By Ann Saphir
(Reuters) – The search for two new central bankers in the United States will be an important test of what has been a kind of rallying cry among diversity advocates: Boards matter.
Federal Reserve Chair Jerome Powell has pledged to seek diverse candidates for the positions vacated by Boston Fed President Eric Rosengren and Dallas Fed President Robert Kaplan after public criticism over their personal investments.
And, after years of deliberate changes under Powell; Lael Brainard, director of the Fed; and Janet Yellen, former chairman of the bank, the Fed’s regional boards that will manage the selection and new hires now have many more women and minority members than when Rosengren and Kaplan were hired.
Across all 12 Fed regional banks, 51% of directors eligible to decide Fed presidencies are women and 48% are minority.
This is far more diverse than usual for US companies and marks a sea change at the Fed from just a few years ago. The board reforms are an attempt to gain a broader view of the economy and have a more diverse group to launch a broad web of searches for regional bank presidents, Fed sources say.
When Kaplan got his job in 2015, most Dallas Fed directors and Fed banks overall were, like Kaplan, white men.
This year, half of the directors who could participate in hiring Kaplan’s successor are women. Half are also from minority groups.
When Rosengren was hired in 2007, the Boston Fed board consisted entirely of whites, with two women.
This year, four of the six directors who may be responsible for choosing a new Boston Fed president are women. Two members are from minorities.
Still, critics fear that’s not enough.
“The problem is that it’s a very internal process for selecting some of the most important Fed officials,” said Benjamin Dulchin, director of the Fed Up campaign at the Center for Popular Democracy, who helped write a study showing that Fed officials tend to represent financial institutions or large corporations, rather than more typical US economic activities.
But the focus on diversity in the upcoming selection process could force the Fed to broaden its search for candidates this time around. The number of blacks among the hundreds of economists employed at the Fed, for example, can be counted on one hand.
On the Fed Board in Washington, whose members are chosen by the White House, all six are white and only two are women.
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