Democrats Criticize Fed for Lack of Diversity in Leadership

  • Sanders, Warren call on Yellen to add women, minorities
  • Regional Fed boards overwhelmingly white men, says letter

Senator Elizabeth Warren listens during a Senate Banking Committee hearing on Feb. 11, 2016.

Photographer: Andrew Harrer/Bloomberg

The U.S. Federal Reserve came under criticism Thursday from some lawmakers over the lack of diversity in the central bank’s leadership.

A majority of Democratic members of Congress -- 11 from the Senate and 116 from the House of Representatives -- signed a letter addressed to Janet Yellen, calling on the Fed chair to include more African Americans, Latinos and women when it considers candidates for top posts. The letter was written by staff for Representative John Conyers of Michigan, according to Ady Barkan of the Fed Up campaign, an activist group that lobbied members of Congress to add their names. No Republicans signed.

“We remain deeply concerned that the Federal Reserve has not yet fulfilled its statutory and moral obligation to ensure that its leadership reflects the composition of our diverse nation in terms of gender, race and ethnicity, economic background and occupation,” according to the letter, whose signatories included presidential candidate Senator Bernie Sanders of Vermont and Massachusetts Senator Elizabeth Warren.

The letter said more than 80 percent of directors at the Fed’s 12 regional banks are white and about three-fourths are men. Of 12 regional Fed presidents, who participate in monetary policy meetings, 11 are white and 10 are men, it added.

Improvements Made

Fed spokesman David Skidmore said the central bank and its branches have focused in recent years on increasing ethnic and gender diversity. Minority representation on Reserve Bank and branch boards has risen to 24 percent this year from 16 percent in 2010, he said, and the proportion of female directors has increased to 30 percent from 23 percent over the same period. “We are striving to continue that progress,” Skidmore said.

Fed Up is organized by the Center for Popular Democracy, non-profit groups and unions who are lobbying for the Fed to reject raising interest rates.

Regional Fed presidents are chosen by non-banking members of their respective boards of directors. The appointments are subject to the approval of the Board of Governors in Washington.

Regional boards have nine members, as stipulated in the Federal Reserve Act. Three are chosen by and represent banks in the district; three are chosen by the same banks to represent the public; three are designated by the Board of Governors to represent the public.

Jesse Ferguson, a spokesman for Hillary Clinton, issued a statement on Fed diversity after the letter was released saying the leading Democratic presidential candidate “believes that the Fed needs to be more representative of America.” She also thinks “commonsense reforms” such as removing bankers from regional Fed boards, “are long overdue,” Ferguson said.

Lockhart Retiring

Barring a surprise resignation, the Atlanta Fed presidency will be the next seat on the Federal Open Market Committee to open. Dennis Lockhart, the current president, will be required to step down in March 2017 after serving for 10 years.

“Diversity for the Federal Reserve is critical. This is the very nature of this institution, to broadly represent the communities we serve,” Kansas City Fed President Esther George said in response to a question Thursday after a speech in Albuquerque, New Mexico. “That means industry diversity. It means diversity of thought. And it means racial and gender diversity in the institution.”

There are two governorships already open. President Barack Obama has nominated Allan Landon, the former chief executive officer of Bank of Hawaii Corp., and Kathryn Dominguez, an economics professor at the University of Michigan in Ann Arbor, to fill the posts. Republican Senator Richard Shelby has refused to hold confirmation hearings for the pair in a dispute with the White House over its failure to fill a separate Fed post.

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