A new government audit of Federal Reserve banks found a disparity between whites and minorities serving as leaders on the banks’ boards of directors.
“Events surrounding the 2007 financial crisis raised questions about the governance of the 12 Federal Reserve Banks (Reserve Banks), particularly the boards of directors' roles in activities related to supervision and regulation,” writes The Government Accountability Office, a nonpartisan government watchdog group that performed the audit, released Wednesday.
The 12 regional banks in the federal system are private companies, and are not part of the U.S. government, but are owned by the banks that they regulate. Each board has three members who represent those banks and six who represent the public, according to the report.
The group called diversity among the banks' boards of directors “limited” between 2006 and 2010. In 2006, minorities accounted for 13 of 108 director positions, and in 2010 they accounted for 15 of 108 director positions. Last year, Reserve Bank director seats were overwhelmingly held by white men: “Specifically, in 2010 Reserve Bank directors included 78 white men, 15 white women, 12 minority men, and 3 minority women,” according to the report. The GAO analyzed data from the Equal Employment Opportunity Commission to arrive at its findings.
The audit also said that the banks’ board members have apparent conflicts of interests because of their day jobs as executives and corporate directors.
To increase diversity, the report recommended that the banks’ boards consider ways to broaden their pools of potential candidates for directors, such as including officers who are below the senior executive level at their organizations. They also recommended that banks document directors' roles and responsibilities, request waivers when conflicts of interests are anticipated and post more documents on their websites to increase transparency to the public.