Campaign News

Unions and groups advocating for retirees, teachers, housing, and workers' benefits are among those visiting the ornate conference rooms of the Federal Reserve Bank of New York to lobby for a less conventional candidate to serve as its next president.

New York Fed directors leading the search for a successor to chief William Dudley, seen as the second most influential policymaker at the U.S. central bank, invited the guests to last week's meeting to seek their advice. According to attendees and others familiar with the search, the directors are close to a "long list" of candidates and appear set to begin formal interviews within weeks.

Read the full article here.

DENVER - President-Elect Donald Trump has threatened to pull federal funding from cities that don’t tow-the-line on immigration.

 “We will end sanctuary cities that have resulted in so many needless deaths,” he said on August 31. “Cities that refuse to cooperate with federal authorities will not receive taxpayers’ dollars.”

 That threat has raised concerns in cities like Denver and Aurora, where police departments have said they won’t enforce federal immigration law, because they don’t have the resources and because that's the federal government’s job.

 Denver Mayor Michael Hancock says that doesn’t mean the cities don’t cooperate.

 “We follow the law,” he told Denver7. “We still cooperate with agencies and ICE (Immigration and Custom’s Enforcement) but we won’t do anything unlawful or unconstitutional.”

 That means Denver won’t detain someone for ICE officials once their adjudicated sentence has been served.

 When federal courts began to rule in 2014 that cities lack the authority to hold inmates in local jails beyond the term of their sentence, Denver modified its policies in regard to detainers, to conform to constitutional standards, as did numerous state and local agencies throughout the United States.

 When asked if Denver is a sanctuary city, the mayor replied, “Denver never adopted a formal policy to be a sanctuary city.  What we are is a very welcoming and inclusive city.”

 The inclusive city of Denver received $175-million from the federal government in 2015.  Much of it was spent on transportation, affordable housing and other forms of public assistance.

 Hancock said he doesn’t think the federal government will withhold money from Denver and other big cities, but Denver City Councilwoman Robin Kniech, who chairs the Finance Committee, said, “We accept the possibility of that risk.”

 Kniech said federal funds are important but not more important than people.

 “We, as a city council, discussed that yesterday, how strongly we support our residents and our obligations to those residents.  If that’s the risk, we will face that risk.”

 Kniech said Denver has seen the federal government turn its back on financial obligations for many reasons.

 “Whether it’s due to government shutdowns or other political shenanigans in Congress, we have to have contingency plans in place,” she said.  “We work to mitigate the impact on our residents.”

 Kniech said if they have to face that challenge, “I’m confident we would use all the tools in our toolbox to help protect our residents.”

 The councilwoman said she is interested in collaborating with other cities and towns.

Kniech is a member of the Board of Local Progress, which includes people who serve on city councils and county commissioners, who are committed to the values of inclusiveness and a stronger economy for their most vulnerable constituents.

 “I have been working with colleagues in Austin, Texas, New York City, Los Angeles and other cities all across the country who are standing up to these threats just as Denver is,”  she said.  “I’m confident we have a national movement.”

 The mayor’s staff pointed out that between 2006 and 2013, the State of Colorado adopted and enforced a law (SB 06-90) which required the state to withhold certain grants from any city that had adopted “sanctuary” policies, and defined the term to mean: “Local government ordinances or policies that prohibit local officials, including peace officers, from communicating or cooperating with federal officials with regard to the immigration status of any person within the state.”

 During that time, no state grants were ever withheld from the city, because Denver was not deemed to have adopted a “sanctuary” policy within the meaning of that statute.

 Other Colorado cities concerned

 Aurora received $11-million from the feds last year.

 When asked if they’re concerned about a loss of federal funds, Lori MacKenzie, a spokeswoman for the city, said, “We don’t want to speculate because it’s simply too early to know what will take shape at the federal level.”

 Trump’s threats are also a concern to the city of Boulder.

 In an emailed statement, Boulder Communications Director Patrick von Keyserling told Denver7 that Boulder’s City Council asked staff to conduct research into the impacts of declaring Boulder a sanctuary city.

 He said no decision has been made, but acknowledged that the issue of declaring sanctuary is one that has legal and financial implications.

 “The city’s research will take into account the potential loss of federal dollars, impact on existing city services and programs and staff’s ability to serve Boulder residents, as well as our community’s strong commitment to social justice,” he said.

By Lance Hernandez

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The Wall Street Journal’s Michael Derby reports. “The Center for Popular Democracy’s Fed Up campaign broadcast a 30-second TV spot urging Mr. Trump to offer Fed Chairwoman Janet Yellen a second term. The ad ran during 'Fox & Friends,' a morning show the president watches and often reacts to on Twitter.” The group is behind Twitter ads bashing Kevin Warsh, another candidate for the chairmanship, that have popped up in my feed over the past couple of weeks, too.

Read the full article here.

There’s no question that race and gender matter in determining people’s economic fortunes. African Americans’ unemployment rate is typically twice as high as that of whites. The racial wealth gap has widened since the financial crisis, when African Americans and Hispanics—who had a disproportionate share of their wealth tied up in their homes—disproportionately suffered from subprime loans and foreclosures. The Federal Reserve’s Survey of Consumer Finances finds that the median wealth of a white family in 2013, the last year studied, was $134,008. For Hispanics, it was just $13,900. For African-Americans, $11,184. And as everyone knows, or should, women still make 79 cents for every dollar men make.

These deficiencies are more likely to be ignored when our most important economic policymakers don’t reflect the faces of all Americans. Yesterday, 127 Democratic members of Congress wrote to Federal Reserve chair Janet Yellen about the lack of diversity at the central bank. “The leadership across the Federal Reserve System remains overwhelmingly and disproportionately white and male,” the letter notes. Led by Senators Bernie Sanders and Elizabeth Warren, this high-level challenge also castigates the Fed for being dominated by former and current executives of financial institutions and large corporations, rather than people with backgrounds in academia, labor, or consumer organizations.

The voices of those left behind most egregiously in the economic recovery are simply not present in Fed deliberations.

Momentum to fix the Fed’s diversity problem grew on Thursday when Hillary Clinton endorsed the viewpoints expressed in the letter. Her spokesperson Jesse Ferguson told The Washington Post, “Secretary Clinton believes that the Fed needs to be more representative of America as a whole and that commonsense reforms—like getting bankers off the boards of regional Federal Reserve banks—are long overdue.”

The Fed’s lack of diversity might actually violate the law. Under the Federal Reserve Reform Act of 1977, regional Federal Reserve bank directors are required to “represent the public, without discrimination on the basis of race, creed, color, sex, or national origin, and with due but not exclusive consideration to the interests of agriculture, commerce, industry, services, labor, and consumers.” The original Federal Reserve Act only mandated representation from agriculture, commerce, and industry.

It’s unclear what enforcement of that 1977 requirement would look like. But clearly the Fed isn’t living up to it. The members of Congress rely on a February report from the Center for Popular Democracy, organizers of the “Fed Up” coalition, which has pressured the central bank to adopt pro-worker policies. According to their figures, 83 percent of Federal Reserve board members are white, and 72 percent are male. Among the twelve regional Fed bank presidents, only Neel Kashkari of the Minneapolis Fed is non-white, and only Esther George (Kansas City) and Loretta Mester (Cleveland) are female. And among voting members of the Federal Open Market Committee (FOMC), which makes monetary policy decisions, it’s even worse: All ten currently serving members are white.

The lack of occupational diversity is also pretty stark. The Center for Popular Democracy studied the regional feds’ boards of directors, finding that 39 percent represent financial institutions. The Fed’s role as a key supervisor of major banks makes this highly suspect—especially considering there is no mandate for financial interests to be represented on the Fed board.

Another 29 percent of the Fed regional directors represent commerce and industry. Only 11 percent come from community, labor, consumer, or academic organizations. Even representation from the service sector, which has an overly non-white workforce and has expanded in recent years, has shrunk as a percentage of Fed bank-board members relative to 2010, the last time the boards’ makeup was studied.

It’s unusual for members of Congress to take such a public stand on the Federal Reserve, given their mindfulness of central bank independence. But they are recognizing that the lack of diversity has an important effect on economic policy. A more diverse Fed might pay more attention to how far communities of color are from full employment when deciding whether or not to raise interest rates, which they are now deliberating. A more diverse Fed might not be as consumed with the concerns of finance and industry, and their desire to keep inflation and wages low. It might consider how banks have traditionally preyed on communities of color, and target its supervision activities to reflect that.

The voices of those left behind most egregiously in the recovery are simply not present in Fed deliberations. The members of Congress cited a recent blog post by former Minneapolis Fed president Narayana Kocherlakota, who said that “there is one key source of economic difference in American life that is likely underemphasized in FOMC deliberations: race.” Kocherlakota searched transcripts of FOMC meetings from 2010 (the most recent ones released). That entire year, African American unemployment stood at 15.5 percent or above. But, writes Kocherlakota, “Based on that search, my conclusion is that there was no reference in the meetings to labor market conditions among African Americans.”

Traditionally, public pressure on the central bank has come from the right, from the likes of Ron Paul’s “End the Fed” movement. Progressives were largely absent from the conversation, despite the Fed’s central economic role. No more: Thursday’s letter to Yellen is the biggest success yet for the Fed Up campaign, launched two years ago to amplify the voices of communities that didn’t benefit from the recovery. The campaign has brought together labor and community groups to demand that the Fed take its mandate to maximize employment seriously—taking into account all communities, not just affluent ones. And now Fed Up’s views have become dominant in the Democratic Party.

In addition to the hefty names of Sanders and Warren, co-signers include 116 House Democrats, more than half of the caucus, as well as the ranking members of the Financial Services Committee (Maxine Waters) and the Monetary Policy Subcommittee (Gwen Moore), the committees with oversight of the Fed. And Clinton’s endorsement of Fed Up’s sentiment puts most of the ideological spectrum of the party on the side of reform.

But what does reform look like? The Center for Popular Democracy’s February report recommends that each regional board contain at least one member from a labor group, a community organization, academia, and a community bank or credit union. A separate reform proposal from former Yellen advisor Andrew Levin includes a number of ideas, including banning anyone affiliated with a financial institution from serving as a Fed director.

These ideas can be congressionally mandated. That will take time, of course, but the movement has begun to get Democrats off the sidelines to pressure the Fed. When Yellen testified before the House and Senate in February, giving her semi-annual Monetary Policy Report, she received questions about the lack of diversity from 15 different members of Congress. Yellen expressed concern that, among other things, no African American has ever led a regional Federal Reserve bank in U.S. history.

The fact that political pressure can make a difference was again signified by the quick response of a Fed spokesman to Thursday’s letter. The Fed statement said the central bank has “focused considerable attention in recent years on recruiting directors with diverse backgrounds and experience.” Those aspirations have not yet translated into results, however, even after the Fed established an internal diversity office in 2011.

It’s hard for the traditionally cloistered Fed to ignore concerns when they come from high-level Democrats. And just having ordinary workers in the public debate already diversifies the Fed, in a sense. No longer can they simply be responsive to Wall Street without further discussion.

BY DAVID DAYEN

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