Selecting a Federal Reserve Bank President
After former St. Louis Fed President Jim Bullard announced in July 2023 that he was stepping down to become the inaugural dean of Purdue University’s business school, the Bank embarked on a search for its next leader.
The next president and CEO will lead the work of the Bank and contribute to U.S. monetary policy decisions at the Federal Open Market Committee (FOMC). It’s an important job—and so is the job of choosing the person who will fill the role.
So how does the search process work? What kinds of candidates are being sought? Speakers gave answers to those and other questions about the St. Louis Fed’s presidential search during a virtual public engagement forum the Bank held on Sept. 7, 2023.
Karen Branding, senior vice president and corporate secretary of the St. Louis Fed, moderated a discussion with four panelists:
- James M. McKelvey Jr., chair of the St. Louis Fed board of directors and chair of the Search Committee
- Carolyn Chism Hardy, deputy chair of the St. Louis Fed board of directors and deputy chair of the Search Committee
- Tom Daniels, member of the Spencer Stuart executive search and leadership consulting firm selected to assist with the search
- François Henriquez, St. Louis Fed executive vice president, chief administrative officer and general counsel
Branding and Henriquez are the support team to the Search Committee.
“Our aim is to get the word out about our search, and to help the public better understand how the process works and have an opportunity to engage and ask questions,” Branding said at the beginning of the public engagement forum.
How the Search Process Works
The process of selecting a Federal Reserve bank president is set out in federal law, with its origins in the Federal Reserve Act of 1913.
As Branding explained, the first step is for a Reserve bank’s board of directors to appoint a presidential search committee, which must be composed of a subset of the Bank’s board: its Class B directors, who are elected by banks in the Reserve bank’s district to represent the public; and its Class C directors, who are appointed by the Federal Reserve Board of Governors to represent the public.
The remaining directors, who are Class A directors elected by banks in the Reserve bank’s district to represent banks’ interests, “are precluded by law from participating in the appointment process [of Reserve Bank presidents] to avoid actual or perceived conflicts of interest,” Branding explained.
The St. Louis Fed’s board of directors appointed the six-member Presidential Search Committee comprising its Class B and Class C directors at its July 2023 board meeting, Branding said. The members are shown in the graphic below.
St. Louis Fed Presidential Search Committee
The members of the Search Committee are, clockwise from top left: James M. McKelvey Jr., founder and CEO, Invisibly Inc., St. Louis; Carolyn Chism Hardy, president and CEO, Chism Hardy Investments LLC, Bartlett, Tenn.; Lal Karsanbhai, president and CEO, Emerson Electric Co., St. Louis; Michael Ugwueke, president and CEO, Methodist Le Bonheur Healthcare, Memphis, Tenn.; Penny Pennington, managing partner, Edward Jones, St. Louis; and R. Andrew Clyde, president and CEO, Murphy USA Inc., El Dorado, Ark.
Reserve bank search committees interview candidates and evaluate their qualifications before forwarding their top choices to the Federal Reserve Board of Governors. The Board reviews and interviews the candidates, and then the six Reserve bank directors representing the public appoint the new president, subject to the Board of Governors’ approval.
An Executive Search Firm to Support the Search
After the Search Committee formed, one of its first steps was to interview several highly qualified executive search firms to support the process. The Search Committee ultimately selected Spencer Stuart to assist in a “broad search process that is robust, transparent, fair and inclusive,” as detailed in the St. Louis Fed’s presidential search frequently asked questions webpage.
Typical searches take six to nine months, McKelvey said during the forum. For the St. Louis Fed presidential search, the deadline is Sept. 28, 2023, for indications of interest, nominations and referrals with supporting documents to be sent to email@example.com.
Having the nominations go directly to the search firm preserves candidate confidentiality, Branding said.
The Experience and Skills the St. Louis Fed President Needs
Reserve bank presidents oversee their banks’ work related to monetary policy, economic research, bank supervision and community development, among other activities. They also represent the voice of Main Street on the Federal Open Market Committee.
The St. Louis Fed president’s job is complex, and the 10-page job profile (PDF) includes a list of ideal qualifications and gives a sense of the many qualities and key competencies that are required, Chism Hardy said during the forum.
The role doesn’t require a Ph.D. in economics, but representing the voice of the Eighth Federal Reserve District and being at the FOMC table are among the most important parts of the job, Chism Hardy said. (The Eighth District spans seven states, including all of Arkansas and portions of Illinois, Indiana, Kentucky, Mississippi, Missouri and Tennessee.)
“So, the ideal candidate needs to have, among other things, respected credentials in macroeconomics or recognized stature in the field that contributes information that’s vital to monetary policymaking,” she said.
A minimum requirement is an understanding of monetary policy and how it “really affects real people,” McKelvey said.
“It affects Main Street,” he said. “It affects all of us. It affects what your car costs and your house costs.”
But the Search Committee also is looking for a leader who “can communicate very well and, in some cases, persuade,” he said.
Asked later if candidates should be from inside or outside the Fed, Chism Hardy said the Search Committee would be considering both.
“It is going to take someone with the right leadership skills and the right leadership experience,” she said.
Reserve Bank President Ethics Requirements
In addition to the experience and other qualifications needed to be a good leader of a Reserve bank, presidents also must adhere to codes of conduct and restrictions, including avoiding actual or apparent conflicts of interest.
The Board of Governors also has its own code of conduct for senior officials of the Federal Reserve System that would apply to the St. Louis Fed president, Henriquez said.
He outlined some of the requirements, including that they “do everything that they can to maintain the integrity, dignity and reputation of the System.” Senior officials also have to ensure that their personal financial dealings are “always above reproach” and that they safeguard the confidentiality of information, he said.
As a member of the FOMC, the president also would be subject to “fairly new” investment and trading limitations that also apply to spouses, minor children and trusts, Henriquez added.
Links to documents outlining codes of conduct, Federal Reserve ethics and values, and the restrictions on investment and trading for FOMC officials are outlined on the FAQ page.
The Significance of the St. Louis Fed President
The open position of St. Louis Fed president is “an incredible opportunity,” said Daniels, of Spencer Stuart. The consulting firm has assisted in several Reserve bank presidential searches, including the search that resulted in the selection of former President Jim Bullard.
The St. Louis Fed is a leading institution with almost 1,500 employees across seven states, Daniels said. The Bank also has “a long-standing reputation for being a bold and innovative thinker when it comes to monetary policy,” he said. “And that’s a great legacy that I think a lot of people would love to embrace.”
The St. Louis Fed also plays a critical role in supporting the U.S. Treasury and in providing FRED, a leading source of macroeconomic data, Daniels noted, as well as in supervising the second largest number of community banks in the country.
This blog explains everyday economics, consumer topics and the Fed. It also spotlights the people and programs that make the St. Louis Fed central to America’s economy. Views expressed are not necessarily those of the St. Louis Fed or Federal Reserve System.