WASHINGTON – Chair Janet Yellen said Thursday she is committed to increasing diversity throughout the Federal Reserve system, including the ranks of senior leadership.
Yellen said that the Fed will benefit from greater diversity, and commercial banks will be better off with a more diverse workforce.
“I am committed to improving diversity throughout our organization,” Yellen said, speaking by videoconference to a forum of minority bankers in Kansas City, Missouri. “Improving diversity requires effort and constant focus. We will continue working hard to achieve this goal.”
Fed Up, a coalition of community activist groups and labour unions, is trying to change how the Fed’s 12 regional banks operate, including increasing job opportunities for minorities. The group notes that in the Fed’s 100-year history, there has never been a black or Hispanic president at any of its regional banks.
Yellen did not address the economy or the future path of interest rates in her remarks but she did address a question about whether the Fed might one day expand the assets it purchases to include company stock and corporate bonds. By law the Fed can only now purchase safe assets such as U.S. Treasury securities or mortgage-backed securities issued by government-sponsored enterprises.
Yellen noted that the Bank of Japan has the authority to purchase stocks and corporate bonds and the European Central Bank can buy corporate bonds. Having these expanded options might be handy if the Fed needs more tools to attack any future deep recession, she said.
During the 2007-2009 Great Recession, the Fed expanded its balance sheet more than four-fold with repeated bond purchases aimed at driving down long-term interest rates as a way to spur the economy.
“Many researchers are thinking what else could be on the shelf if we needed a wider range of tools,” Yellen said. She said that while the Fed is not considering such a move now, she believes it is a useful area to explore for the future.
In response to another question, Yellen said it was important to encourage more minorities to consider careers in economics.
Each year, only a handful of minority students — fewer than 20 — graduate with a doctorate in economics, she said. If this figure rises, it will expand the pool of economists the Federal Reserve will be able to hire and also expand the types of research that economists pursue.
“A diversity in the ranks of economists would result in a broader, richer diversity in the research that the profession does,” Yellen said.