February 27, 2020 / 11:24 AM / a month ago

Highlights: Fed policymakers on why diversity matters and how to get there

WASHINGTON/SAN FRANCISCO (Reuters) - Several U.S. Federal Reserve policymakers told Reuters why increasing diversity within the U.S. central bank system matters. Here are some highlights:

FILE PHOTO: The Federal Reserve seal is seen during Chairman Jerome Powell news conference following the two-day meeting of the Federal Open Market Committee (FOMC) meeting on interest rate policy in Washington, U.S., January 29, 2020. REUTERS/Yuri Gripas/File Photo

FEDERAL RESERVE GOVERNOR LAEL BRAINARD:

“The research now is very compelling that homogenous groups are more prone to groupthink that leads to lower quality discourse and lower quality decisions.

“One of the strong findings in the research is that in order to have the best possible decision making, we need a diverse group of leaders. In order to have a diverse group or leaders, we need to bring people up as they progress in their careers and have that same kind of diversity.”

“What I think we are still seeing too much of is a reluctance to take a chance on a woman or a minority, particularly when the people making that selection themselves are not very diverse and perhaps might be a little uncomfortable and have a little lack of ability to see how someone who’s quite different from who they are - who perhaps came up a different route - could succeed in that position.

“So I think the problem that we still have today is providing enough opportunities for women and minorities to be in leadership positions and then supporting them.”

ATLANTA FED PRESIDENT RAPHAEL BOSTIC:

“By having this diversity of view points in the room, I think it challenges ideas differently and more rigorously. I think it makes deliberation more robust... my work has been much crisper, more precise and less speculative because of the presence of diversity.”

“Our board members have been great ambassadors to us in attracting other board members... We do a lot of tracking: we keep a list of potentials from the full district; we track on business sector; we track on size of the business; we track on geography, urban, rural, and then we track on these dimensions of diversity. It is all about the intentionality. We want to make sure that we are hitting on all cylinders on all dimensions.”

CHICAGO FED PRESIDENT CHARLES EVANS:

“During the last 12 years that I’ve been president, understanding that maximum employment is probably a lower unemployment rate than we thought 12 years ago, and than we thought three to four years ago ... just having more discussion and understanding the benefits are really substantial ...I really do appreciate the contributions that all of my board members have made.”

CLEVELAND FED PRESIDENT LORETTA MESTER:

“I think it’s very important as an institution that we have the public represented in-house on our boards as part of how we go about doing our business. I do think we make better decisions because of that, and I think it’s just part of our responsibility of being an institution like the Federal Reserve.

“You’re a central bank. You should be representing the public.”

“As a leader, you have to champion this because all through the organization they kind of get, ‘Okay, this is important.’ And you’ve got to be willing to push back.

“So when we get a slate of candidates for an open position on the board of directors, if I don’t see diversity in who they’re considering, I push back and I say, ‘No, you go out and do a better job here and then come back to me.’ You’ve got to be willing to do that even if it postpones a decision, so it does take effort.”

DALLAS FED PRESIDENT ROBERT KAPLAN:

“We deliberately worked to find a female bank CEO and a Hispanic bank CEO.”

“In order to do that, you have to be very intentional because the predominant profile of bank CEOs is white male, certainly that is true in our district... First thing you do is you identify people who could be potential candidates, second thing you do is get to know them.”

“We need, particularly, input and advice on underrepresented groups on some of the big, burning issues that we are facing ... early childhood education, literacy, better skills training, better educational attainment... why are some groups less represented in the workforce and have lower participation rates and higher unemployment rates than other groups? We spend an enormous amount of time...trying to figure out how to move the needle on that.”

MINNEAPOLIS FED PRESIDENT NEEL KASHKARI:

“I’ve been somewhat of an outlier on monetary policy. And I test my views intensely with my research staff. And my research staff has diversity there. The fact that I can test my views with diverse economists in terms of their perspective really gives me comfort that I’ve thoroughly thought through the ideas.

Reporting by Ann Saphir and Lindsay Dunsmuir; editing by Edward Tobin

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