Group of lawmakers says Fed fails to diversify leadership

WASHINGTON – A group of Democratic senators and House members complained Thursday that the Federal Reserve has failed to meet its obligation to build a diverse leadership that includes enough women and minorities, and it wants Chair Janet Yellen to remedy the issue.

The lawmakers said a more inclusive leadership that properly reflects gender, race, ethnicity, occupation and economic background is needed to ensure fairness in Fed policy.

The Democratic lawmakers — 11 senators and 116 in the House — expressed their concerns in a letter to Yellen. The Fed’s leadership “remains overwhelmingly and disproportionately white and male,” they wrote.

In its search for directors who oversee the Fed’s 12 regional banks for terms next year, the Fed’s board of governors should cast a wider net for African American, Latino and female candidates, as well as qualified people from labour, consumer and community organizations, the lawmakers told Yellen.

A Fed spokesman, David Skidmore, responded that the central bank is “committed to fostering diversity — by race, ethnicity, gender and professional background — within its leadership ranks.”

“We have focused considerable attention in recent years on recruiting directors with diverse backgrounds and experiences,” Skidmore said. “By law, we consider the interests of agriculture, commerce, industry, services, labour and consumers. We also are aiming to increase ethnic and gender diversity.”

The senators signing the letter include Elizabeth Warren of Massachusetts and Bernie Sanders of Vermont, who is challenging front-runner Hillary Clinton for the Democratic presidential nomination. Warren and Sanders are the most outspoken Democratic critics on economic and financial issues.

The 116 House members, representing more than half the 188 Democrats in the House, are led by Rep. John Conyers of Michigan, the senior Democrat on the Judiciary Committee.

The letter cites data from the Center for Popular Democracy, a liberal advocacy group. The data indicates that 83 per cent of the directors who supervise the Fed’s regional banks are white and that nearly three-quarters of them are men. All the members of the Fed’s committee that sets interest-rate policy are white, and 60 per cent are men.

The Fed counters that the proportion of minority directors on the boards of its regional banks and their branches has risen from 16 per cent in 2010 to 24 per cent this year, and that the proportion of female directors has increased from 23 per cent to 30 per cent. Forty-six per cent of the directors represent diversity in race and-or gender, the Fed said.

“We are striving to continue that progress,” Skidmore said.

The data cited in the congressional letter do not include directors of the regional banks’ branches, only the banks themselves.

On Thursday, Clinton’s campaign said she shares the lawmakers’ concerns. A spokesman, Jesse Ferguson, said Clinton thinks “the Fed needs to be more representative of America as a whole.” She also believes there no longer should be three private-sector bankers sitting on each regional Fed bank board, Ferguson said.

That change would require new legislation.

Yellen, the first woman to lead the central bank in its 100-plus-year history, has stressed in her public statements the importance of overcoming economic inequality.

The five current Fed governors are white. Two, including Yellen, are women.