In his memoirs, former Fed Chairman Ben Bernanke discussed the reaction of the Federal Reserve Bank presidents to a congressional proposal that the Reserve Banks no longer be responsible for supervising state banks that were members of the Federal Reserve System:
The Reserve Bank presidents were particularly alarmed at the prospect of losing bank supervision duties… . The [Reserve] banks had already endured rounds of staff layoffs over the previous decade as many of the Federal Reserve’s financial services, such as check clearing, were consolidated into fewer locations… . [A] large proportion of their remaining employees examined and supervised banks and bank holding companies. Are the positions of the Reserve Bank presidents during this episode better explained by the public interest view of Fed motivation or by the principal–agent view? Briefly explain.