Analysis: Diverse boards to pick the next Boston and Dallas Fed bank chiefs

Oil States International

04/10/2021 11:00

By Ann Saphir
    Oct 4 (Reuters) - The searches soon to get underway for two
new top U.S. central bankers will be an important test for what
has been a rallying cry of sorts for proponents of diversity:
that boards matter. 
    Federal Reserve Chair Jerome Powell has pledged to seek
diverse candidates for the jobs vacated by Boston Fed President
Eric Rosengren and Dallas Fed President Robert Kaplan after
public outcry over their personal securities trading
 urn:newsml:reuters.com:*:nL1N2QW266. 
    And after years of deliberate change under Powell, Fed
Governor Lael Brainard and former Fed Chair Janet Yellen, the
regional Fed bank boards that will run the searches and make the
new hires now have far more women and minorities than they did
when Rosengren and Kaplan were hired. 
    Across all 12 regional Fed banks, 51% of the directors
eligible to pick Fed chiefs are women, and 48% are minorities. 
    That's much more diverse than is typical at U.S. companies,
and marks a sea change at the Fed from just a few years ago.    
The board makeovers are both a bid to get broader insight on the
economy and to have a more diverse group in place to cast a wide
net in searches for regional bank presidents, Fed insiders
say. urn:newsml:reuters.com:*:nL1N2KV3DO  urn:newsml:reuters.com:*:nL1N29Q10G.    
     When Kaplan got his job in 2015, the majority of directors
at the Dallas Fed and at the Fed banks overall were, like
Kaplan, white men. 
    This year, half of directors who could take part in hiring
Kaplan's successor are women. Half are also minorities. 
    When Rosengren was hired in 2007, the Boston Fed board was 
all white, with two women.
    This year four of the six directors who could be responsible
for picking a new Boston Fed president are women. Two are
minorities.  
   
Still, critics worry it's not enough. 
    Rosengren was an economist who had spent years at the Boston
Fed before he was picked to lead it. Kaplan was no Fed lifer but
had a long career on Wall Street with Goldman Sachs; he was also
a director at the search firm the Dallas Fed had hired.
    “The problem is that it’s a very insiderish process for
selecting some of the most important leadership in the Fed,"
says Benjamin Dulchin, director of the Center for Popular
Democracy’s Fed Up campaign who helped author a study showing
Fed board directors tend to represent financial institutions or
big business, rather than more typical American economic
pursuits. 
    But a focus on diversity in the upcoming search process may
force the Fed to reach outward for candidates at this go-round.
The number of Blacks among the hundreds of economists employed
at the Fed, for instance, can be counted on one hand. 
    The only Black policymaker currently at the U.S. central
bank, Atlanta Fed President Raphael Bostic, had been among those
in the 90s, though he was most recently a professor at the
University of Southern California. 
    Minneapolis Fed Chief Neel Kashkari, the only other minority
among the Fed's 18 interest-rate setters, had no previous Fed
affiliation. Of the 10 other Fed bank presidents, three are
white women and the rest are white men. 
    At the Fed Board in Washington, whose members are picked by
the White House, the lineup is even less diverse: all six are
white, and just two are women. 
    Neither Dallas nor Boston has provided any detail about
their planned searches, though the latter said on Friday its
board had "a wonderful mix of individuals" and that its search
committee "is committed to doing a great job with openness and
breadth and rigor." 
    Typically Fed banks looking for a new chief form a hiring
committee headed by the chair of their local board and advised
by an outside search firm. 
    The Fed's Washington-based Board provides input and gives
final approval. 
    Only non-banker directors - six of the nine board members at
each bank - may take part in the process. 
    Those six are supposed to represent the American public at
the central bank, and half are picked by member banks and half
by the Fed Board. The remaining three are chosen by member banks
to represent banks, and are typically bankers. 
    
    BOSTON
    The bank's board is led by a white woman and a Black man.
    Christina Hull Paxson, the board's chair, has been Brown
University's president since 2012. She is also an economist
whose research focuses on health and children.
    Corey Thomas, the deputy chair, runs cybersecurity firm
Rapid7 Inc  RPD.O . He is the only Black chief of a publicly
traded company in Massachusetts. 
    Roger Crandall has led Massachusetts Mutual Life Insurance
for the past decade. Like the overwhelming majority of Fortune
500 company CEOs, he is white.  
    Lizanne Kindler is CEO of women's clothing retailer Talbots,
now owned by private equity firm Sycamore Partners. She was born
in Denmark.
    Kimberly Sherman Stamler is president of real estate
developer Related Beal. 
    Lauren Smith joined the CDC Foundation, a congressionally
authorized philanthropy, last year as its first chief equity and
strategy officer. She is a former pediatrician and medical
director of the Massachusetts public health department.
    
    DALLAS
    The bank's board is led by two white men. 
    Greg Armstrong, the board's chair, ran Plains All American
Pipeline LP  PAA.O  for decades until his retirement in 2018. He
remains a director.
    Thomas Falk, the deputy chair, ran household goods maker
Kimberly-Clark Corp  KMB.N  from 2002 to 2019. 
    Claudia Aguirre is president and CEO of BakerRipley, a
non-profit provider of education and community services in
Houston. She was born in Mexico.
    Cindy Taylor has run energy services company Oil States
International Inc  OIS.N  since 2007.
    Renard Johnson is founder and CEO of professional services
company METI in El Paso.
    Gerald Smith founded investment management firm Smith Graham
in 1990.
    

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
On Fed bank boards, some classes more diverse than others    https://tmsnrt.rs/3kWEjzW
2021 regional Fed bank boards     https://tmsnrt.rs/30n5bzR
Fed bank boards are increasingly diverse    https://tmsnrt.rs/3qAsYY6
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 (Reporting by Ann Saphir;
Editing by Dan Burns and Andrea Ricci)
 ((ann.saphir@thomsonreuters.com; +1 312 593 8342))