One little-known fact about the various regional Federal Reserve Banks is that their boards of directors are made up of representatives from the private banks they regulate and from business leaders chosen by those same private banks. A third class of directors is supposed to represent the consumer and public interest but often end up being bankers or businesspeople as well, mostly defeating the purpose of having a broad swathe of economic interests represented in the various regional reserve banks.Today, though, we have some exciting news, as the new Chairman of the New York Federal Reserve Bank -- by dint of its jurisdiction the most powerful Fed branch -- will be Dennis Hughes, the President of the New York AFL-CIO, a 2.5 million worker union. (The prior incumbent, Stephen Friedman, resigned after facing criticism for conflicts of interest with Goldman Sachs). While Hughes' role is mainly advisory, he will have a strong voice in how the Fed is managed and some say in picking the next president of the Fed, a job previously held by Treasury Secretary Tim Geithner and now occupied by William Dudley.Hughes' appointment is a rare instance of having a voice for workers and consumers take an important role in a Federal Reserve Bank -- the national AFL-CIO has been supportive of the administration's plan to move consumer financial regulation out of the Federal Reserve and into a new independent agency -- and an unusually tangible sign that the financial establishment might have learned a lesson or two from the next crisis. While having Hughes in charge certainly doesn't guarantee overnight improvements in regulation, it's certainly a step in the right direction. -- Tim Fernholz
