The Federal Reserve of New York is concluding its process for selecting its next President, one of the few most important positions in the entire Federal Reserve System and especially with regard to the oversight of Wall Street. This selection process has been characterized by an unacceptable lack of transparency and public accountability. In particular, Hispanic candidates were not taken seriously in this process.
Enormous disparities in wealth, income and opportunity that strongly correlate to race, ethnicity and geography represent one of the few most important challenges for the US economy. Failing to address these disparities, and particularly in segments that are driving our demographic growth, will result in national level economic consequences including lagging economic productivity and reduced GDP. This is a significant risk for the US economy.
The Federal Reserve would be in a stronger position to address this risk by having Presidents and members of Boards of Directors whose experience and expertise better reflect the large segments of our economy and our population that are not proportionally benefiting from economic growth. This uncontroversial fact has been acknowledged by members of the Board of Governors including Chairman Powell.
“Too often, arguments for the independence of the Fed are used as a cover for insufficient transparency that leads directly to the clear lack of diversity in the highest levels of governance in the Federal Reserve System,” said NALCAB’s Executive Director, Noel Poyo.
“The process for selecting the new President of the New York Fed has perpetuated this status quo, which undermines the public standing of its next President and, ultimately, ongoing support for the independence of the overall System.”
There is a stunning lack of diversity at the highest levels of governance throughout the Federal Reserve System with respect to race and ethnicity, as well as representation of important perspectives in the US economy, including community development, small business and labor. The Federal Reserve relegates these perspectives to advisory committees and processes for “outreach.”
This is particularly true with regards to Hispanic communities and particularly at the Federal Reserve of New York. Consider that Hispanics make up more than 28% of the population of the Second District. There is a single Hispanic on the nine-member board of directors (appointed only in the past year) and no Hispanics in senior leadership represented on the Management Committee. The Center for Popular Democracy has published important analyses of the lack of diversity in the leadership of the entire Federal Reserve System.