Increasing Gender and Racial Diversity in the U.S. Federal Reserve System

Lisa Cook of Michigan State University considered for vacant Fed director position... Possible first Black female director
Number of white male regional Fed directors decreased from 70 in 2015 to 38 currently

[Asia Economy Reporter Park Byung-hee] The Board of Governors of the U.S. Federal Reserve (Fed) currently has one vacant seat. The board consists of seven members: one chair, two vice chairs, and four governors, all appointed by the president. U.S. President Joe Biden is considering Lisa Cook, an economics professor at Michigan State University, for the vacant governor seat. If appointed, Professor Cook would become the Fed's first Black female governor.

Lisa Cook is being considered because there is growing demand for the Fed to reflect gender and racial diversity.

Although the 12 regional Fed boards have increased gender and racial diversity, the central Fed board is still criticized for lacking diversity. Currently, the six Fed governors are composed of four white men and two white women.

In contrast, among the 103 members of the 12 regional Fed boards, only 38 are white men. The regional Fed boards consist of nine members, two more than the central Fed, and currently, five of the total 108 seats are vacant.

The number of white male governors was as high as 70 in 2015 but has significantly decreased in recent years. Conversely, during the same period, the number of minority female governors increased from 5 to 15, and minority male governors rose from 15 to 21. Currently, minorities account for 34% of the directors of the 12 regional banks. This is a 5 percentage point increase from 29% last year and has doubled from 17% in 2016 over five years. The number of white female governors also increased from 18 in 2015 to 31 now.

Jerome Powell, Fed Chair, whose term expires in February next year
[Photo by AFP Yonhap News]

The gender and racial diversity of the regional Fed boards is now considered to closely reflect the reality of American society. Currently, minorities make up about 40% of the U.S. population, and women account for 51%.

However, diversity is somewhat lower among the regional Fed presidents. Currently, among the 12 regional Fed presidents, seven are white men, three are white women, and two are people of color. Within the next two years, the terms of Eric Rosengren, Boston Fed president; Charles Evans, Chicago Fed president; and Esther George, Kansas City Fed president, will expire. Since two of the three presidents whose terms are ending are women, it will be difficult to increase diversity unless all three are replaced by women or minorities.

Regional Fed presidents can exert influence at the central Fed. Of the nine members of each regional Fed board, three are appointed by the central Fed. The remaining six are selected by regional Fed member banks, with three representing the member banks and three representing the public. The three public representatives selected by member banks and the three members appointed by the central Fed influence the selection of the regional Fed president.

Meanwhile, among Fed governors appointed by member banks, 69% are men and 92% are white. There are no women of color.

At the central Fed, the term of Vice Chair Randy Quarles will expire soon, and in February next year, Chair Jerome Powell’s term will end, followed by Vice Chair Richard Clarida’s term in September. All are white men. Considering President Biden’s emphasis on gender and racial diversity, the diversity of the Fed board is expected to increase.

Fed Governor Lael Brainard said, "There is a vast amount of research proving that decision-making quality is better among groups with diverse composition and experiences rather than homogeneous groups," emphasizing the need for greater diversity at the Fed.

In fact, many reports analyzing the economic impact of gender and racial inequality were produced during Chair Powell’s term. The San Francisco Fed released an analysis report on April 4 last month, stating that economic losses due to gender and racial inequality have exceeded $70 trillion since 1990.

This content was produced with the assistance of AI translation services.