Janet Yellen is poised to take charge of a Federal Reserve System where boardroom dissent has become increasingly rare, making the central bank’s governing body an unusual example of harmony in a divided capital.
Records spanning 25 years of meetings of the Fed’s board of governors show a pattern of increasing unanimity among the members, who number seven when there are no vacant seats. Bloomberg News obtained the files from the Fed under a Freedom of Information Act request filed in 2011.
For Yellen, President Obama’s nominee to succeed Ben Bernanke as Fed chairman, a cohesive board would be an asset her predecessors didn’t always command. It will take some work to ensure the pattern continues, said Nathan Sheets, formerly the top economist in the Fed’s international finance division.
“The momentum for having the governors support the chairman is enormous,” said Sheets, who is now global head of international economics at Citigroup Inc. in New York. “But any chairman has to nurture that and maintain the relationships.”
Under former Chairman Paul Volcker and early in the tenure of his successor, Alan Greenspan, dissent at the board was common. Eventually Greenspan brought the other governors into line. Dissents that averaged 21 a year in the 1986-1993 period dwindled to five annually in 1994-1997, then to zero for 10 years. Dissents reappeared as the financial crisis heated up in 2008, when there was one, and in 2009, with four. There were none again in 2010, the last year for which the Fed provided records.
The Fed’s board of governors holds hundreds of votes every year, on everything from regulations, to bank mergers, to internal budgets. The body is distinct from the Federal Open Market Committee, the panel that makes monetary policy decisions, which includes the Fed’s 12 regional presidents as well as the governors.
Since June 2011, every meeting of the FOMC, whose votes are public record, has included at least one dissent from a regional president. No governor has cast a negative vote on an FOMC decision since September 2005.