WASHINGTON, D.C. – U.S. Senator Bob Menendez (D-N.J.), the highest-ranking Latino in Congress, today led several of his Senate Democratic colleagues in sending a letter to Federal Reserve Chairman Jerome Powell, urging him to work closely with the Boston and Dallas Boards of Directors and search committees to find and select diverse candidates, especially Latino candidates, for the open president positions and to prioritize bringing much needed diversity to the highest executive levels of the Federal Reserve System.

“The Federal Reserve has a well-documented diversity problem,” wrote the senators in a letter to Federal Reserve Chairman Jerome Powell. “According to the Fed’s most recent Office of Minority and Women Inclusion report, only five percent of the Fed’s overall workforce identifies as Hispanic or Latino. Of the 870 PhD economists employed by the Federal Reserve System, only nine percent are Hispanic and one percent are Black.”

The lawmakers highlighted that the Federal Reserve’s diversity problem is further exacerbated at the executive level and pointed out that in the 107-year history of the Federal Reserve System there have only been three Black members of the Board of Governors, one Black Federal Reserve Bank president, and only three nonwhite Federal Reserve Bank presidents.

“The lack of diversity at the Federal Reserve is not only harmful to these underrepresented groups, it has a negative impact on the Fed’s ability to promote maximum employment and price stability, the safety and stability of the financial system, and consumer protection and community development,” the senators added before concluding that, “[t]he current makeup of the Federal Reserve System does not reflect the country that it serves. Appointing the first Latino Federal Reserve Bank president would be a critical first step in bringing diverse perspectives to the executive management of our nation’s central bank.”

Sen. Menendez has long advocated for increased diversity and inclusion across all sectors and industries. Earlier this week, he led several of his Senate Democratic colleagues in sending a letter to the U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler urging the Commission to expeditiously adopt the Subcommittee on Diversity and Inclusion (D&I) of the SEC Asset Management Advisory Committee’s (AMAC) July 7, 2021, recommendations to promote greater transparency and diversity among asset managers. He has led the charge to further diversify corporate America, which is why he authored the Improving Corporate Governance Through Diversity Act of 2021, legislation that would address shortcomings in the U.S. Securities and Exchange Commission’s (SEC) diversity disclosure rule by requiring public companies to disclose information related to the racial, gender, ethnic makeup and veteran status of corporate boards and senior management.

In the 116th Congress, Senator Menendez introduced the Federal Jobs Act, a bill that would have required the development and implementation of a government-wide initiative to promote, expand, and retain diverse talent across the federal workforce. For over a decade, Menendez has also regularly conducted corporate diversity surveys of the largest companies in the country.

Joining Sen. Menendez in signing the letter to the Federal Reserve Chairman were Sens. Sherrod Brown (D-Ohio), Tina Smith (D-Minn.), Raphael Warnock (D-Ga.), Ben Ray Luján (D-N.M.), Bob Casey (D-Pa.), Alex Padilla (D-Calif.), Elizabeth Warren (D-Mass.), Cory Booker (D-N.J.), Jeff Merkley (D-Ore.), and Catherine Cortez Masto (D-Nev.).

The full text of the letter can be found HERE and below.

Dear Chair Powell,

As the Federal Reserve searches for candidates to replace the Presidents of the Boston and Dallas Federal Reserve Banks, we urge you to highly prioritize finding and approving diverse candidates.  We were pleased to hear that finding diverse candidates would be “a big focus for both of these processes.” However, actions speak louder than words, and it is essential you take advantage of this opportunity to bring much needed diversity to the highest levels of the Federal Reserve System.

The Federal Reserve has a well-documented diversity problem.  According to the Fed’s most recent Office of Minority and Women Inclusion report, only five percent of the Fed’s overall workforce identifies as Hispanic or Latino.[1]  Of the 870 PhD economists employed by the Federal Reserve System, only nine percent are Hispanic and one percent are Black.[2]  You yourself have stated that you are “not at all satisfied with the results” of the Fed’s attempts to recruit more diverse staff, and neither are we.[3]

The Fed’s diversity problem is especially bad at the executive level.  According to the Brookings Institute, in the 107-year history of the Federal Reserve System there have only been three Black members of the Board of Governors, one Black Federal Reserve Bank president, and only three nonwhite Federal Reserve Bank presidents.[4] There has never been a Latino Federal Reserve Bank President. 

The lack of diversity at the Federal Reserve is not only harmful to these underrepresented groups, it has a negative impact on the Fed’s ability to promote maximum employment and price stability, the safety and stability of the financial system, and consumer protection and community development.  In the lead up to the 2007-2008, financial institutions targeted segregated minority neighborhoods with risky subprime mortgages, fueling the financial crisis that crashed our entire economy.[5] Treasury Secretary and former Federal Reserve Chair Janet Yellen previously said, “if economists are mainly of one gender or race, they are likely to miss things that matter.”  This statement is true of every profession.  Studies have shown that companies in the top quartile for racial, ethnic and gender diversity were more likely to have returns above their industries’ national medians.[6]  Diversifying the highest levels of leadership will lead to an increase in performance and help the Boston and Dallas Federal Reserve Banks better perform their missions.

The current makeup of the Federal Reserve System does not reflect the country that it serves.  Appointing the first Latino Federal Reserve Bank president would be a critical first step in bringing diverse perspectives to the executive management of our nation’s central bank.  In light of this, we strongly urge you to work closely with the Boston and Dallas Boards of Directors and search committees to find and select diverse candidates, especially Latino candidates, for the open president positions. 

Sincerely,

###