During Federal Reserve Chair Jerome Powell’s semi-annual appearance before the Senate Banking Committee, one legislator had a bizarre set of priorities. Sen. Bob Menendez (D-NJ) used his microphone time to berate Powell on diversity within the central bank.
Not inflation, which sits near a four-decade high. Not the balancing act of bringing soaring prices under control through interest rate hikes while avoiding a crushing recession that will take years to recover from.
No, the honorable senator’s concern was counting heads. With a dose of blaming Russian President Vladimir Putin for Biden’s foibles thrown in for good measure.
For the record, when new officials take their positions in September, White males will be less than half of the Fed’s policymakers. Eight of the 18 will be women and five will be minorities.
Menendez still railed against the lack of what he called “racial, ethnic, gender, and economic diversity” in leadership positions within the regional bank system.
The senator even threw in sectoral diversity, complaining that 75% of the current banking directors are from banking or business. What’s worse, only 5% of directors at Federal Reserve banks represent labor. The horror, having banking experts in charge of the central bank.
This is hardly new territory for Menendez, who last October led a group of Senate Democrats who called for a Federal Reserve System that “reflects the country that it serves.”
The lack of diversity, charged the senators, harms the Fed’s mission to support “maximum employment and price stability, consumer protection” and other measures. Exactly how one relates to the other is undetermined.
Menendez then borrowed a page from President Joe Biden’s playbook by blaming Russia’s invasion of Ukraine for inflation. Comically, he queried Powell how interest rate hikes will combat issues caused by the war in Europe.
Meanwhile, when grownups had their turn in the Senate Wednesday, Powell told the committee that recession is now “certainly a possibility.” While he added that it is not the goal of the Federal Reserve, the comment marks a departure from recent statements downplaying the chance.
It’s a good guess that Sen. Menendez’s constituency is far more concerned with white-hot inflation than counting heads on the Federal Reserve. Or for that matter the senator’s personal ax to grind with Powell, who he voted against earlier this year for a second term.