My Provision Does Not Politicize the Federal Reserve
Congresswoman Waters authored the following letter to the editor in response to a Wall Street Journal editorial that criticized a provision she authored in the Wall Street reform and consumer protection bill:
The Journal editorial "Politicizing the Fed" (June 14) is filled with misrepresentations, unsupported conclusions and outright distortions about a provision of the Wall Street reform and consumer protection bill that I introduced and that has now been approved by the House-Senate conference committee.
The legislation establishes an Office of Minority and Women Inclusion at each government financial services agency in order to "ensure equal employment opportunity and the racial, ethnic and gender diversity" of the work force and senior management, and also to increase "the participation of minority-owned and women-owned businesses in the programs and contracts" of each agency.
The Journal mischaracterizes both the intent and the effects of the legislation. It is absolutely not an attempt to politicize the Fed or any other agency or to allocate credit by race and gender. Nothing in the bill mandates lending to minorities or women. The provision does not even mention lending. The offices will only be responsible for employment, management and business activities of the agencies.
The provision that passed the House made the directors of these offices presidential appointees requiring Senate confirmation, but the conference-based text and the version approved in conference make them members of the Senior Executive Service. They will develop standards to assess the diversity policies and practices of regulated entities, but they will not have any authority over regulated institutions. They will not have the authority to look at how banks are lending to minorities and women. The directors won't be responsible for formulating monetary policy.
It is also wrong and outrageous to suggest that the bill undermines regulators or interferes with their ability to prevent systemic risk. Nothing in the bill would require, cause, nudge or even hint that a financial services agency should abandon or subjugate its focus on systemic risk to make loans based on race or gender.
What this legislation will do is help address an indisputable problem, the lack of diversity in financial services. Rigorous analysis documents the discrimination that women and minorities face compared to white men of similar educational background and age. Data from the Office of Personnel Management shows the lack of African-American and Hispanic senior managers at the federal financial services agencies.
At the Treasury Department, for example, minorities only make up 17.2% of employees at senior pay levels. A recent report from the Government Accountability Office points to the lack of diversity within the financial services industry, with virtually no improvement at the management level from 1993 to 2008. The lack of contracting opportunities for minority- and women-owned businesses through programs like TARP has also been documented.
The provision is designed to broaden and improve the work force of these agencies and expand opportunities for our nation's small businesses—including minority- and women-owned businesses—to participate in programs and contracts instead of continuing to rely on the same "old boy" network and handful of Wall Street firms responsible for the crisis in the financial markets.
Rep. Maxine Waters (D., Calif.)