Oct 4 (Businesshala) – The soon-to-be search for two new top US central bankers will be a crucial test for what constitutes a kind of rallying cry for supporters of diversity: that the board matters.
Federal Reserve Chairman Jerome Powell has pledged to seek diverse candidates for vacant positions following public outcry by Boston Fed Chairman Eric Rosengren and Dallas Fed Chairman Robert Kaplan over their individual securities trading.
And after years of deliberate change under Powell, Fed Governor Lyle Brainard and former Fed Chair Janet Yellen, the regional Fed Bank boards that will run searches and hire new ones have far more women and minorities than Rosengren and Kaplan. . rented.
In all 12 regional Fed banks, 51% of the directors eligible to elect a Fed head are women, and 48% are minorities.
It is much more diversified than US companies, and marks a sea change at the Fed a few years ago. Fed insiders say the board makeover is a bid to have a more diverse group to gain broader insights on the economy and cast a wider net looking for regional bank presidents. .
When Kaplan got his job in 2015, the majority of directors at the Dallas Fed and Fed banks overall, Kaplan, were like white people.
This year, half of the directors participating in the appointment of Kaplan’s successor are women. Half are also minorities.
When Rosengren was hired in 2007, the Boston Fed board was comprised of two women entirely white.
Four of the six directors responsible for choosing the new president of the Boston Fed this year are women. There are two minorities.
Still, critics worry that’s not enough.
Rosengren was an economist who spent years at the Boston Fed before being elected to lead. Kaplan was not a fed lifer, but he had a long career on Wall Street with Goldman Sachs; He was also a director at a search firm hired by the Dallas Fed.
“The problem is it’s a very in-house process to select some of the most important leadership at the Fed,” says Benjamin Dulchin, director of the Fed Up campaign for the Center for Popular Democracy. Institutions or large businesses rather than more typical American economic activities.
But the focus on diversity in the upcoming search process could force the Fed to reach out to candidates in this round. For example, the number of blacks can be counted on one hand among the hundreds of economists working at the Fed.
Currently the only black policy maker at the US central bank, Atlanta Fed Chairman Rafael Bostic was in the 90s, although he was most recently a professor at the University of Southern California.
Minneapolis Fed Chief Neil Kashkari, the only other minority among the Fed’s 18 interest rate setters, had no previous Fed affiliation. Of the 10 other Fed Bank chairmen, three are white women and the rest are white men.
On the Fed board in Washington, whose members are chosen by the White House, the lineup is even less diverse: All six are white, and only two are women.
Neither Dallas nor Boston has provided any details about its planned searches, though the latter said Friday that its board had “an amazing mix of individuals” and that its search committee was “aware of openness and breadth and rigor. Committed to doing a great job together.”
Typically the feds looking for a new head form a recruitment committee headed by their local board and advised by an outside search firm.
The Fed’s Washington-based board provides input and gives final approval.
Only non-banker directors – six of the nine board members in each bank – can participate in the process.
Those six must represent the American public at the central bank, and half are elected by member banks and half by the Fed’s board. The remaining three are elected by the member banks to represent the banks, and are usually bankers.
The board of the bank is headed by a white woman and a black man.
Board Chair Christina Hull Paxon has been the Chair of Brown University since 2012. He is also an economist whose research focuses on health and children.
Deputy chairperson Corey Thomas runs cyber security firm Rapid7 Inc (RPD.O). He is the only black head of a publicly traded company in Massachusetts.
Roger Crandall has led Massachusetts Mutual Life Insurance for the past decade. Like the overwhelming majority of Fortune 500 company CEOs, he is white.
Lizanne Kindler is the CEO of women’s clothing retailer Talbots, now owned by private equity firm Sycamore Partners. She was born in Denmark.
Kimberly Sherman Stamler is the president of real estate developer Related Beale.
Lauren Smith joined the CDC Foundation, a Congress-authorized philanthropy, as its first chief equity and strategy officer last year. She is a former pediatrician and medical director of the Massachusetts Department of Public Health.
The board of the bank is headed by two white men.
Board Chairman Greg Armstrong ran Plains All American Pipeline LP (PAA.O) for decades until his retirement in 2018. He remains a director.
Thomas Falk, deputy chair, ran home goods maker Kimberly-Clark Corp (KMB.N) from 2002 to 2019.
Claudia Aguirre is the President and CEO of BakerReplay, a non-profit provider of education and community services in Houston. She was born in Mexico.
Cindy Taylor has run the energy services company Oil States International Inc. (OIS.N) since 2007.
Renard Johnson is the founder and CEO of METI, a professional services company in El Paso.
Gerald Smith founded the investment management firm Smith Graham in 1990.