Treasury push to 'veto' Fed regional chiefs stirs speculation about central bank's future
Treasury secretary Scott Bessent’s latest suggestion for Federal Reserve reform does more than reopen a fight over central bank independence – it sharpens debate over how far the White House might go to shape the path of interest rates, and with it the cost of United States mortgages.
Speaking at the New York Times’ DealBook Summit, Bessent said he would pursue a new requirement that Federal Reserve regional bank presidents live in their districts for at least three years before taking office, arguing the institution has drifted from its original purpose.
“I do believe that there is now a disconnect from the original framing” of the Fed, he said.
“Presidents in the regional banks were meant to be from their district,” while now “there’s this idea of importing a bright, shiny object.”
Bessent also suggested the administration could effectively block nominees who fail that test.
At DealBook, he said the Fed’s Washington-based board could “just say, unless someone’s lived in the district for three years, we’re going to veto them.”
A residency rule would mark a new front in the administration’s efforts to exert influence over the Fed, whose 12 regional presidents help set policy through their votes on the Federal Open Market Committee.
The committee’s decisions filtered through to “borrowing costs for mortgages, auto loans, and credit cards,” Bessent acknowledged, even as regional presidents such as Dallas’s Lorie Logan, Kansas City’s Jeff Schmid and Cleveland’s Beth Hammack stand out as vocal hawks resisting near‑term cuts.
Bessent, who has led President Donald Trump’s search for a successor to Fed chair Jerome Powell, has also pressed for a simpler central bank.
In a recent interview, he argued that the Fed had migrated from “a monetary interest rate function” to “a balance sheet function, which I can tell you no one understands.”
At DealBook, he reiterated that in a downturn, policymakers might still need to “ease monetary conditions, maybe go to the balance sheet,” especially if rapid growth in private credit proved “very pro-cyclical” because “investors always panic at the bottom.”
Treasury secretary Scott Bessent signaled momentum in the search for the next Federal Reserve chair, saying there is "a very good chance that the president will make an announcement before Christmas."https://t.co/ialAFOXZNJ
— Mortgage Professional America Magazine (@MPAMagazineUS) November 27, 2025
For mortgage lenders and investors, the immediate rate outlook remains uncertain. Trump has publicly favored deep cuts and has hinted he wanted a Fed chair who would move “sharply away” from Powell’s cautious approach.
While a new chair could advocate for rate cuts, they would still need to build a majority on the FOMC – a procedural guardrail that has so far limited abrupt shifts in policy.
Still, Bessent’s claim that “three, maybe four” current regional presidents do not meet his proposed residency test underscores a political fight likely to matter for the mortgage market: whether the next generation of Fed leaders would prioritize faster rate cuts or defend the central bank’s distance from the White House.
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