Presidents of regional Federal Reserve banks on Thursday defended their role in supervising small banks, and said ending it would cut a link between the central bank and the national heartland.
"It is a travesty," Kansas City Federal Reserve Bank President Thomas Hoenig told the American Bankers Association.
"It is absolutely disenfranchising our relationship with a very important, hugely important sector outside of Wall Street across the United States."
"It makes the central bank the central bank of Wall Street and not of the United States," he said.
Cleveland Federal Reserve Bank President Sandra Pianalto said any suggestion that the central bank's independence has been weakened would rattle financial markets.
Policymakers make decisions about where to set interest rates based on their assessment of economic conditions, not because of political pressures, she said.
"Making that process political would be devastating ... to our country. Financial markets around the world would become concerned about the credibility and the integrity of our system and our economy and that would be devastating," said Pianalto, a voter this year on the Fed's policy panel.
The two appeared on a panel with Richmond Fed President Jeffrey Lacker.
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