecting current leaders.
• All 12 regional Fed presidents are up for reappointment in February 2026, creating an opportunity for intervention.

Treasury Secretary Scott Bessent said Wednesday that the White House is considering a residency requirement for future regional Federal Reserve presidents, a proposal that wouldn’t affect current leaders but could reshape how some of the central bank’s most influential positions are filled.

Speaking at the Dealbook Summit in New York, Bessent argued that many regional Fed presidents no longer reflect their districts’ interests. Five of these policymakers vote on the Federal Open Market Committee each year on a rotating basis.

“They were meant to be from their district, and now there’s this idea of importing a bright shiny object,” he said. Going forward, not retroactively, the Trump administration will “start advocating that regional Fed presidents must have lived in their district for three years.”

Many current regional Fed presidents don’t meet that standard. Cleveland Fed President Beth Hammack recently moved from New York, though her husband has longstanding ties to Cleveland. Dallas Fed President Lorie Logan spent years at the New York Fed before relocating to Texas. New York Fed President John Williams previously led the San Francisco Fed.

How the administration would implement such a rule remains unclear. “It may be Congress, it may be the Fed chair and board has final say on who the regional bank boards can select,” Bessent said. “So I believe they would just say, unless the [nominee] has lived in the district for three years, we would veto them.” The Treasury didn’t immediately respond to requests for clarification.

The proposal comes as Trump seeks greater influence over the Fed. He said this summer he would soon have a majority of his nominees on the Board of Governors, who he expects will work to slash interest rates. His comments followed his attempt to fire Fed governor Lisa Cook over allegations of false statements on mortgage applications. The Supreme Court has temporarily blocked that effort, with a hearing set for late January.

If Trump succeeds in removing Cook, combined with the recent appointment of White House economist Stephen Miran and the expiration of Chair Jerome Powell’s term as chair next May, he could fill three seats on the seven-member board. Along with governors Michelle Bowman and Christopher Waller, both Trump appointees, that would create a five-member voting majority. Since 2022, Waller has also overseen the Fed’s process for appointing new presidents as vacancies arise.

The timing matters. All 12 regional Fed presidents are up for reappointment in February 2026, their synchronized five-year terms creating an unusual opportunity for intervention. “If [Bowman and Waller] allied with whoever fills the two new vacancies, they could remove all 12 presidents, thereby dramatically reshaping the FOMC,” JPMorgan’s Michael Feroli wrote in a recent note.

Still, Washington’s role is limited by design. Each regional Fed bank has a board of directors split into three classes. Class B and C directors, representing business and community interests, run search processes and select finalists. Class A directors who are affiliated with financial institutions are excluded from the search. The Board of Governors can approve or veto but cannot propose its own candidates.

Reappointments follow the same framework. Local boards review performance and recommend term extensions based on leadership, policy contributions, and community engagement. Historically, these reviews have been routine, with presidents continuing unless they near retirement or step down voluntarily.

A Trump-appointed majority could make future cycles less predictable. Governors might scrutinize reviews more closely or reject candidates they view as misaligned with policy priorities. That wouldn’t give the White House direct control over replacements, but it could inject uncertainty into what has long been a procedural formality. ​​​​​​​​​​​​​​​​

Write to Nicole Goodkind at nicole.goodkind@barrons.com