Wim Duisenberg, then chief of the Dutch central bank, identified Susan Phillips by her gender at a dinner with top international policy makers in Basel, Switzerland -- much to her surprise.
“He stood up to greet everybody and he said ‘Welcome to everyone -- and Ms. Phillips,’” said Phillips, who served as a Federal Reserve governor from 1991 to 1998 and was attending meetings with former Fed Chairman Alan Greenspan. “I nearly fell over; it was because I was the only woman in the room.”
More than a decade later, Phillips said the focus on gender in speculation over who will succeed Ben S. Bernanke as chairman -- Fed Vice Chair Janet Yellen, former Treasury Secretary Lawrence Summers or former Vice Chair Donald Kohn -- has reminded her that women remain scarce as central-bank heads.
Yellen, 66, would be the first female leader in the central bank’s 100-year history and, while women have populated its senior ranks, there is a “big difference” in the authority and visibility wielded by the chairmen, Phillips said. They speak for the entire institution, set the agenda and often “preserve to themselves” relationships with the administration and Congress.
It is “the second most-powerful position in the country after the president -- it’s a very influential position,” said Mark Calabria, director of financial-regulation studies at the Cato Institute in Washington and a former Senate Banking Committee aide. “There is a glass-ceiling element to this that does make this different than being vice chair.”
The U.S. central bank isn’t the only one to have been run solely by men: Institutions including the Bank of Japan, Bank of England, Bank of Israel and European Central Bank have never been led by a woman.
The contrast between Yellen and Summers, 58, who is not “looked at as sensitive to gender,” has made sexism more of an issue than it otherwise would have been in the succession discussion, Calabria said. Summers resigned as president of Harvard University in 2006 after apologizing in 2005 for remarks he made in which he hypothesized that women might lack an “intrinsic aptitude” for science and engineering. Calabria said Summers’ appointment may be viewed as a regression for an institution that has made strides in diversity.
“There has never been a woman chair of the Fed, and correcting that inequity is long overdue,” Terry O’Neill, president of the National Organization for Women in Washington, said in a July 25 statement. “Dr. Yellen is the best person for the job, male or female.” NOW cited Summers as having “obnoxious views” that “are only part of the problem.”
Fed spokeswoman Michelle Smith declined to comment.
The entire banking and economics professions weren’t welcoming places to women in the 1960s and 1970s, said Martha Seger, who has a Ph.D. in economics and served as chief economist for Detroit Bank and Trust Co. and commissioner of financial institutions in Michigan before President Ronald Reagan appointed her a Fed governor in 1984. She was the second woman on the board.
“In commercial banking, when you had a boss whose wife didn’t have a checking account, think of the mountain you have to climb,” Seger said. “But once you get going and find that when you have a woman she doesn’t force the whole place to choose pink drapes or something, that spreads and the idea becomes comfortable.”
A total of 12 women in the Fed’s history have become policy makers on the Federal Open Market Committee. Eight have been appointed governors and five have become presidents of the regional banks. Yellen is in both groups, having run the San Francisco Fed from 2004 to 2010 and also serving on the board from 1994 to 1997.
Nancy Teeters was the first female governor, appointed by President Jimmy Carter in 1978. She was previously chief economist of the House Budget Committee, a senior specialist at the Library of Congress Congressional Research Service and a senior fellow at the Brookings Institution.
The FOMC voted yesterday to keep buying $85 billion of bonds every month and said persistently low inflation could hamper the economic expansion.
Putting a woman in charge of the Fed may have more of an impact on the central bank’s public image than its internal operations, given that numerous women do hold senior titles, according to former Richmond Fed President J. Alfred Broaddus.
“It’s still an issue generally among ordinary Americans,” Broaddus said. “They’re looking at Greenspan or Bernanke and their bald heads on television, and if she’s put in the job they’ll be looking at her,” he said, referring to Yellen.
Former Federal Deposit Insurance Corp. Chairman Sheila Bair wrote in a July 22 Fortune magazine column that Yellen is “clearly the most qualified successor” to Bernanke and it’s time for a woman to run the Fed.
“The segment most directly involved in overseeing the nation’s financial markets and the big financial institutions” has lacked women leaders, Bair wrote. “Testosterone-laden Wall Street usually feels more comfortable dealing with guys than gals.”
No woman has ever headed the Fed, Treasury Department, Federal Reserve Bank of New York or the Office of the Comptroller of the Currency.
“To the extent that the Fed is perceived as being part of an old-boys’ network, it would have an impact” to have a woman at the helm, said former Minneapolis Fed President Gary Stern. “I don’t know if the Fed deserves that rap or not; I think the Fed has worked quite hard on diversity.”
Forty percent of the Fed board’s executive senior level positions were held by women in 2012, and about 45 percent of employees were female, according to its March report to Congress on the Office of Minority and Women Inclusion. The central bank was required to establish this office by the Dodd-Frank financial-overhaul legislation passed in 2010.
House Democratic Leader Nancy Pelosi of California said that while Summers and Yellen are both well-qualified, “it would be great to have a woman.” Pelosi was interviewed on Bloomberg Television’s “Political Capital with Al Hunt,” which aired last month.
A group of 37 female House Democrats led by Maxine Waters of California, the ranking Democrat on the Financial Services Committee, sent Obama a letter yesterday supporting Yellen without mentioning any of the other candidates.
Not all women are pushing for Yellen’s appointment. Seger said she’s skeptical of Yellen, who “like a lot of other people at the Fed is a perennial government employee. They don’t know what it’s like to actually be there in the real world and make decisions that you’re held accountable for.”
Yellen was a University of California-Berkeley economics professor who specialized in labor-market research. She also served as chairman of President Bill Clinton’s Council of Economic Advisers.
The debate over whether to appoint Yellen as chairman of the Fed comes as the number of women on the board of governors is poised to dwindle. Elizabeth Duke announced July 11 she will resign at the end of August. The White House said yesterday it will nominate Sarah Bloom Raskin to become deputy Treasury secretary, the No. 2 official after Secretary Jack Lew.
Yellen’s four-year term as vice chairman ends in October 2014, and if she’s passed over and departs, no women would remain on the Fed’s board of governors.
Cleveland Fed President Sandra Pianalto and Kansas City’s Esther George would be the only females left on the policy-making FOMC. They rotate voting on policy decisions: George this year and Pianalto next year. Neither votes in 2015.
“It would be a problem if none of the replacements are women,” said Stephen Oliner, a former Fed economist who is now a scholar at the American Enterprise Institute in Washington. “I think that would be a significant consideration for President Obama, especially if he chooses Summers as chairman.”
Raskin and Duke have both been members of a board subcommittee that examines how the Fed’s new supervisory tools affect community banks, and their departure will leave a gap in policy makers focused on such institutions. Their contribution “was in crafting financial regulation in that part of the Fed’s mandate,” Oliner said. The central bank will “need people who have experience in the financial sector and with financial issues.”
While the banking community and markets focus on the composition of the entire board of governors, the average American may be aware only of the Fed chief, said Phillips, the former board member.
“The person who is watching television tends only to see Bernanke’s head; that’s the symbol of the Fed.”