How political pressure and internal changes at the Federal Reserve helped make the central bank’s influential boards more diverse
SAN FRANCISCO/WASHINGTON - The Federal Reserve, long criticized for being too white and male, crossed a substantial milestone last year: for the first time in its 107-year history, white men held fewer than half of board seats at the Fed’s 12 regional outposts.
They matter because the boards, or more precisely the two-thirds of directors who are not bankers, hire Fed bank presidents. Six of each nine-member board are supposed to represent the public and are often local leaders in business, education or labor, with three appointed by the Fed’s Washington-based Board of Governors and three by local bankers.
“Once you realize that people at high levels in an organization can be perfectly good board members for you, that does increase the pool of candidates,” said Cleveland Fed President Loretta Mester, whose bank has made some of the biggest strides in diversity in the past five years.It also took leadership at the board level.
Yellen and other senior Fed officials also point out that academic research shows that mixed-gender and mixed-race groups make better decisions. Strict retirement rules mean that over the next couple of years, at least three more regional banks will need to find new leaders.
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