In the U.S. Federal Reserve’s 105-year history, only seven women and one African American have served as president at any of its 12 district banks. This lack of diversity in the agency can create blind spots for critical economic policymaking issues as well as negatively affect underrepresented groups.
After the 2009 recession, legislation was passed to address inequality in the financial sector. These included the Dodd-Frank Act in 2010 which established offices for women and minority inclusion at all Federal Reserve banks and required them to monitor supplier and workforce diversity. In January 2019, House Financial Services Diversity and Inclusion Subcommittee Chair Joyce Beatty introduced a legislative bill that would require that at least one ethnically, gender or racially-diverse candidate be considered for presidential vacancies in Federal Reserve banks. A companion bill was also introduced in the Senate by Senator Kamala Harris.
According to some members of regional boards of directors who select Federal Reserve bank presidents, there are certain unofficial competencies that act as barriers to the entry for people of color and women. These include a doctorate degree in economics and prior executive experience.
Swarthmore College professor and Federal Reserve senior adviser Amanda Bayer believes that revising these “traditional” requirements could help broaden the talent pool and that the requirement of a doctorate degree should be reevaluated. A study conducted by economic and racial justice campaign Fed Up found that most of the incumbent presidents and board of directors of all 12 Federal Reserve banks are insiders who spent most of their careers within the agency. The findings also revealed that of the 108 directors, 62% were male, 76% were from the banking and business sectors and 74% were white.
Fed Up research analyst Maggie Corser said internal recruitment and selection of presidents predominantly from the financial industry limits the agency’s ability to become more gender and racially diverse. The Federal Reserve have made some progress from 2013 to 2019. During this period, the female board of directors increased by 12% to 38% while the percentage of white directors dropped by 9% to 74%. But Corser believes that this is still not representative of the U.S. demographic. Raphael Bostic, the first African American appointed as a Federal Reserve Bank president, highlighted the importance of representation and said that diversity can open up people’s imagination for what is possible.