More than 120 members of Congress say the Federal Reserve has a striking diversity problem similar to the one that hit Hollywood's Academy Awards the past two years, and it's harming the economic prospects of millions of Americans.

The lawmakers -- including Sens. Bernie Sanders (I-Vt.) and Elizabeth Warren (D-Mass.), as well as Reps. Maxine Waters (D-Los Angeles) and John Conyers (D-Mich.) -- wrote to Fed Chairwoman Janet L. Yellen on Thursday complaining about what they called "the disproportionately white and male" leadership at the nation's central bank.

"Given the critical linkage between monetary policy and the experiences of hardworking Americans, the importance of ensuring that such positions are filled by persons that reflect and represent the interests of our diverse country, cannot be understated," said the letter, signed by 116 House members and 11 Senators.

"When the voices of women, African Americans, Latinos, and representatives of consumers and labor are excluded from key discussions, their interests are too often neglected," said the lawmakers, who were all Democrats except for Sanders, an independent running for the party's presidential nomination.

The diverse group of House and Senate members praised Yellen, the first woman to lead the Fed, for her "strong leadership" and efforts to help raise wages while combatting economic inequality.

But they said the Fed had failed to fulfill its statutory obligation to “represent the public, without discrimination on the basis of race, creed, color, sex, or national origin" and called on Yellen "to take steps to promptly begin to remedy this issue."

All five members of the Fed Board of Governors are white and three are men.

All 10 voting members this year of the Federal Open Market Committee (FOMC), the monetary policy-setting body that includes Fed governors and a rotating set of regional Fed bank presidents, also are white and six are men, the letter said.

In addition, 11 of the 12 regional Fed bank presidents are white and 10 are men, with no African Americans or Latinos.

When the voices of women, African Americans, Latinos, and representatives of consumers and labor are excluded from key discussions, their interests are too often neglected.

— Letter from lawmakers to Federal Reserve Chairwoman Janet L. Yellen

Regional presidents are appointed by the directors of each Fed bank. The Fed's Board of Governors in Washington approves the appointments.

In addition, the lawmakers cited a recent study by the Center for Popular Democracy, a worker advocacy group, that said that 39% of all regional Fed bank directors came from financial institutions, while 11% were from community, labor or academic organizations.

Fed spokesman David Skidmore said the central bank was "committed to fostering diversity -- by race, ethnicity, gender, and professional background -- within its leadership ranks."

The Fed's board has "focused considerable attention in recent years" on recruiting regional bank directors "with diverse backgrounds and experiences," he said.

Minority representation on the boards of Fed banks and branches increased to 24% this year from 16% in 2010, he said. And the proportion of women directors increased to 30% of the total from 23% during that period.

In a blog post in January, the former president of the Federal Reserve Bank of Minneapolis, Narayana Kocherlakota, raised concerns about diversity on the committee that sets monetary policy.

“There is one key source of economic difference in American life that is likely under-emphasized in FOMC deliberations: race,” he said.

Kocherlakota reviewed committee transcripts from 2010, the most recent available, and said he found no references at meetings "to labor market conditions among African Americans,” even though their unemployment rate never dropped below 15.5% that year.

The lawmakers cited Kocherlakota's post, calling it "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."

Rep. David Scott (D-Ga.), who signed the letter, pressed Yellen at a House hearing in February to consider "getting an African American, for the first time in history, to be a regional president of a Federal Reserve bank."

Yellen said she "absolutely" would and regretted there hadn't been such an appointment.

"It's our job to make sure that every search for those jobs assembles a broad and diverse group of candidates," Yellen said.

The lawmakers said they appreciated her concern about diversity but urged her to do more.

Connie Razza, author of the Center for Popular Democracy report, said the large number of lawmakers who signed the letter showed that support is growing for changes at the Fed to make sure "the economy works for all."

The center coordinates Fed Up, a coalition of labor, community and liberal activist groups that has organized protests outside FOMC meetings urging central bank policymakers not to raise a key interest rate until the job market is stronger.

By Jim Puzzanghera

Source