Federal Reserve Board: Democratic Members of Congress Write Letter to Board–Lack of Diversity Adversely Affects Policymaking

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.

7 Id.

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.]

Federal Reserve Board: D.C. Circuit Affirmed Dismissal of Employment Discrimination Case, Artis v. (Greenspan) (Bernanke) Yellen

On April 1, 2016, the District of Columbia Circuit Court of Appeals issued a mandate of its December 21, 2015, order, which summarily affirmed the dismissal of the appellants’ appeal. The court determined that the record was replete with examples of appellants’ misconduct at the district court level.

The circuit judges on the panel were Brett Kavanaugh, Cornelia Pillard, and Robert Wilkins.

(Docket number 15-5260, available at www.pacer.gov).

Thus ends this shamefully long case to fight against the complainants in the initial stages of a so-called Equal Employment Opportunity counseling session.

One thing is certain, Board employees should read this case and, in case of any issue, consult legal counsel first, and be wary of the Board’s complaint mechanisms (unless there are sufficient reforms).

Eighteen years for this case to arrive at a messy and incomplete end. The whole affair scars the Board’s credibility; the Board is worthy of further Congressional oversight. In addition, the Board should never again have the latitude to put forward such lengthy, expensive litigation without approval.

Antonin Scalia: Donors Ask George Mason to Name Its Law School–from which Not One Graduate Served as His Law Clerk–for Scalia; Scalia Insulted Black People from the Dais of the Supreme Court and as a Law Professor

I will start this post with an illuminating quote from Reverend Thomas Merton’s book, “Seeds of Destruction (Letters to a White Liberal),” page 19-20:

We have been willing to grant the Negro rights on paper, even in the South. But the laws have been framed in such a way that in every case their execution has depended on the good will of white society, and the white man has not failed, when left to himself, to block, obstruct, or simply forget the necessary action without which the rights of the Negro cannot be enjoyed in fact. Hence, when laws have been passed, then contested, dragged through all of the courts, and finally upheld, the Negro is still in no position to benefit by them without, in each case, entering into further interminable lawsuits every time he wants to exercise a right guaranteed to him by law.

Conservatives seem to want to ensure a positive legacy and memory of Antonin Scalia; this is impossible. Scalia’s own behavior prevents it. The Washington Post reported that donors gave $30 million ($20 million (anonymous donor), $10 million (Charles Koch Foundation)), requesting that George Mason University (GMU) rename its law school after Scalia, who died in February 2016, Antonin Scalia School of Law (ASSoL) at George Mason University.

At American University (AU), in 2009, Scalia, a graduate of Harvard Law School, informed the law students that no one from the school could be a law clerk in his chambers.

‘By and large’, he said, ‘I’m going to be picking from the law schools that basically are the hardest to get into. They admit the best and the brightest, and they may not teach very well, but you can’t make a sow’s ear out of a silk purse. If they come in the best and the brightest, they’re probably going to leave the best and the brightest, O.K.?’

So, another institution not from the “silk purse” category of law schools, George Mason University, named their law school after him,  GMU did not have one law graduate serve as his law clerk on the Supreme Court, unsurprising given what he said to the AU law students.

Scalia engaged in attacks on the powerless. On December 9, 2015, during oral argument at the Supreme Court for Fisher v. Texas, Scalia stated the following (at pages 67-8 of the Court’s transcript):

“There are–there are those who contend that it does not benefit African-Americans to–get them into the University of Texas where they do not do well, as opposed to having them go to a less-advanced school, a less–a slower-track school where they do well. One of–one of the briefs pointed out that–that most of the–most of the black scientists don’t come from schools like the University of Texas.

They come from lesser schools where they do not feel that they’re–that they’re being pushed ahead in–in classes that are too–too fast for them.

I’m just not impressed by the fact that–that the University of Texas may have fewer. Maybe it ought to have fewer. And maybe some–you know, when you take more, the number of blacks, really competent blacks admitted to lesser schools, turns out to be less. And–and I–I don’t think it–it–it stands to reason that it’s a good thing for the University of Texas to admit as many blacks as possible. I just don’t think–.”

Shortly after the death of Scalia, Gawker reported that Scalia seemed to have a pattern of giving low grades to all black students in his classes at the University of Chicago Law School and the University of Virginia Law School. This report illuminates Scalia’s comments during the Fisher oral argument.

After an undergraduate stint at Columbia, Arnim Johnson attended the elite University of Chicago Law School in the late 1970s, during Scalia’s tenure as an instructor there. In the spring trimester of his 1L year, Johnson took administrative law with Scalia, before temporarily moving to Washington, D.C. for a summer job with the government. Upon receiving his final grades for the term, Johnson was shocked to discover he’d failed the course with a flat F—practically unheard of at a top-tier school like Chicago, or any law school for that matter.

[…]

But [Phillip] Hampton also recalls an ominous remark by Scalia: “He made a statement once that he could tell—because he was such a linguist—that he could usually tell papers that were written by African Americans.” The school finally admitted that professors “had access to the [exam] blue book numbers and names,” but only so that they could award extra credit. “I said that’s bullshit,” Hampton remembered.

 

 

 

 

 

 

Federal Reserve Board: H.2 Release for Week Ending March 12, 2016; Dems Request Update to 2013 GAO Study on Diversity in Financial Services Agencies and Industry

The Federal Reserve Board (Board) publishes a weekly digest of its activities on its website. The digest is called the H.2 Release and is published every Thursday. The release for the week ending March 12, 2016, is below.

H.2 Release–Actions of the Board, Its Staff, and the Federal Reserve Banks; Applications and Reports Received

Category Action Taken
Forms Forms — initial Board review to extend without revision the Funding and Liquidity Risk Management Guidance (FR 4198) and Recordkeeping Provisions Associated with Guidance on Leveraged Lending (FR 4203).

-Proposed, March 9, 2016

 

Forms — initial Board review to extend without revision the Reporting, Recordkeeping, and Disclosure Requirements Associated with Regulation NN (Reg NN).

-Proposed, March 10, 2016

 

 

 

 

 

Personnel Division of Banking Supervision and Regulation — appointment of Steve Spurry, Kathleen Johnson, and Joanne Wakim as assistant directors.

-Announced, March 7, 2016

Management Division — appointment of Steven A. Miranda as deputy director.

-Announced, March 9, 2016

 

Enforcement American Bank of Baxter Springs, Baxter Springs, Kansas — written agreement dated January 5, 2010, terminated March 4, 2016.

-Announced, March 8, 2016

 

CB Financial Corporation, Wilson, North Carolina — written agreement dated May 25, 2010, terminated March 3, 2016.

-Announced, March 8, 2016

 

Hazard Bancorp, Hazard, Kentucky, and Peoples Bank and Trust Company of Hazard — written agreement with the Federal Reserve Bank of Cleveland and the Commonwealth of Kentucky Department of Financial Institutions.

-Announced, March 8, 2016

 

 

 

Congressional Democrats Request Update to General Accountability Office’s 2013 Report on Diversity within the Financial Services Industry and Related Federal Agencies

On March 15, 2016, Ranking Member of the House Financial Services Committee, Rep. Maxine Waters (D-Calif.), Ranking Member of the Senate Banking Committee, Sen. Sherrod Brown (D-Ohio), and Ranking Member of the Investigations subcommittee of the House Financial Services Committee, Rep. Al Green (D-Tx.) requested that the General Accountability Office update its 2013 report “Diversity Management: Trends and Practices in the Financial Services Industry and Agencies after the Recent Financial Crisis” (released on May 16, 2013).

The Democrats stated that they were concerned about the slow pace of increasing diversity in the financial sector, as such diversity will help the industry to understand better all of the communities that it serves and to ensure that all consumers are treated fairly.

See also a report from the staff of the House Financial Services Committee (discussed previously in this blog).

 

Federal Financial Regulatory Agencies: Financial Services Democrats Receive Responses from Agencies; Seek Further Action and Commitment for Measurable Results

In a previous post, I discussed the publication of a report by the U.S. House of Representatives’ Democrats (Representative Maxine Waters (D-Calif.), Representative Al Green (D-Tx.), and members of the Tri-Caucus) on the diversity and inclusion issues within the federal financial agencies.

Agency Date submitted Link Comment
Consumer Financial Protection Bureau December 7, 2015 http://democrats.financialservices.house.gov/uploadedfiles/2015.18.25_diversity_report_and_reforms_agency_responses_final.pdf
Federal Deposit Insurance Corporation December 7, 2015
Federal Housing Finance Agency December 7, 2015
Federal Reserve Board November 25, 2015 and February 8, 2016 Detailed letter (Feb. 8, 2016) submitted 2 days before the Monetary Policy Report hearing (Feb. 10, 2016).
National Credit Union Administration December 7, 2015
Office of the Comptroller of the Currency December 8, 2015
Securities and Exchange Commission December 9, 2015

According to a press release issued on January 8, 2016, the Democrats received responses from the federal financial regulatory agencies. Waters and members of the Tri-Caucus appreciated the responses but seek further action to ensure demonstrated commitment and action on the part of these agencies.

Federal Financial Agency Report Number Internet Link Comment
Consumer Financial Protection Bureau Audit report 2015-MO-C-002 http://oig.federalreserve.gov/reports/cfpb-diversity-inclusion-mar2015.pdf American Banker article about racial disparities of CFPB staff evaluations.
Department of the Treasury, Office of the Comptroller of the Currency OIG-15-017 http://www.treasury.gov/about/organizational-structure/ig/Audit%20Reports%20and%20Testimonies/OIG-15-017.pdf
Federal Deposit Insurance Corporation Eval-15-001 http://www.fdicoig.gov/reports15/15-001EV.pdf
Federal Housing Finance Agency EVL-2015-003 http://fhfaoig.gov/Content/Files/EVL-2015-003.pdf
Federal Reserve Board Audit report 2015-MO-B-006 http://oig.federalreserve.gov/reports/board-diversity-inclusion-mar2015.pdf What is left out of the report is significant: Artis v. Bernanke (now Yellen). Also 12 U.S.C. 244 needs Congressional attention to ensure that Title 5 of the U.S. Code applies to the Board; the Board’s record-keeping on, and reporting of, its internal management is lax.
National Credit Union Administration OIG-14-09 http://www.ncua.gov/about/Leadership/CO/OIG/Documents/OIG201409EqualOpportunityDiversity.pdf Click for blog post on this report
Securities and Exchange Commission 528 http://www.sec.gov/oig/reportspubs/528.pdf Report is thorough, thoughtful, and well done.

In particular, Chair Janet Yellen stated in the Fed’s letter that the Fed had already begun acting on recommendations from its Inspector General.

[Note: Key issues to monitor PMR monitoring, discussions with OMWI director. Responses to these recommendations were opaque.]

Author’s note: Other posts relating to the Federal Reserve Board on this issue follow.

https://alexwdc.wordpress.com/2015/11/27/federal-reserve-board-h-2-release-for-week-ending-november-21-2015-a-brief-comment-on-diversity-practices-of-the-board/

https://alexwdc.wordpress.com/2015/11/13/federal-reserve-board-h-2-release-for-week-ending-november-7-2015-background-on-the-boards-omwi-program/

https://alexwdc.wordpress.com/2015/12/11/federal-reserve-board-walter-t-charlton-counsel-for-cynthia-artis-artis-v-bernanke-on-c-span-in-2002-a-note-onjohn-roberts-and-antonin-scalia/

https://alexwdc.wordpress.com/2015/10/29/federal-reserve-board-h-2-release-for-week-ending-october-24-2015-boards-ig-identifies-major-management-challenges/

https://alexwdc.wordpress.com/2015/07/22/federal-reserve-board-long-running-employment-discrimination-case-artis-v-bernanke-yellen-dismissed-with-prejudice-length-of-case-offends-conscience/

https://alexwdc.wordpress.com/2016/02/11/federal-reserve-board-legal-cases-against-the-board-2/

Federal Reserve Board: H.2 Release for Week Ending February 13, 2016; Antonin Scalia

The Federal Reserve Board (Board) publishes a weekly digest of its activities on its website. The digest is called the H.2 Release and is published every Thursday. The release for the week ending February 13, 2016, is below.

H.2 Release–Actions of the Board, Its Staff, and the Federal Reserve Banks; Applications and Reports Received

Category Action Taken
Testimony and Statements Monetary Policy — statement by Chair Yellen before the House Committee on Financial Services on February 10 and the Senate Committee on Banking, Housing, and Urban Affairs on February 11, 2016, on the semiannual monetary policy report to the Congress.

-Published, February 10, 2016

 

Forms Forms — initial Board review to extend with revision the recordkeeping and disclosure requirements associated with the Truth in Lending Act (Reg Z).

-Proposed, February 7, 2016

 

Forms — initial Board review to extend without revision certain information collections relating to banking supervision and regulation (G-FIN, G-FINW, Reg Y-1) and to extend with revision certain other such information collections (MSD-4 and MSD-5).

-Proposed, February 8, 2016

 

Forms — final Board review to extend with revision the Semiannual Report of Derivatives Activity (FR 2436) and Central Bank Survey of Foreign Exchange and Derivatives Market Activity (FR 3036).

-Approved, February 12, 2016

 

Forms — initial Board review to extend without revision the Written Security Program for State Member Banks (FR 4004) and Risk-Based Capital Guidelines: Market Risk (FR 4201).

-Proposed, February 12, 2016

 

Personnel Division of Banking Supervision and Regulation — appointment of Tim Clark as deputy director and Anna Lee Hewko as associate director.

-Announced, February 9, 2016

 

Division of Consumer and Community Affairs — appointment of Phyllis Harwell as associate director.

-Announced, February 8, 2016

 

Division of Monetary Affairs — appointment of Fabio Natalucci and Gretchen Weinbach as senior associate directors; Margaret DeBoer, Jane Ihrig, and David Lopez-Salido as associate directors; Mary T. Hoffman and Matthew Luecke as deputy associate directors; and Robert Tetlow as senior adviser; and reassignment of Egon Zakrajsek as senior adviser and Don H. Kim as adviser.

-Announced, February 8, 2016

 

Division of Research and Statistics — appointment of Andrew Cohen and Norman Morin as assistant directors.

-Announced, February 8, 2016

 

Office of Financial Stability Policy and Research — reassignment of William Bassett as deputy associate director.

-Announced, February 8, 2016

 

 

 

Regulations and Policies Regulations C (Home Mortgage Disclosure) and AA (Unfair or Deceptive Acts or Practices) — (1) publication for comment of proposal to repeal Regulation C, which implements the Home Mortgage Disclosure Act, in connection with the transfer of applicable rulemaking authority to the Consumer Financial Protection Bureau under the Dodd-Frank Act; and (2) final rule repealing Regulation AA in view of the Dodd-Frank Act’s repeal of the Board’s rulemaking authority under the Federal Trade Commission Act.

-Approved, January 13, 2016

(A/C)

 

 

 

Reserve Bank Operations Federal Reserve Bank of Philadelphia — appointment of James D. Narron as first vice president and chief operating officer, effective April 1, 2016.

-Approved, February 12, 2016

 

Monetary Policy Report, February 2016

Monetary Policy Report (February 2016): http://www.federalreserve.gov/monetarypolicy/files/20160210_mprfullreport.pdf

U.S. House of Representatives U.S. Senate
February 10, 2016, 10:00 a.m., House Financial Services Committee February 11, 2016, 10:00 a.m., Senate Banking Committee
Press release: http://financialservices.house.gov/news/documentsingle.aspx?DocumentID=400197 Press release: http://www.banking.senate.gov/public/index.cfm/2016/2/semiannual-monetary-report-to-congress
Testimony: http://www.federalreserve.gov/newsevents/testimony/yellen20160210a.htm  (Testimony identical to House version.)

 

Futility of “Colorblindness”: Antonin Scalia (1936-2016)

I have made a small comment on Antonin Scalia after his anti black oral argument in the case of Fisher v. University of Texas. Postmortem, there have been attempts to eulogize him, without commenting on his attitude and beliefs against black people. This is incorrect; his words hurt a whole class of people, who were unable to respond to the abuse of power from the dais of the Supreme Court.

As a result, I have written a comment, postmortem, about his beliefs, including a quote from a Roman Catholic monk, Reverend Thomas Merton. Rev. Merton was mentioned by Pope Francis during his visit to the United States in 2015.

A quote from Reverend Thomas Merton’s book, “Seeds of Destruction” (Letters to a White Liberal), page 19-20:

We have been willing to grant the Negro rights on paper, even in the South. But the laws have been framed in such a way that in every case their execution has depended on the good will of white society, and the white man has not failed, when left to himself, to block, obstruct, or simply forget the necessary action without which the rights of the Negro cannot be enjoyed in fact. Hence, when laws have been passed, then contested, dragged through all of the courts, and finally upheld, the Negro is still in no position to benefit by them without, in each case, entering into further interminable lawsuits every time he wants to exercise a right guaranteed to him by law.

(Note: Emphasis, above (in bold), the blog author’s.)

I included this quote for Scalia and also for the Federal Reserve with regard to the long-running case of Artis v. Bernanke. The quote from 1964 gives context to ongoing beliefs in the present day.

 

 

Antonin Scalia (1936-2016): Legacy Includes Anti Black Sentiment and Elitism in the Selection of His Law Clerks

Associate Justice Antonin Scalia died on February 13, 2016. He was 79.

A quote from Reverend Thomas Merton’s book, “Seeds of Destruction (Letters to a White Liberal),” page 19-20:

We have been willing to grant the Negro rights on paper, even in the South. But the laws have been framed in such a way that in every case their execution has depended on the good will of white society, and the white man has not failed, when left to himself, to block, obstruct, or simply forget the necessary action without which the rights of the Negro cannot be enjoyed in fact. Hence, when laws have been passed, then contested, dragged through all of the courts, and finally upheld, the Negro is still in no position to benefit by them without, in each case, entering into further interminable lawsuits every time he wants to exercise a right guaranteed to him by law.

(Justice Scalia’s work on the Supreme Court fits well within this description.)

The blog has covered Justice Scalia rarely. But the blog’s attention was drawn to the Fisher v. University of Texas due to the commonality of conservative affiliations by Edward Blum (see also http://mediamatters.org/blog/2014/04/08/ny-times-misses-link-between-anti-civil-rights/198784) and Justice Scalia, who mentioned Richard Sanders’ anti black “mismatch” theory during oral argument.

The connection of these men contributed to the unfair, destructive and unjust attack on black citizens from a government forum (that is, Scalia’s “questions” during oral argument and the cultivation of the Fisher case on the docket by Blum).

(Author’s note: The sight of a high-ranking white male justice forming an argument to justify the exclusion of black students, masked by transferring black students to “slower” schools was exasperating and offensive. I will not forget this profound insult.)

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Virginia Slave Law, 1705

In addition, Scalia made it clear that students from non-elite law schools could not become one of his law clerks, despite speaking at a law school that was not in his elite group–American University in Washington, D.C.

 

Document or Quote Blog Post
Fisher v University of Texas (2015 oral argument), pages 67-8 https://alexwdc.wordpress.com/2015/12/11/federal-reserve-board-walter-t-charlton-counsel-for-cynthia-artis-artis-v-bernanke-on-c-span-in-2002-a-note-onjohn-roberts-and-antonin-scalia/
(Selection from blog author’s post (for context). Justice Scalia’s quote is at the end.)

 

It seems that only graduates of “elite” legal education institutions (Harvard, Yale, Stanford) can apply to be law clerks for Justice Antonin Scalia.  Justice  Scalia spoke at American University’s Washington College of Law in May 2009.

 

A student at the event asked what a student that does not go to an “elite” law school needs to do to be successful as a future practicing lawyer. Justice Scalia responded, “Just work hard and be very good.” Fair enough, I suppose.

 

But this advice is not at all sufficient for a non-“elite” law school graduate to be a candidate for a Supreme Court law clerk position in his chambers. Nothing trumps an “elite” law school diploma.

 

‘By and large’, he said, ‘I’m going to be picking from the law schools that basically are the hardest to get into. They admit the best and the brightest, and they may not teach very well, but you can’t make a sow’s ear out of a silk purse. If they come in the best and the brightest, they’re probably going to leave the best and the brightest, O.K.?’

 

 

https://alexwdc.wordpress.com/2009/06/07/supreme-court-for-law-clerk-positions-only-elite-law-school-grads-in-general-need-apply/