It’s no secret that women and minorities have a more difficult time accessing capital for entrepreneurial pursuits. For example, of the $85 billion invested by venture capitalists last year, women-led businesses only received about 2% of it. And minority-owned businesses are three times more likely to get denied for loans than businesses owned by whites.
Given these sobering statistics, it would seem encouraging that the Federal Reserve recently had its first female chair (Janet Yellen) and that in 2017 the first black president assumed leadership of the Atlanta Fed (Raphael Bostic).
Certainly, progress has been made. But more than 100 years of white male leadership has established a stubborn legacy at the Fed. And a new report suggests that the lack of diversity is negatively impacting the economy.
The fact is that of the more than 100 current directors, 78% are from banking/business backgrounds, 77% are white, and 67% are male. Yikes. With a breakdown like that, it’s no wonder that many outside observers fear that women and minorities will not be adequately represented.
One potential consequence of a homogeneous Fed is that policymakers could base their decisions off statistics that favor white men. As mentioned earlier, men landed the lion’s share of the $85 billion invested by venture capitalists last year. And white business owners are much more likely to get approved for loans.
Thus, female and minority entrepreneurs wouldn’t be represented in the decision-making process. And their struggles could potentially be overlooked. To this end, it’s been pointed out that if the Federal Reserve Bank Boards of Directors were to represent the American public in a racial and gender proportionate way, half the directors would be women and nearly half would be minorities.
Some had hoped change was on the way with the early 2018 announcement that long-time Federal Reserve President William Dudley would step down from his post. However, it was recently announced that Dudley will be replaced with John Williams – another white male. It seems that change will be slower than some had hoped…