Taking a Page Out of the NFL's Playbook
Last week, Raphael Bostic was named president of the Federal Reserve Bank of Atlanta—becoming the first African-American Federal Reserve Bank president. That’s right, in the Federal Reserve’s 104-year history, no African-American has led one of the 12 regional Reserve Banks until Bostic’s historic selection.
I wholeheartedly congratulate Professor Bostic on his history-making appointment, and applaud the Atlanta Fed for making this long-overdue selection, but clearly more progress must be made.
Did you know that our central banking system has also only had two Asian-American and merely six women at the helm of the Reserve Banks, and still has yet to put a Latino in this position? That’s nine out of 135 regional Reserve Bank presidents, over a ten-decade span.
As Maya Angelou once noted, “…in diversity there is beauty and there is strength.” That strength is actually quantifiable. A 2015 McKinsey & Company report (Diversity Matters) found that private companies with more racial, ethnic and/or gender diversity were more likely to have higher financial returns.
The McKinsey report concluded that “companies in the top quartile for racial and ethnic diversity are 35 percent more likely to have financial returns above their respective national industry medians” and “companies in the top quartile for gender diversity are 15 percent more likely to have financial returns above their respective national industry medians,” among other eye-opening findings.
To build a stronger economy, and to create economic and monetary policies that works for all Americans, we need the talents, skills and expertise of men AND women of ALL backgrounds. My bill, the Ensuring Diverse Leadership Act, H.R. 485, will do precisely that by ensuring at least one gender-diverse candidate and minority candidate are interviewed when there is a vacancy among the Federal Reserve regional bank presidents.
The idea behind my bill is not a new one; it is modeled after a similar, almost 15-year-old rule taken straight out of the National Football League’s (NFL) playbook—the last place you might suspect!
In 2002, the NFL realized it had a diversity problem among its coaching staff. During the 82-year-old history of the NFL, teams had hired only six minority head coaches of the more than 400 head coaches throughout the League’s history—statistics strikingly similar to those at the Federal Reserve. Even worse, only two of the six were active head coaches at the time. Worst yet, a 2002 study found that black NFL head coaches—even with impressive winning percentages—were more likely to be fired and judged by a higher standard than their white counterparts.
Enter the “Rooney Rule,” a policy envisioned and named after Pittsburgh Steeler owner Dan Rooney, which requires League teams to interview at least one minority candidate for head coaching and general manager vacancies. Since its implementation in 2003, NFL teams have hired 14 head coaches of color, with a peak of eight at any given time, which will be the number entering the 2017 season. Last year, the NFL took the Rooney Rule a step further, requiring the League Office to interview women for executive positions.
Today, the Rooney Rule has moved beyond the hash marks and front offices of the NFL, and found a home in the tech industry and even the Halls of Congress: Facebook, Intel, Pinterest, Amazon, Xerox and Senate Democrats have all implemented their own version of the Rooney Rule. It’s time for the financial industry to follow suit.
In 2013, a Government Accountability Office (GAO) study found that only 11 percent of financial firms and 17 percent of financial regulators employed minorities in senior management positions. Also shocking, the same report found that women represented less than 30 percent of senior management positions at financial firms and approximately 36 percent at financial regulators. Looking more generally at Fortune 500 companies, only 21—or 4.2 percent—are led by a woman CEO.
As a member of the exclusive House Financial Services Committee, I have talked at length with Chairwoman Janet Yellen (the Fed’s first female chair) about the need for greater diversity in the boardroom and I have also closely monitored and spoken out in support of the establishment of Offices of Minority and Women Inclusion (OMWIs)—as required by Dodd-Frank—across all federal financial services agencies. Like me, Chairwoman Yellen believes the financial industry is behind the curve, and she has assured me the Federal Reserve and related-federal financial agencies are committed to attracting and retaining a more diverse pool of professionals. However, it is readily apparent that the Fed needs help, begging the question: how can the government tell the financial industry to get serious about increasing diversity, if we are not willing to lead by example? My bill will push the Fed in that direction, while at the same time bringing about change in our monetary policy AND the financial services arena. Talk about a win-win.
Yes, selecting Bostic was a giant step in the right direction for the Fed and our country, but we have an opportunity to score a touchdown if the Ensuring Diverse Leadership Act becomes law.
Rep. Beatty represents Ohio's 3rd District and is a member of the Financial Services Committee.