The White House tighten its control over how the Federal Fund regulates large banks as part of OA New executive order That gives President Donald Trump's appointees more power over independent agencies.
But in doing so, the new administration made it clear that monetary policy – The direction of interest rates – Remains under the full control of the Fed.
Rates are set by the Fed Federal Open Market Committee, which includes seven governors fed in Washington, DC, and regional feeding bank presidents scattered nationwide.
“This Order will not apply to the Board of Governors of the Federal Fund system or to the Federal Open Market Committee as it maintains monetary policy,” according to the Order released on Tuesday.
That language may help to allay concerns that the White House could sloping the long -standing independence of the Fed in terms of the question of whether rates should be raised or reduced.
But it makes it clear that another key role – supervising the country's largest banks – will now have a closer link to the White House's policies and priorities.
“This Order will apply to the Board of Governors of the Federal Fund System only in relation to its conduct and authorities directly related to its supervision and regulation of financial institutions,” the Order said.
Read more: How the Fed Rate Decision affects your bank accounts, loans, credit cards and investments
Independent agencies – which would also include the Federal Communications Commission, the Securities and Exchange Commission, and the Federal Trade Commission – will now introduce major regulations to the White House Management and Budget Office, overseen by Russell Vought.
Vought will establish “performance standards and management objectives” for the heads of these agencies. It can also review and modify budgets, which can “ban independent regulatory agencies from spending reserves on specific activities, functions, projects or objects.”
The tighter management of the regulation of the Fed's banks is in line with the efforts of Trump's administration to reset one large bank regulatory agency, the Consumer Financial Protection Office, and rethink how to restructure other major regulators that oversee the nation's biggest lenders.
Earlier this month, Trump's administration ordered all the work in the CFPB to prevent. It is also allegedly Plans to consolidate other bank regulators without the input of Congress, according to a report in the Wall Street Journal. Discussions may include the FDIC folding into the Treasury Department and combining it with the Office of the Currency Manager.