Revised article published in Southern Economic Journal 66, no. 4 (March 2000): 957-975.

The boards of directors of the 12 District Reserve Banks are the rare private citizens who play a role in government decisionmaking. Although the nine business, labor, financial and community leaders on each local board do not directly set policy, they do recommend changes in the discount rate to the Board of Governors. On the surface their role in monetary policy deliberations is only advisory; however, their influence could, in fact, be substantially more significant if they actually affect the FOMC votes of their respective Reserve Bank presidents. This paper examines this more significant link to monetary policy by testing the relationShip betweer the discount rate recommendation of the Reserve Bank's board and the vote of that District's Bank president at the FOMC. It is shown that the FOMC votes of Reserve Bank presidents are significantly correlated with their board of directors' current discount rate recommendation.