(Bloomberg) — The Federal Reserve Bank of Dallas on Wednesday named Lorie Logan as its next president, elevating a central bank insider who brings decades of monetary policy experience to the post and making her the first woman to lead the bank.
Logan, 49, comes to Dallas from the New York Fed, where she currently oversees implementation of monetary policy as manager of the Fed’s $9 trillion securities portfolio and serves as executive vice president. She has led market operations, monitoring and analysis there since 2012 and started at the bank in 1999.
Logan succeeds Robert Kaplan, who stepped down from the Dallas Fed last year following disclosures about his personal trading activity in 2020.
The appointment is effective Aug. 22. The Dallas Fed’s next turn to vote on monetary policy is in 2023.
Logan will become the eighth woman among the Fed’s 19 policy makers once she takes office, helping further diversify a group that has historically been dominated by White men. She is already well known among top officials: In her current role, she attends Federal Open Market Committee meetings and advises policy makers on their decisions.
“We anticipate that Logan will be in the sensible center,” Evercore ISI’s Krishna Guha and Peter Williams wrote in a note to clients. “We would expect her to favor a calibrated hawkish approach focused on upside inflation-risk management and restoring price stability without injecting unnecessary volatility into markets or the economy.”
Presidents of the 12 regional banks rotate their vote annually — except New York, which goes every year. Officials are currently trying to curb the hottest inflation in decades by removing emergency pandemic support, while attempting to avoid stalling the economy in the process.
“What we’re seeing is a huge, seismic shift in the composition of the Fed, and a much more balanced shift on gender — some on race, not as much as I’d like,” said Diane Swonk, chief economist at Grant Thornton LLP and a longtime Fed watcher.
The Dallas Fed district encompasses the oil-producing regions of Texas, southern New Mexico and northern Louisiana, and analyzing the energy sector is one of the bank’s research strengths. Its proximity to the Mexican border has also made immigration a significant focus for the bank in recent years and just under 40% of the district is Latino.
Choosing an insider like Logan was a win for “continuity” at the Fed, said Aaron Klein, a senior fellow in economic studies at the Brookings Institution in Washington.
While Logan may need to spend time getting to know the region’s unique business environment, her monetary policy expertise will be a boon to the FOMC right now, said Ray Perryman, an economist who run a research firm in Waco, Texas, and has been tracking the state’s economy for 40 years.
“To bring in someone with this level of specific experience in monetary policy at this moment I think is just a very, very strong thing to do,” Perryman said. “To have that person representing our region on the Open Market Committee would be something that’s very advantageous for our region.”
Some argued that the pick was a missed opportunity to broaden the voices heard by policy makers.
“People who have spent most of their career inside the Fed tend to be loyal to the institution and defensive of its decisions, rather than bringing a fresh and independent perspective to the Fed’s policy deliberations,” said Andrew Levin, a former Fed adviser and a professor at Dartmouth College.
Hispanic members of Congress, who urged the Dallas Fed to pick a Latino as its next president, were disappointed with the selection.
With Logan’s appointment, the regional bank “chose to perpetuate a legacy that has largely excluded Latino voices at all levels of the institution,” Senator Bob Menendez of New Jersey and Representative Raul Ruiz of California said Wednesday. Ruiz chairs the Congressional Hispanic Caucus. “We are deeply disappointed by today’s decision and will work to find solutions to address the Federal Reserve’s ongoing diversity problem.”
Less than a quarter of the workforce is Latino at the Dallas Fed, which hired an executive search firm to help it fill the position and pledged to consider a large and diverse pool of candidates.
“The Dallas Fed had a chance to make themselves more representative of their region, but they didn’t take that chance seriously,” said Ben Dulchin, director of the Fed Up Campaign at the Center for Popular Democracy. “The fact that the Fed’s presidents are 75% White undermines the legitimacy of the system.”
Navigating Crises
Logan has seen the New York Fed navigate several crises during her tenure there, including the Sept. 11 attacks, the 2008 financial crisis and the Covid-19 pandemic. She played a prominent role in developing and implementing the emergency lending programs the New York Fed established during the last two crises to smooth market functioning and keep credit flowing.
She was key to establishing the Fed’s overnight reverse-repurchase facility after the financial crisis, a program that became a popular place for money-market funds and other firms to park excess cash during the pandemic.
Logan will stay with the New York Fed’s markets team through August and will oversee the beginning of the shrinking of the central bank’s balance sheet, which will start June 1.
Patricia Zobel, Logan’s deputy as head of the Fed’s bond holdings, known as the System Open Market Account, will become manager “pro tem” of the portfolio.
Logan fills a role vacated by Kaplan in October as the Fed was engulfed in its most serious ethics scandal in years.
The announcement of his departure, on the same day that Boston Fed President Eric Rosengren said he was stepping down due to ill health, followed revelations of their unusual trading activity as the central bank swept into action to shield the economy from Covid-19.
Fed Vice Chair Richard Clarida also came under scrutiny for his transaction on the eve of a Fed statement signaling it was getting ready to calm market panic. He resigned Jan. 14, ahead of the expiration of his term as governor on Jan. 31.
The Boston Fed announced in February that University of Michigan economist Susan Collins, the first Black woman to lead one of the central bank’s districts, will become its new president on July 1.
The scandal provoked a demand from the Senate floor by Massachusetts Democrat Elizabeth Warren for an investigation of potential insider trading. Chair Jerome Powell asked the Fed’s internal watchdog to investigate and the central bank subsequently adopted sweeping restrictions on officials’ investing and trading, prohibiting the purchase of individual securities and boosting disclosure requirements among policy makers and senior Fed staff.
(Updates with lawmakers’ names in 16th paragraph.)
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