Federal Reserve banks need stronger policies to prevent conflicts of interest, a government watchdog said Wednesday.
The banks’ board members have apparent conflicts of interest because of their day jobs as executives and corporate directors, the non-partisan Government Accountability Office said in an audit. It said the Fed banks should document directors’ roles in overseeing financial companies and request waivers when needed.
The audit also criticized the boards’ lack of diversity. They are composed mainly of white men, in part because they include mostly senior executives, it said. The GAO analyzed data from the Equal Employment Opportunity Commission and found that diversity in the pool of candidates is severely limited.
The GAO recommended that Fed banks consider a wider range of candidates for their boards, document directors’ roles and responsibilities, request waivers when conflicts are possible and post more documents on their websites.