WASHINGTON, D.C. – Congressman Sean Duffy (R-WI), Chairman of the House Financial Services Subcommittee on Housing & Insurance, today discussed the scope of the Federal Reserve’s authority in American corporate board rooms with Fed Chair Janet Yellen.

Duffy pressed Chair Yellen on the role that the Federal Reserve Board plays on corporate board rooms, specifically on the aspects of what the Federal Reserve can require of a board under the auspices of safety and soundness. He went further by confirming that everything falls under the scope of safety and soundness, with the potential to force them to make changes in any number of areas without any liability.

Congressman Duffy noted that corporate board members have a fiduciary duty to their shareholders, and have civil and criminal liability for their actions, and inquired if the Federal Reserve was held to the same standard. When asked by Duffy if the Federal Reserve has “civil or criminal liability should things go wrong on a corporate board,” Yellen admitted, “not to the best of my knowledge.”

To watch the exchange in its entirety between Duffy and Yellen, click HERE or the image below:

Partial Transcript:

Duffy: “You can’t give me an answer because everything falls under the scope and that’s our concern. The Fed doesn’t have a fiduciary duty to shareholders. And actually board members have potential civil and criminal liability in their service on a board. Does the Fed have any civil or criminal liability should things go wrong on a corporate board? So board members are liable, how about the Fed?”

Yellen: “Well, we have supervisory responsibilities.”

Duffy: “No, no, you do but, are those Fed members who are sitting in on board meetings, are they potentially criminally or civilly liable for the decisions that they push a board to make?”

Yellen: “Not to the best of my knowledge.”

Duffy: “Mine either. That’s concerning for us. And I’m pushing you on this because you do have a supervisory role and I want you to do a good job. But from the feedback that we get, the involvement that the Fed has in our corporate board rooms has far surpassed I think the vision that any of us had in this room. And it concerns us.”

Yellen: “So let me say that we have talked to many corporate board members and understand that there has been an accumulation of a large number of items we have indicated that board members along with senior management should be responsible for. And we should clarify...”

Duffy: “I don’t believe you have the authority to make hiring and firing decisions, and that is feedback that we have had from members.”

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