New Report Finds Federal Reserve Bank Directors Are Moving Left 

In recent years Fed directors have become less politically diverse and are less likely to have crucial banking experience 

NEW YORK, NY— The board of directors that oversees the twelve Federal Reserve Banks are supposed to be nonpolitical and act in the public’s best interest. The directors should reflect all sectors of the American economy so that their insights can accurately inform monetary policy recommendations. However, a new Manhattan Institute report by senior fellow Judge Glock and law school associate Reade Ben reveals that in the last ten years the makeup of Federal Reserve Bank directors has become increasingly left-leaning, activist, and demographically diverse. At the same time, fewer directors have crucial banking experience needed for some of their management roles.

Glock and Ben reviewed political donations, professional positions, industry sectors, educational backgrounds, and demographic details of various Fed directors from 2010 to 2023. They find the group has become less politically diverse but more demographically diverse. The share of directors donating exclusively to right-leaning candidates dropped to 5% in 2023, while left-wing donations increased to 35%. This in part is due to an increase in nonbank directors representing consumer & community and labor sectors. Notably the consumer & community sector has the largest concentration of nonwhite and female directors and is known for its activism in areas like affordable housing, community development, decolonization, and naturalization. Alongside this growth in political activism, the share of board chairs and deputy chairs with mandated tested-banking experience has decreased overall from 44% in 2010 to 29% in 2023, with sharp decreases commencing in 2021.

These changes have inhibited the ability of the Federal Reserve Banks to provide strong and dissenting voices on monetary or regulatory policy. To correct course, Glock and Ben recommend that the criteria for selecting future directors prioritize the representation of diverse geographies and more rigidly define tested-banking experience. They argue the best way to prevent groupthink is to select economically experienced and ideologically diverse Federal Bank directors and Bank Presidents. This would also provide a more effective counterweight to the Board of Governors in Washington.

Click here to view the full report.