U.S. Treasury Secretary Scott Bessent looks on as he speaks to the media, following the trade talks between the U.S. and China, in Kuala Lumpur, Malaysia October 26, 2025. REUTERS/Hasnoor Hussain

By Dan Burns and Michael S. Derby

Dec 3 (Reuters) - U.S. Treasury Secretary Scott Bessent on Wednesday said he plans to advocate for a requirement that the 12 regional Federal Reserve bank presidents reside in their districts for at least three years before being appointed to those positions.

Bessent, speaking at the New York Times DealBook Summit, said going forward he would press that appointments of candidates who have not satisfied that threshold be vetoed by the Fed's Board of Governors in Washington.

"The chair and the board have the final say on who ... the regional bank boards can select," Bessent said. "So I believe that ... unless someone's lived in the district for three years, we're going to veto them."

Bessent, who is in the process of selecting a candidate to recommend to President Donald Trump as the successor for Fed Chair Jerome Powell, said the fact that many of the current regional bank presidents were hired from outside their districts is at odds with the spirit of how the U.S. central bank's system was designed.

The leaders of that system include seven Fed board members based in Washington and appointed by the president and 12 heads of regional reserve banks hired by their own local boards of directors. The system, set out in the Federal Reserve Act, was designed to ensure that U.S. central bank policy reflected input from officials from around the country, not just political appointees based in Washington.

"I do believe that there is now a disconnect from the original framing," he said.

Bessent, who like Trump wants interest rates set by the Fed to be lower, has repeatedly complained that several regional bank presidents are not from the districts they were hired to represent.

A strong majority of current regional Federal Reserve bank presidents have been drawn from outside their districts. The current presidents of the Cleveland and Dallas Fed banks, for example, came from New York, with the Texas central bank now helmed by Lorie Logan, who led monetary policy implementation for the New York Fed.

The current leader of the New York Fed, John Williams, was formerly the leader of the San Francisco Fed. St. Louis Fed leader Alberto Musalem is also an alumnus of the New York Fed. Neel Kashkari, leader of the Minneapolis Fed, ran for governor of California before being tapped to lead his bank, while the new Philadelphia Fed chief was previously research director at the Chicago Fed.

The Federal Reserve Act does not impose any residency requirements on regional bank presidents. Regional Fed banks have repeatedly argued that in selecting new leaders merit and ability have driven their decision-making.

The ranks of regional Fed leadership have represented a particular challenge to the Trump administration's desire for the Fed to slash interest rates. Many of these officials have been hesitant or outright opposed to rate cuts due to concerns about still-high inflation. The hawkishness of many of these officials has added considerable uncertainty over whether the Fed will cut rates at its Federal Open Market Committee meeting next week.

"Now there's this idea of importing a bright, shiny object," Bessent said, referring to some of the current bank presidents who have worked previously at the New York Fed. "So do they represent their district? So I am going to start advocating, going forward, not retroactively, that regional Fed presidents must have lived in their district for at least three years."

(Reporting by Dan Burns and Michael S. Derby; Editing by Paul Simao and Andrea Ricci )