This blog has covered several posts about the Board of Governors of the Federal Reserve System (Board), specifically about its unjust and myopic policymaking as well as its mistreatment of African American employees. The topic of this post is a recent Congressional letter to the Board (May 12, 2016).
Some Democratic Members of Congress–Senators and Representatives– wrote to the Chair of the Board, Janet Yellen, to inform Yellen and the Board of their concerns. Chief among them is the concern that the lack of diversity ill affects policymaking of the Federal Open Market Committee (FOMC). The congressional letter writers noted that the membership of the FOMC is 100% white.
A former member of the FOMC, former president of the Federal Reserve Bank of Minneapolis, Narayana Kocherlakota, stated the following observation in his blog–that the effect of race on economic policy was never discussed–particularly the high rate of unemployment among African Americans.
“Reflecting on his experience on the FOMC in a recent blog post, former Minneapolis Federal Reserve President Narayana Kocherlakota wrote: “There is one key source of economic difference in American life that is likely underemphasized in FOMC deliberations: race.”6 He reviewed the most recent full year of FOMC meeting transcripts available (2010), and found that “there was no reference in the meetings to labor market conditions among African-Americans,” although the unemployment rate for African-Americans never dropped below 15.5 percent during that year.7 It is unacceptable that discussion of the job market for these populations would be an afterthought, or worse, ignored entirely, and we are concerned that the lack of balanced representation may be a significant cause of this oversight.”
6 Narayana Kocherlakota , “MLK Day Reflection s on the FOMC,” (blog post) Narayna Kocherlakota’s Website, January 18, 2016, https://sites.google.com/site/kocherlakota009/home/policy/thoughts-on-policy/1-18-16.
I now summarize the remainder of the congressional letter writers concerns–
- The Board’s failure to ensure its leadership reflects the composition of the nation, including occupational diversity.
- When the Board reappointed the presidents of the Federal Reserve Banks, it was done without public consultation and limited transparency regarding the metrics and criteria used to evaluate the presidents’ performance or the decision to reappoint them.
- The letter writers also request that the FOMC consider the interests and priorities of those who have not benefitted from the economic recovery. [Author’s note: It should be mentioned that Congress can act to address concerns about unemployment through fiscal policy.]