Senate Democrats call for diversity among new Federal Reserve Bank presidents

A group of Senate Democrats on Thursday called on Federal Reserve Chairman Jerome Powell to prioritize diverse candidates as the institution searches for replacements for the Boston and Dallas Federal Reserve Bank presidents, both of whom retired this year.

In a letter to Powell led by Sen. Bob Menéndez (D-N.J.), the senators outlined the Federal Reserve’s “well-documented diversity problem,” noting a Federal Reserve report that found that only five percent of the workforce identifies as Hispanic or Latino, and of the 870 PhD economists at the central bank, only nine percent are Hispanic and one percent are Black.

“You yourself have stated that you are ‘not at all satisfied with the results’ of the Fed’s attempts to recruit more diverse staff, and neither are we,” the senators wrote Powell.

Although Powell cannot directly appoint Federal Reserve Bank presidents, candidates selected by each bank’s search committee are ultimately subject to the approval of the Federal Reserve Board of Governors, which Powell chairs.

Boston Federal Reserve Bank President and CEO Eric S. Rosengren announced mid-September that he was moving his long-planned retirement from June of 2022 to September 31 of this year, and Dallas Federal Reserve Bank President and CEO Rob Kaplan retired on Oct. 8.

Menéndez — joined in the letter by Sens. Sherrod Brown (D-Ohio), Tina Smith (D-Minn.), Raphael Warnock (D-Ga.), Ben Ray Luján (D-N.M.), Bob Casey (D-Pa.), Alex Padilla (D-Calif.), Elizabeth Warren (D-Mass.), Cory Booker (D-N.J.), Jeff Merkley (D-Ore.), and Catherine Cortez Masto (D-Nev.) — wrote that “the current makeup of the Federal Reserve System does not reflect the country that it serves.”

“The Fed’s diversity problem is especially bad at the executive level,” wrote the senators, noting that in the 107-year history of the central bank, the Board of Governors has only had three Black members, one Black Federal Reserve Bank president, three non-white presidents and no Hispanic presidents.

The senators added an economic argument to their call for diversity, using the example of the subprime mortgage crisis in 2007 and 2008.

The senators specifically suggested that the appointment of a first Hispanic Federal Reserve Bank president “would be a critical first step in bringing diverse perspectives to the executive management of our nation’s central bank.”

“The lack of diversity at the Federal Reserve is not only harmful to these underrepresented groups, it has a negative impact on the Fed’s ability to promote maximum employment and price stability, the safety and stability of the financial system, and consumer protection and community development,” they wrote.