Fed Called Out on Lack of Diversity
09 February 2016 - 10:00AM
Dow Jones News
NEW YORK--Federal Reserve leadership is overly male, almost
entirely white and drawn too frequently from the banking community,
according to a group critical of the central bank.
A new report from the Center for Popular Democracy's Fed Up
campaign analyzes the types of people populating the Fed's
Washington-based board of governors, the regional bank presidencies
and the regional bank boards of directors.
The report notes that all voting members of the central bank's
rate-setting Federal Open Market Committee and nearly all the
regional bank presidents are white. Just two of the 12 presidents
and two of the five governors are women.
"These key decision-making bodies remain dramatically unbalanced
and unrepresentative of the vast majority of people who participate
in the economy," said the group, which has called for more public
input into the selection of regional bank presidents and their
performance evaluations.
The center said the composition of the Fed's leadership bodies
violates the spirit of the law that created the central bank, which
calls for membership drawn from many different industries and
interests.
A Fed spokesman responded to the criticism about the regional
bank boards by saying the central bank has "focused considerable
attention" to finding directors "with diverse backgrounds and
experiences" that represent agriculture, commerce, industry,
services, labor and consumers, as the law requires.
"We also are striving to increase ethnic and gender diversity,"
the spokesman said, noting a rise in minority representation on the
boards from 16% in 2010 to 24% today. Female representation has
risen from 23% to 30% over the same period, and all told, 46% of
regional directors now are either a woman or a member of a racial
minority, the spokesman added.
Fed Chairwoman Janet Yellen is the central bank's first female
leader.
The Fed Up group, with a membership drawing heavily from labor
unions and community organizations, is a regular critic of the
central bank. It has argued in recent months that the Fed shouldn't
raise short-term interest rates and has pressed its case in private
meetings with Fed officials. Several of its members appeared
outside the central bank's research conference in Jackson Hole,
Wyo., last year to call attention to their views.
The group's concern about a dearth of diversity at the Fed has
been echoed by former Minneapolis Fed chief Narayana Kocherlakota.
He argued in a blog post last month the central bank has appeared
to give short shrift to racial concerns in part because there have
been almost no African-Americans in its policy-making ranks. He
wrote that the concerns of racial minorities have been
"underemphasized" at the Fed.
The last African-American to serve on the Fed board was Roger W.
Ferguson Jr., who served as a governor between 1997 and 2006 and as
vice chairman from 1999 to 2006. The first African-American to
serve as a Fed governor was Andrew Brimmer, from 1966 to 1974.
The report showed particular concern about the directors on the
regional Fed bank boards, which are drawn from the private sector.
It said 83% are white, compared with around two-thirds of the total
U.S. population.
"The diversity of regional board members is meant to inform the
bank presidents, who in turn, participate in discussions and vote
at the FOMC," the report said. "However, the boards, the
presidents, and the FOMC fail to represent their region's racial
diversity."
The report also said its analysis found that representatives of
banking and what it calls commercial interests have increased their
share of regional Fed board seats in recent years. Representatives
of community groups and labor unions account for fewer than 5% of
the available board seats, according to the center.
Among the regional Fed bank boards' most high-profile roles is
selecting their bank presidents. Recent regulatory changes now bar
directors from participating in that process if their firms are
regulated by the bank.
The directors also provide information to bank officials about
local economic conditions and give advice on running the banks.
Write to Michael S. Derby at michael.derby@wsj.com
(END) Dow Jones Newswires
February 08, 2016 17:45 ET (22:45 GMT)
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