Hillary Clinton wants the Federal Reserve to look a lot different.
The Democratic candidate’s campaign said Thursday that it supports a plan presented by Democratic lawmakers calling for more diversity at the Federal Reserve and removing bankers from the boards of regional branches.
A statement from Clinton campaign spokesperson Jesse Ferguson argued that the changes were necessary in order to make the central bank more representative of the American people (emphasis ours):
“The Federal Reserve is a vital institution for our economy and the well-being of our middle class, and the American people should have no doubt that the Fed is serving the public interest. That’s why Secretary Clinton believes that the Fed needs to be more representative of America as a whole and that commonsense reforms — like getting bankers off the boards of regional Federal Reserve banks — are long overdue. Secretary Clinton will also defend the Fed’s so-called dual mandate — the legal requirement that it focus on full employment as well as inflation — and will appoint Fed governors who share this commitment and who will carry out unwavering oversight of the financial industry.”
The biggest issue raised in Secretary Clinton’s statement is that employees of banks make up a considerable portion of the boards of the twelve regional Federal Reserve banks.
The original letter, signed by Congressional Democrats such as Massachusetts Sen. Elizabeth Warren and presidential candidate Vermont Sen. Bernie Sanders, was sent to Federal Reserve Chair Janet Yellen on Thursday morning. It cited some gains made by the Fed, but said there is more work to be done.
“However, despite these gains, we remain deeply concerned that the Federal Reserve has not yet fulfilled its statutory and moral obligation to ensure that its leadership reflects the composition of our diverse nation in terms of gender, race and ethnicity, economic background, and occupation, and we call on you to take steps to promptly begin to remedy this issue,” said the letter.
The Democrats’ letter also cited statistics that showed that 92% of regional bank presidents are white; 100% of the current voting members of the Federal Open Markets Committee are white, and 75% of the regional bank directorships are male.
The Fed’s leadership is made of three levels. The lowest level is made up of the 12 regional banks’ boards of directors. Those elect the next level, the presidents of the regional branches. At the top level are the seven members of the Fed’s Board of Governors appointed by the US president, including the chair.
The seven governors and the regional presidents make up the Federal Open Markets Committee, which determines monetary policy for the US.
The letter from Democrats also advocated for caution in monetary-policy decision-making at upcoming meetings, taking into consideration how policy would affect average Americans.
“Moreover, as you make crucial monetary policy decisions in 2016, we urge you to give due consideration to the interests and priorities of the millions of people around the country who still have not benefited from this recovery,” said the letter.
“We share the vision that you laid out in Chicago two years ago: an economy in which all working families ‘get the chance they deserve to build better lives’.”
There has been a push among Democrats in Congress urging the Fed to keep interest rates near their historically low levels in order to allow more workers to find jobs and increase wages.
Chair Yellen said in her regular testimony before Congress that she is sympathetic to the position.
source: Business Insider, by Bob Bryan, May 12, 2016