If confirmed, the president’s choices will change the composition of the Fed’s board of governors, which is dominated by white males. In the nearly 109-year history of the board, the board has only had three black members—the last of whom, Roger Ferguson, left in 2006.
This lack of representation has fueled growing frustration among key Democratic constituencies — and prompted Biden to pledge in November to bring “new diversity” to the Fed — even as the central bank begins to focus more on disparities in economic outcomes for disadvantaged communities.
“Over the past six years, I have lobbied several Federal Reserve chairs to increase leadership and staff diversity,” Rep. Joyce Petty (D-Ohio), who leads the Congressional Black Caucus, told Politico before the announcements. “While the Federal Reserve has made great strides in some areas, we have a lot of work to do with our members [Federal Open Market Committee], which determines the monetary policy of this country.
Biden’s new Federal Reserve will be the most diverse ever, with four women on the seven-member board of directors and the first woman of color with Cook. “This group will bring much-needed expertise, judgment and leadership to the Federal Reserve, while at the same time bringing a variety of ideas and perspectives never before seen on the Board of Governors,” Biden said in a statement announcing the nominations.
The new members are likely to push for greater focus at the Federal Reserve on issues such as climate change financing, diversification in the financial services industry and lending discrimination, areas that have often been considered secondary — or in the case of climate, no. Even part of – the responsibilities of the central bank.
That will draw resistance from some Republicans, who have complained that the Fed is going beyond its mission of promoting price stability and creating maximum jobs. Raskin and Cook are likely to face the most criticism from Republican lawmakers on the Senate Banking Committee, which will vet the candidates.
“Members of the Fed’s Board of Governors must have exceptional qualifications and a rigorous view of the Fed’s narrow mandates with regard to monetary policy and banking supervision,” said Senator Pat Tomey (R-Pen), the committee’s top Republican. Thursday night statement. “I will examine closely whether Ms. Cook and Mr. Jefferson have the necessary experience, judgment, and political views to serve as Fed Governors.”
Tommy, who has already raised concerns about Raskin’s nomination, said he worried it would override the Fed’s mandate to “get the central bank actively involved in capital allocation.”
The president’s choices could provide a counterweight to the quest to act more aggressively to fight high inflation, a potential source of tension in the board of directors and with Republican lawmakers. Many progressives pressured the Fed to keep interest rates low as long as possible so that more Americans could feel the benefits of the recovery.
The unemployment rate among black Americans has historically been twice that of white workers, which means that the prospect of curbing economic activity to stifle inflation raises equity issues.
By naming Raskin, who was deputy Treasury secretary at one point, Biden appointed an official who lobbied for stricter oversight of Wall Street. That may appease financial regulators who have criticized Powell for loosening rules on major financial firms and for not doing more to combat climate change.
Some black members of Congress had hoped that Cook, Michigan A state university professor will be named vice president at the Federal Reserve with Brainard elevated to the presidency, according to a person familiar with the matter. Instead, Brainard was placed second while Powell was re-nominated for the top position.
right Now These advocates rely on Cook for her work on the economic effects of racial discrimination and experience guiding other young people of color into the economy as they look to expand diversity elsewhere at the Federal Reserve. She also has the support of climate groups and other activists.
Jefferson, a former Federal Reserve economist, professor and director at Davidson College, North Carolina. His work focused on “the role of education as a barrier against unemployment, the effect of business cycles on poverty rates, and the distribution of income between labor and capital,” according to his autobiography.
If confirmed, members will have a vote in approving new leaders of the Federal Reserve’s regional branches, who have not been appointed by the president. Proponents see the potential for a cascading effect; As the board of directors increases in diversity, so does the network of central bank employees.
And the Federal Reserve has stopped working. The Brookings Institution found last year that in any given year during the 2000s, fewer than 10 percent of board members at each of the 12 regional federal banks were non-white. These managers are key to finding and choosing their bank president, who sits on the Federal Reserve’s interest rate-setting committee.
Only two of these 12 presidents — Atlanta Fed President Raphael Bostic and Minneapolis Fed President Neil Kashkari — are people of color.
Meanwhile, the New York Times reported that only two of the 417 Fed economists were black, according to central bank data provided in January 2021.
Senator Bob Menendez (DNJ) also lectured Powell at his hearing on Tuesday about the fact that no Latino person has ever done a senior policy-making job at the Federal Reserve.
Powell has committed to building a more diverse workforce at the central bank.
“We are working to foster an inclusive workplace environment where employees can feel comfortable at work and to foster a similar inclusive culture within the profession,” he said in November at the Federal Reserve’s Co-hosted Diversity and Inclusion Conference. “We are expanding our reach through hiring at historically black colleges and universities and Hispanic institutions, as well as by hosting events to promote employment at the Federal Reserve.”
Against this background, the black caucus in Congress has asked the administration and the Federal Reserve for a more diverse representation in monetary policy. Petty and Senator Raphael Warnock (D-Ge) focus on ensuring that this is a priority in the search for new leaders at the Boston Federal Reserve and the Dallas Fed.
Those searches focus on groups like the Fed Up Campaign, which lobbied the Federal Reserve to reform how regional presidents are chosen. The Federal Reserve in Dallas held an open meeting this week to solicit public opinions, indicating that some of that pressure is working.
“Why in 2021 are there still only two presidents of color out of 12? It should be a scandal, but it certainly isn’t a coincidence,” said Benjamin Dolchin, director of Fed Up, a coalition of community and business groups that advocates for central bank policies that benefit workers. “.
Here, too, Biden’s new appointments could have an impact.
Progressive activists have highlighted the importance of diversity of backgrounds, too, saying the Fed should look beyond Wall Street and the Ph.D. Economists.
“The diversity argument gets lost a lot in racial symbols, like we need one of every colour, but a lot of what we’ve been championing is ethnic diversity, gender diversity, and ideological diversity,” said Vasuda Desikan, the movement’s political director. The center of race and economy. “Lisa Cook has roots in the black communities she came from and grew up in but is also a part of them.”
Lura maram grass–Lopez contributed to this report.