Campaign News

Source: Wall Street Journal

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.

President Donald Trump’s unorthodox, dysfunctional behavior and decision-making may lead him to violate a whole slew of new norms if he announces a pardon Tuesday night, as he has said he might, for former Arizona Sheriff Joe Arpaio. Legal analysts and Dept. of Justice guidelines reviewed by TYT suggest that granting a presidential pardon to the controversial former sheriff would go against virtually every recommended criteria the DOJ has for appropriate pardon candidates.

Read the full article here.

An internal memo from a Starbucks executive this week urged store managers to "go the extra mile" to improve workers' schedules.

The letter was distributed on Tuesday and refers to a New York Times story that was set to be published the following day titled, "Starbucks falls short after pledging better labor practices."

The Times story referred to a survey by the nonprofit advocacy group Center for Popular Democracy.

Based on interviews with 200 baristas in 37 states, the survey says Starbucks "is not living up to its commitment to provide predictable, sustainable schedules to its workforce."

In 2014, Starbucks said it was changing its policies telling managers to post schedules at least a week in advance and not make store employees work an opening and closing shift back-to-back.

In this week's memo, Cliff Burrows, Starbucks (SBUX) group president of the U.S. and Americas, said the findings of the new survey "suggest" that neither commitment was being met -- "contrary to the expectations we have in place."

In his letter, Burrows urges managers to improve scheduling for coffee baristas, who the company calls partners.

"To our store managers, I want to stress that as we continue to evolve and improve the usability of our system, we have to go the extra mile to ensure partners have a consistent schedule -- free of back-to-back close and open shifts that are less than 8 hours apart -- that is posted 2 weeks in advance," he wrote.

Source: CNN Money

JACKSON HOLE, WYO. -- The world's economic elite gathered here for an annual symposium sponsored by the Federal Reserve Bank of Kansas City last week to debate the strategies central banks should employ to safeguard the global economy. We sat down with St. Louis Fed President James Bullard to chat about when he might be ready for a rate hike, the limits of his powers and why predicting the future is futile.

The transcript below has been edited for length and clarity.

Wonkblog: Let’s start with the question of the day: Which month looks good to you for a rate hike?

Bullard: Actually, I’m agnostic on this. Our new framework calls for one, and only one, and then we go on pause for a bit. It’s not critical to me exactly when we make that move, so we wouldn’t have to go at any particular meeting.

I do like to move on good news, so if we have good information, and we’re at a meeting, it might be a good opportunity to go ahead and make that move. But what’s different about what I’m saying is I’ve got a real flat interest rate path — much closer to the markets’ interest rate path. I don’t have this march upward of 200 or 250 basis points.

If only one more rate hike is really needed to get to the Fed’s neutral stance, why does it matter if you move in September, December or next year? You would be willing to wait until 2017?

Certainly, I just don’t feel that there’s any urgency when you’ve got the framework I’m talking about.

[The Federal Reserve is debating how to fight the next recession]

So explain your framework for us.

What we wanted to do is break down this idea that we’re really certain about where the economy is going in the medium- and long-run. What most models do is they have something called a steady state, which is really an average of all the variables in the past: You look at the unemployment rate, and you take the average unemployment rate. You look at interest rates and take the average past interest rate. You look at inflation, growth — you take averages of the past, and you call those your normal values.

As you go along, you expect all your variables to go back to their normal values. That’s what we’ve been doing. That’s the old framework. And what we’re saying is we don’t like that framework anymore because it suggests we have a lot more certainty about where the economy is going than we really do.

These averages of these variables from the past — they can sometimes be high and sometime be low. You can be in a configuration where these things are low, and then you can switch to another configuration when they’re high. Then they’re high for a while, and you switch back to low. What you have to do is make policy given whatever regime you’re in.

We think that the regime that is dominant right now is a slow-growth regime that is characterized by low productivity growth and very low real returns on short-term government debt around the world. We think these regimes are persistent. These things aren’t changing any time soon. And because of that, we just have to take them as given, for now anyway.

Given that in this framework, it’s difficult to tell when the regime is shifted, how do you know that you’re not setting monetary policy for a regime that’s already expired?

You’re gonna know when the regime switches. These very low real rates of return on government debt, if you look at the ex-post return on one-year Treasurys, it’s about -135 basis points right now. If that starts to go up rapidly, we’re gonna know and we’re going to take note of it. We’re gonna say, “Aha! Our regime has changed, and we’re going to have to change monetary policy accordingly.”

But for forecasting purposes, I wouldn’t say that I’m expecting that to happen all of a sudden. It’s been that way for at least the last three years, and if you look at real rates of return, they’ve declined for the last 30 years. It’s also very clear that we’re in a very low productivity environment.

It’s not that you go to sleep. You stay alert to the possibility that the regime can change in the future, and probably will change at some point in the future. It’s just not good to be predicting that it’s going to change.

Federal Reserve Chair Janet Yellen's speech here laid out the argument that the Fed is not out of ammunition to fight the next recession. Do you agree with that?

I loved the speech. She made the case that we still have quite a bit of bandwidth to handle problems if they arise in the next couple of years, and I very much agree with that. But at the same time, it’s always good to be studying other possibilities. I actually have papers on nominal GDP targeting, so I think that’s an interesting topic. It's probably not ready for prime time, but I’m a believer in research.

What led you to the support for this regime-based framework. Can you talk about the evolution of your thinking?

Maybe some frustration with the dot plot. We were saying we were going to have to raise rates fairly aggressively over the forecast horizon in order to keep the economy on track, and that wasn’t materializing. We had that forecast for several years, and it wasn’t really working. For that reason, I wanted to get a different way to think about what we were doing.

We’ve only moved once on the policy rate, and markets are saying maybe one more move this year. That would only be one move per year — that’s really not normalization. If you’re going to say it’s going to take 10 years to get back to a normal value, you’re really saying we’re not going back there. That’s way longer than any sort of business cycle than you can reasonably talk about.

How do you feel about the division between monetary and fiscal policy currently? Do you feel it’s time to pass the baton here?

I do think that. And I think the regime framework is good for laying that out for people. Part of the story is that the recession has been over for seven years. The unemployment rate has gone down below 5 percent. Inflation is low, but we don’t think it’s that low, and it’s kind of coming up to target.

So the cyclical dynamics are all done. The dust has settled, I guess is the way I would put it.

You might say the dust has settled, and I don’t like what I see. But for that, you can’t solve that with monetary policy. You’ve got to have things that are going to increase productivity in the economy. You’ve got to make the economy more efficient. New ideas, better technology, better diffusion of technology, better human capital, better skills match — I think it’s a lot of small things that you have to do right to get an economy humming. The story of let’s keep interest rates low and that will help us, that’s kind of over for now.

Related to that are the demonstrations by Fed Up and the Center for Popular Democracy that were held Thursday. Any additional thoughts on their point of view, that there’s still more that the Fed can do?

I love the people that come here. I think they’re a really great slice of the American workforce. It’s really nice that they’re willing to take time out of their lives to come out here and talk to us boring central bankers.

They want to talk about low nominal interest rates as solving difficult problems of how our labor markets operate and how our labor markets are unfair to many people. I would like them to think about the German labor market reforms that were done over the last decade. Germany had very high unemployment for a long time. It was an endemic problem, and then they did these reforms and got their unemployment rate cut in half — even though Europe went through a double-dip recession during that period.

It showed to me that there are ways to attack these problems, and I think we could do that in the U.S. I think they should refocus their efforts on the labor secretary, so we could get those kinds of reforms going. People aren’t even talking about that.

By Ylan Q. Mui

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