White Male Bankers Dominate New Crop of Federal Reserve Directors and Presidents
Report finds egregious lack of sectoral, racial, and gender diversity, worsened by recent appointments
02/08/16
Today, the Fed Up campaign released a report showing that the January 1 appointments to the 12 Federal Reserve boards across the country have exacerbated the system’s skewed leadership structure and resulted in economic policy choices that privilege the needs of the wealthy over the welfare of low-income communities of color. The report, “To Represent the Public”: The Federal Reserve’s Continued Failure to Represent the American People, is being released as Chair Janet Yellen begins two days of testimony before Congress and three weeks before the expiration of the five-year terms of all 12 regional Federal Reserve Bank presidents, who are all expected to be reappointed by the regional boards through a completely opaque process.
Among the 19 board members appointed at the beginning of 2016, 16 are white, three are black, and none are Latino or Asian. Twelve come from either banks or corporations, while three are from academia, one represents a labor union, and the remaining three come from the non-profit world. This year’s new appointees mirror society in terms of gender with 10 women and nine men, although the boards remain dominated by men.
The report is being released as approximately 80 community leaders and organizers from around the country converge on Washington DC today and tomorrow for Yellen’s “Humphrey-Hawkins” hearings in front of the House Financial Services and Senate Banking committees. For over a year, the Fed Up campaign have been warning the Fed not to intentionally slow down the economy while it remains fragile, with 0.7 percent growth in the fourth quarter of 2015 and a slack labor market with low wage growth. Nevertheless, Fed officials raised rates in December, sending international markets into a tailspin on fears of a global slowdown and even a new recession.“To Represent the Public” shows that its decision to slow down the economy – which reduces aggregate demand, slows job creation, undercuts workers’ bargaining power, and leads to lower wages – is the result of a leadership dominated by bank executives who profit from higher interest rates and corporate executives who profit from lower labor costs.
The report reveals that, despite the legal requirement that Federal Reserve Bank directors “represent the public” with “due consideration” to a wide array of constituencies across the economy, directorships at Fed Banks are occupied disproportionately by white men, almost entirely from the corporate and financial sectors. 83 percent of Federal Reserve board members are white and nearly 75 percent are men. By comparison, 63 percent of the country is white and 49 percent is male. Banking and commercial sectors dominate the board seats, with representatives from community and labor organizations representing less than five percent of all seats.
On top of the lack of diversity, the report casts a spotlight on the revolving door between the banking industry and the Federal Reserve. The majority of Federal Reserve Bank presidents spend their entire careers either in the federal government or in the banking sector before taking a job at the Fed. One fourth of current Fed presidents have strong ties to Goldman Sachs.
The report makes a set of recommendations, calling on the Fed to ensure that community, labor, academic, and alternative banking voices have a strong presence within the system’s governance.
Shawn Sebastian, the Fed Up campaign’s Field Director, released the following statement:
“When a policy-making body that looks like this evaluates whether lower unemployment and higher wages would be a good thing for America, whose perspectives are they taking into consideration? When no regional president is African-American, how do they weigh the importance of Black unemployment?
“When the vast majority who represent banking and financial interests debate with the few labor representatives over whether we have a strong labor market, who wins? The answers are obvious.
“The Federal Reserve intentionally slowed down the economy in December, ignoring the voices of working people around the country. The Fed needs to prioritize strong job and wage growth for everybody. But its leadership continues to represent America’s one percent and to advance policies that help the wealthiest, rather than the rest of us. That needs to change.”
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Fed Up is a coalition of community organizations and labor unions across the country calling on the Federal Reserve to reform its governance and adopt policies that build a strong economy for the American public. The Fed can keep interest rates low, give the economy a fair chance to recover, and prioritize genuine full employment and rising wages.
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The Center for Popular Democracy promotes equity, opportunity, and a dynamic democracy in partnership with innovative base-building organizations, organizing networks and alliances, and progressive unions across the country. CPD builds the strength and capacity of democratic organizations to envision and advance a pro-worker, pro-immigrant, racial justice agenda.
Press Contact:
Anita Jain, ajain@populardemocracy.org, 347-636-9761
Sofie Tholl, stholl@populardemocracy.org, 646-509-5558
