High Court Kills Senator’s Plea on Naming Fed Panel

The Supreme Court on Monday killed a bid to give the Senate a bigger hand in naming members to the Federal Reserve committee that helps set the nation’s monetary policy.

The high court let stand without comment a ruling that dismissed a challenge by Sen. John Melcher (D-Mont.) to the way some members are appointed to the Federal Open Market Committee.

The committee directs the buying and selling of government securities in the open market by Federal Reserve banks. Such transactions are part of the way the Fed implements monetary policy.

There are 12 members of the open market committee: the seven governors of the Federal Reserve Board and five representatives of Federal Reserve banks.

The governors, appointed by the President with Senate approval, are permanent members of the open market committee. The five other members are selected annually by the boards of directors of the Federal Reserve banks from among the banks’ presidents and first vice presidents.

Melcher filed a lawsuit challenging the constitutionality of how the five bank executives are named to the committee. He said they also should be subject to Senate confirmation.

In another decision Monday, the court refused to order states to give refunds to businesses when a state tax is invalidated as a violation of interstate commerce.

The justices, by a 6-3 vote, turned down an appeal asking them to apply retroactively a 1987 ruling in which the high court struck down a Washington state manufacturing tax that favored some in-state businesses.

In the Federal Reserve case, the U.S. Court of Appeals threw out Melcher’s suit last December. The court said ruling on the merits of his claim would represent undue judicial interference with the legislative process.

Any change in the appointment of committee members must be left to Congress, the appeals court said, adding that similar challenges by other senators met with a similar fate.

Melcher said the changing national and world economy has given the issue a greater urgency than ever. “As the Federal Reserve grows in importance, so does the injury to this plaintiff in the deprivation of his rightful, constitutional role in the selection of the officers who control it,” he said.