August 02, 2023

Senator Warren, Representative Waters, Lawmakers Reintroduce Federal Reserve Racial and Economic Equity Act

Legislation Would Require Federal Reserve to Close Racial Employment and Wage Gaps

Bill Text (PDF)

Washington, D.C. – United States Senators Elizabeth Warren (D-Mass), Chair of the Economic Policy Subcommittee of the Senate Banking, Housing, and Urban Affairs Committee, and Representative Maxine Waters (D-Calif.), Ranking Member of the House Financial Services Committee, reintroduced the Federal Reserve Racial and Economic Equity Act to require the Federal Reserve to use its existing authorities to close racial employment and wage gaps and report on how the gaps change over time.

“The Fed can and should take deliberate actions to help reverse the serious racial gaps in our economy,” said Senator Elizabeth Warren. “Representative Waters and I are reintroducing the Federal Reserve Racial and Economic Equity Act because it is powerfully important that the Fed use its power to minimize the racial employment and wage gaps and ensure disparities are not ignored.”

“In the spirit of Juneteenth, we must all be reminded that racial equality is a dream that our country has still yet to realize. As it stands, the racial wealth gap is widening and Black families and other communities of color are suffering as a result,” said Representative Maxine Waters. “The Federal Reserve Racial and Economic Equity Act will help ensure that the Fed plays a role in addressing inequality by creating a new racial justice mission at the Fed to eliminate racial and economic disparities in all of its work. This legislation builds on recent work by the Fed to ensure there is robust data published on racial economic disparities when they testify before Congress so that we can better monitor and close these gaps to ensure our economy provides prosperity for all. It also complements President Biden’s executive orders to strengthen equity-advancing requirements for all agencies, including encouraging independent agencies like the Fed to comply. We need all hands on deck, including at the Federal Reserve, to take action to address racial equity.”

The Federal Reserve Racial and Economic Equity Act would: 

  • Make Reducing Inequality Part of the Fed’s Mission: This bill adds a new section to the Federal Reserve Act that would require the Fed to carry out its functions in a way that “minimizes and eliminates racial disparities in employment, wages, wealth, and access to affordable credit.” 
  • Ensure that Racial Economic Disparities are Not Ignored: This legislation requires the Federal Reserve Chair to identify in their semiannual testimony before Congress: (1) the existing disparities in employment, income, and wealth across racial and ethnic groups and (2) how the Fed is using its authorities to reduce these disparities. 
  • Require Robust Reporting on Disparities in Labor Force Trends: This bill requires the Fed’s Semiannual Monetary Policy Report that the Fed releases in conjunction with the Chair’s testimony to include recent labor force trends with “a comparison among different demographic groups, including race, gender, and educational attainment.” 

The legislation was also cosponsored in the Senate by Senators Richard Blumenthal (D-Conn.), Ed Markey (D-Mass.), Chris Van Hollen (D-Md.), Dianne Feinstein (D-Calif.), Raphael Warnock (D-Ga.), Jack Reed (D-R.I.), Bernie Sanders (I-Vt.), Cortez Masto (D-Nev.), Sherrod Brown (D-Ohio), and Sheldon Whitehouse (D-R.I.).