Status of Equal Employment Opportunity at the Federal Reserve: Diversity ...

JIM NUSSLE OWA
CRAIG THOMAS, WYOMING
SAM JOHNSON, TEXAS
DEBORAM PRYCE OHIO
JOHN LINDER GEORGIA
JOE KNOLLENBERG MICHIGAN
RICK LAZIO NEW YORK
ROD GRAMS, MINNESOTA
SPENCER BACHUS 18, ALABAMA
MIKE HUFFINGTON, CALIFORNIA
MICHAEL CASTLE. DELAWARE
PETER KING. NEW YORK
BERNARD SANDERS, VERMONT

(202) 225-4247

Transmitted herewith for consideration of the Committee on Banking, Finance and Urban
Affairs is a study entitled Status of Equal Employment Opportunity at the Federal Reserve:
Diversity Still Lacking. This report is a follow-up to the Committee's 1990 and 1992 studies.

In 1990, the Committee conducted an extensive study on the racial, gender and background profiles of the directors of the Federal Reserve Banks. This study found that minorities and women as well as consumer and labor representatives, were systematically excluded from directorships at the Federal Reserve Banks. In 1992, the Committee conducted a study of Equal Employment Opportunity (EEO) and minority and women contracting at the Federal banking agencies, which illustrated the disparity in hiring and contracting practices with respect to minorities and women.

This study examines the staffing statistics of the Federal Reserve Board and twelve Federal Reserve Banks. It also examines their EEO and Affirmative Action programs, as well as the EEO reporting structure and the distribution of cash awards disbursed by the Federal Reserve to its employees. The report demonstrates that minorities and women are consistently underrepresented in the highest paid and most important decision-making positions at the Board and Reserve Banks, a condition that unfortunately also exists at other Federal banking regulatory agencies. At the Federal Reserve the underrepresentation of minorities and women in positions in the "pipeline" to the official level shows that this pattern of discrimination is unlikely to change in the near future.

There is no question that the Federal Reserve's actions and responsibilities in establishing monetary policy, supervising and regulating member banks and enforcing a number of important consumer banking laws affect every U.S. citizen. The failure of the Federal Reserve to include minorities and women in the policy-making process leaves an enormous segment of the population without a voice in these important decisions. This failure also reduces the confidence that can be placed in the commitment of Federal Reserve officials to eradicate redlining and other lending discrimination.

In addition, the Federal Reserve, which is our nation's central bank, serves as a role model for other banking institutions. This role model has had Federal Reserve presidents serving five-year terms at each of the twelve Federal Reserve Banks since the central bank was established by an act of Congress in December 1913. In all this time, there have been 110 Federal Reserve Bank presidents, yet there has never been a minority Federal Reserve Bank president and only once a woman. Each president of a Federal Reserve Bank is elected by a ninemember board of directors and then the appointment is subject to the approval of the Board of Governors in Washington. Six of the nine members on each board of directors are elected by private banks in the district, which are officially member banks of the Federal Reserve System. Thus, the presidents have a banker constituency. The result is not difficult to determine. The presidents of the Federal Reserve Banks since 1913 are primarily bankers and their friends. The dismal record in selecting women and minorities is a strong sign of the closed nature of this group.

President Clinton has made a commitment to diversity in the Federal government by appointing women and minorities to top positions within the Administration. On April 14, 1993, I wrote the President urging him to include the Federal banking agencies and the Federal Reserve in this effort. In addition, I provided the President the response from Chairman Greenspan regarding the Federal Reserve Board's salary compensation with respect to women and minority employees. Of the 34 staff members of the Board of Governors earning over $125,000 in 1993, only one is a woman and one is listed as "non-white." The Board of Governors reported to me that twelve staff members earn $161,800 which exceeds the 1993 pay of cabinet officers ($148,400). None of these twelve is a woman or a minority person. The Federal Reserve Banks have 82 staff employees earning over $125,000 per year of whom only 14 are women and 3 are listed as "non-white." Unfortunately, I have yet to receive a response from the President.

It is my hope that the continuing efforts to monitor and evaluate the Federal Reserve's employment practices will highlight this Committee's commitment to ensuring equal employment opportunity. Discrimination in hiring and promotion of women and minorities at the Federal Reserve will not be tolerated.

I commend this report to your attention. With warmest personal regards, I remain

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