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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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The Committee for Better Banks (CBB), a Communications Workers of America (CWA)-affiliated community and labor coalition, was created in 2013 to put an end to that. Cassaundra Plummer, a Maryland-based CBB member currently employed as a bank teller at TD Bank, told In These Times, “A lot of the issues within the banks are not discussed, they’re kept really quiet. As a young woman, I always thought that working at a bank was more of a prestigious job than retail. Once I actually got into banking, I realized that it’s not a whole lot different.”

The CBB, which has grown from eight lead members in April to approximately 60 in six different states today, with thousands more either engaged through petition signing or attending rallies. CBB is hoping to expand and create a critical mass of organized workers by bringing these issues out in the open. 

A study released by the National Employment Law Project (NELP) early this month shored up CBB claims, finding that 30.4% of the 1.7 million retail banking employees across the country—more than 500,000 workers—are paid less than $15 an hour. Nearly three-quarters of low-wage bank workers are bank tellers, 84.3% of which are women.

Another report, published by the UC Berkeley Labor Center last year, found that these low-wages led 31% of bank teller families toward enrolling in public assistance programs (compared to 25 percent of the entire workforce). “The cost of public benefits to families of bank tellers is nearly $900 million per year,” says the report.

Though it was labeled an “occupational winner” by the Bureau of Labor Statistics for its 84% throughout its growth in the 1970s, the introduction and proliferation of automated teller machines helped put the brakes on that, leading to a projected 1% growth over the next decade. As Timothy Noah noted for Slate in 2010, banks tellers earn “slightly less than [they] did in 1970,” putting the job at the center of wage stagnation that has become common-place throughout the middle class, especially within the context of expectations of higher productivity.

CEO compensation and executive pay indeed remain at worrying heights. The NELP report found that CEOs of Wells Fargo and Bank of America made amounts equal to more than 500 times the annual earnings of an average bank teller. Stephen Lerner, the architect of SEIU’s famed Justice for Janitors campaign, summed up the wealth disparity among bankers at the top and bottom of the pay brackets in a 2010 New Labor Forum article, writing, “We could increase pay by $2.00 per hour and provide employer-paid health insurance for over 550,000 tellers with just 3.6 percent of the bonuses paid out to executives.”

“The constant focus on making more forces the people working in the bank to take on more work, but we’re being paid the same amount,” says Plummer. “We’re not expecting to become wealthy off of entry-level positions. But the corporations make a lot of money off of the things that we do—the sales goals, and all that we have to do to create wealth for the bank. It should be reciprocated back to the employees.”

By shifting traditional banking services toward automation, low-wage bank workers such as bank tellers and personal bankers have also become the frontline for pushing financial products on to customers in an effort to increase profits. The pressure of sales quotas imposed by management and executives at the top keeps low-wage bank workers under more scrutiny than ever before. Customer service employees in retail banks must not only attempt to hook patrons onto core retail banking services like checking and savings accounts, but must also resort to hawking mortgages and credit cards in ways CBB organizers say can be predatory. Tellers risk termination if they fail to meet quotas for such products.

“Wells Fargo creates an environment of hostility and humiliation. Multiple times I witnessed management behaving in a condescending fashion to those who did not meet ‘goals’ even though their customer service was excellent. Wells no longer cares about customer service or the best interest of their customers; they are only looking to push products and most of the time they are unnecessary products,” one bank employee told the Committee of Better Banks when they surveyed 5,000 workers for the aforementioned study at the group’s conception.

According an April 2015 report by the Center for Popular Democracy, since 2011, 17 different lawsuits across the top five banks in the country (JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, and US Bank) have been settled for nearly $46 billion, “highlighting a range of alleged illegal and unethical business practices.”

A 2013 Los Angeles Times investigation reported that the pressure of sales goals, which increase U.S retail banks’ profits, has led some bank workers to commit fraud, forging signatures, opening secret checking accounts with fees attached, or even credit lines for customers in order to keep up with their sales goals. This has led to lawsuits from customers and even cities decrying the rigid and unfair sales culture fostered by the banking industry. When these practices become public, banks fire employees and managers in alleged attempts to uphold ethical finance.

But as Khalid Taha, one of the first Committee members in California, currently employed at Wells Fargo in San Diego, describes it, the “impossible” sales goals come from the top and workers ultimately have no other option. “They fire the entry level employees which is us, but if you think about it, yes we are responsible for it, but we are also victims,” says Taha. “We have to keep our jobs, pay our rent. We have no way but to go a little bit shady when we deal with our customers because the company wants to meet their quota. They don’t care how.”

Beyond low pay, CBB has been working to connect these pressurized work environments to their detrimental effects on the economy caused by the bank’s business practices.

The top four retail banks in the country (JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo), part of the too-big-to-fail banking institutions that some, like presidential candidate Sen. Bernie Sanders, have called to be broken up, now collectively possess assets equivalent to 45% of the U.S economy, a slight increase than what it was in 2008 before that year’s financial crisis.

Lerner, who is currently advising CBB as a fellow at the Kalmanovitz Initiative for Labor and the Working Poor at Georgetown University, told In These Times, “This campaign is different from many union campaigns that say ‘our sole goal is winning better conditions for workers.’ Those campaigns are important, [but] in this case we’re saying that you can’t win better conditions for workers unless you reform the industry—and you can’t reform the industry unless workers are helping reform it.”

At an April 2015 rally in Minnesota where they delivered 11,000 signatures on a petition calling for an end to sales goals, the Committee for Better Banks released a proposed bill of rights for bank workers. One of the planks of the bill addresses what they say is community suffering at the hands of banks: “We must eliminate unreasonable sales goals or performance metrics that force us to push unnecessary products on our customers. We are here for our neighbors—for the child who opens his first savings account, for the newlywed couple planning ahead to retirement, for the senior citizen opening a credit card. We want to be honest brokers of your financial security, and that means an end to pressure tactics that only serve to line shareholders’ pockets.”

“We’re at the very beginning of a baby-steps campaign to build working support for the idea that we need to do two things, and that come simultaneously: We need to address how bank workers unfairly—low pay, etc., but we need to connect with how the finance industry behaves is bad for the overall economy,” Lerner says.

In 2010, Lerner was launching SEIU’s new plan to organize bank workers. Mike Elk described that effort as emanating from his realization that banks influenced the rest of labor organizing through its close connections to the pensions and investment banks that intertwined with financial decisions made not only by workers but their communities, as well.

At the time, fellow journalist Steve Early told Elk, “[Successful organizing] require[s] a long-term commitment that few unions are willing to make, even when dealing with a strategic multinational target that’s not going away.” Lerner left SEIU later that year under disputed circumstances, and his work organizing bank employees was abandoned by the union.

CEO and President of union-owned Amalgamated Bank, Keith Mestrich announced in early August that the bank’s employees would be making at least $15 an hour under their new collective bargaining agreement. He told Buzzfeed, “We think it’s the right thing for our bank to do, and frankly we think it’s the right thing for all banks to do. … If any industry in this country can afford to set a new minimum for its workers, it’s the banking industry.”

But in the rest of the nonunionized retail banking industry, CBB, like the Fight for 15 and OUR Walmart, will be agitating for improvements.

“It was a little bit scary at the beginning, but we have to do it. If we don’t talk then the banks will do whatever they want to do,” says Taha.

Source: In These Times

Shawn Sebastian, field director of Fed Up, a campaign by labor, community and liberal activist groups that wants the Fed to enact pro-worker policies, said the choice of Williams damaged the Fed’s legitimacy and credibility.“Today, the Federal Reserve concluded another opaque and controversial Reserve Bank presidential selection process by ignoring the demands of the public and choosing yet another white man whose record on Wall Street regulation and full employment raises serious questions,” he said.

Read the full article here.

Atlanta, located in the heart of the South, was a center of the civil rights movement, became a corporate hub of the New South economy, and boasts a large black professional class.

Can it help break the Federal Reserve's color barrier?

Dennis Lockhart's retirement early next year as head of the Federal Reserve Bank of Atlanta has spotlighted the selection of his replacement as members of Congress and a coalition of activist groups call for an aggressive search among blacks and Latinos with finance or economics expertise.

African-Americans have served on the Federal Reserve's Washington-based Board of Governors three times in the Fed's 103-year history, and the central bank now has a female chair, Janet Yellen.

But none of the regional banks have ever been run by a black or Latino, a lack of diversity some argue is worrisome on its face and could make the system as a whole less attentive to how policy impacts less advantaged communities.

"Grave racial disparities exist across our nation in unemployment, wages and income. ... It is critical that incoming leadership ... be committed to doing more," four African-American members of the House of Representatives wrote in a letter this week to Yellen and Thomas Fanning, chair of the Atlanta Fed's private board of directors.

"Lockhart's recent retirement announcement presents an opportunity to enhance and expand the Federal Reserve's leadership," they said in the letter.

In a public webcast on Thursday, Fanning said he wants to hold "one of the most transparent processes ever," and that the search committee has already received nominations from the public at large.

As in other districts, the search will be national in scope. There is no requirement that the head of the Atlanta Fed come from the bank's southeastern region, and the 12 regional Fed banks often bring in a president from outside their own geographic area.

Executive search firm SpencerStuart has been hired to run the search. Consultant John Harpole said the firm has helped place 1,600 women, minorities and other "underrepresented groups" in corporate positions, and would cast a wide net among local institutions, national organizations and its "strong network" of sitting executives to find candidates.

The issue is sensitive for the Fed, whose policies affect every citizen but which is designed to be immune from the day-to-day politics that influence other U.S. government agencies.

Group says Fed is unaccountable 

Because monetary policy focuses on influencing interest rates that apply nationwide, Fed officials say it is too blunt a tool to address issues like the persistent gap between unemployment rates for blacks and white.

Activists counter that those sorts of problems might improve if unemployment was driven as low as possible — even at the risk of higher inflation. The Fed sets policy with two goals in mind, low employment and stable inflation of around 2 percent annually.

The U.S. unemployment rate in August, the latest month for which data is available, was 4.9 percent.

A labor-affiliated coalition of civic groups, known as Fed Up, has taken the argument even further, arguing that the Fed's very structure makes it unaccountable.

The regional banks in particular have supervisory power over local financial institutions as well as a voice in national policymaking, but are set up as private entities owned by the banks they oversee. The regional bank presidents are chosen by a local board of directors, though the choice must be approved by the Fed governors in Washington.

In a meeting with civic activists in August, New York Fed President William Dudley agreed the institution had done a "pretty lousy" job of promoting diversity. But Fed officials in general argue that the current structure has worked well, and that changes would need to offer clear advantages without risking the central bank's independence.

In that environment, the Atlanta Fed appointment will be watched closely. Though many regional bank heads come from within the broader Fed system, tapped from its ready pool of economists with doctoral degrees, Lockhart had a varied career in private equity and banking before taking over the Atlanta Fed 10 years ago.

And while the search will be national, Atlanta has a deep pool of black professionals - 10 percent of African-Americans in the city have a graduate or professional degree, three percentage points higher than the national average.

"That would be a great thing," Fanning said. "We want the best person as well."

By Howard Schneider

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