If Barney Frank had a financial services policy that he wanted changed, it seems to me that the ideal vehicle for such a change would be the giant bill from last year that had his name on it. You may remember it as Dodd-Frank. But instead, a year later, Frank is rolling out a plan for a reorganization of the Federal Reserve to reduce the power of the regional banks.

U.S. Rep. Barney Frank (D., Mass) Tuesday introduced a bill that would let interest rates be set only by Federal Reserve officials picked by the government, a new attempt to move power away from regional Fed officials chosen by the private sector.

The bill would remove from the 12-member policy-setting Federal Open Market Committee the five members who represent regional Fed banks. Only the seven-member board in Washington, which currently has two vacant seats, would get to vote on interest rates. The congressman said this would make the Fed more democratic and increase “transparency and accountability on the FOMC” by eliminating those officials who are effectively picked by business executives.

Frank’s bill faces significant hurdles to clear Congress, where Republicans are likely to resist centralizing Fed powers in Washington. There’s also no similar proposal in the Senate yet. Frank, though an influential member of the House Financial Services Committee, is in the Democratic minority, reducing his ability to push legislation through the House.

This is a broader version of a policy shift that was attempted in Dodd-Frank. Within that bill, there was a policy to have the head of the Federal Reserve Bank of New York chosen by the President instead of the regional Fed bank (i.e. Wall Street). It was in the version of one of the bills that made it to conference committee, and then it was stripped out, amid opposition from the Fed… and the White House. All that’s left in the law is a provision against bankers sitting on the selection committee for the regional Fed presidents. But the other members of the regional Fed boards would still pick the president, and those boards are dominated by the banking sector, regardless of the occupation of the particular board member. So the entire provision makes very little sense.

Frank’s idea, to have FOMC decisions made by members who get Senate confirmation, is pretty good. It’s laughable to hear regional Fed presidents like Thomas Hoenig say that the regional banks “allow the public … to have an input on the Fed’s decisions.” If by public you mean bankers setting policies that impact bankers, then yes. At least the people’s representatives in Washington would have some say over who makes the decisions under the Frank plan.

But it’s also pretty late. It has no chance of passing, and it reveals Frank as someone not truly committed to Fed reform, or he would have proposed this when he had some power. The current group of leaders in the House want to tear down key elements of financial reform. They don’t want to keep any reforms going, and they’re not going to spend more than a minute on Frank’s bill.

The timing tells you everything here.

David Dayen

David Dayen

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