Generations of discrimination and mistreatment informed by racist beliefs, narratives, laws, policies, and practices have contributed to deeply entrenched structural inequities within the financial services sector that continue to profoundly undermine the economic status of people of color. This will not be easily undone. Nonetheless, a concerted commitment is badly needed and long overdue. Racial economic inequality has not only limited economic opportunities for many people of color and undermined their quality of life, it has also put in place a structurally regressive economic and financial system that perpetuates tremendous and growing economic inequality in the United States. These dynamics continue to hold our economy back from achieving its full potential, ultimately hurting every American.
While focusing on individual issues at individual agencies remains important, a comprehensive, coordinated, and integrated approach by the regulatory agencies is necessary to help rid racial economic inequality from our financial system and ultimately our society,
Because Better Markets is engaged at all the regulatory agencies (highlighted by the report “The Road to Recovery: Protecting Main Street from President Trump’s Dangerous Deregulation of Wall Street”), it is ideally positioned to develop a comprehensive, coordinated, and integrated approach to financial regulatory reform that targets racial economic inequality. Moreover, because Better Markets has developed a unique advocacy approach to the financial regulatory process (which we call our “Arc of Advocacy™”), it is well-positioned to turn that approach into an actionable plan that gets results.
What is the role of the financial regulatory agencies?
All the financial regulatory agencies have direct and important roles to play in moving toward a more just and equitable society.
- The Securities and Exchange Commission (SEC) — Although it may not seem obvious at first glance, the SEC has a role to play in promoting racial economic equality on multiple levels. The SEC regulates the financial services industry, including the brokers and investment advisers who help facilitate investor access to those markets. The SEC also oversees the companies that turn to the capital markets for money to start and grow their businesses. It regulates many aspects of corporate life, from the disclosure regime that ensures investors have accurate information about the companies they invest in, to the corporate governance processes through which investors elect boards of directors and vote on major corporate policies. Ultimately, the SEC’s responsibilities are critical to ensuring broad economic prosperity.
- The banking agencies (the Federal Reserve, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation) — The banking agencies play a number of roles that relate both directly and less directly (but no less importantly) to the challenges created by the long history of racial economic inequality in the U.S. There is room for progress in multiple areas. Existing laws and mandates in the banking system have the right intentions, but they do not explicitly and effectively target the problem through strict requirements nor do they impose meaningful consequences when banks fail to meet current requirements. Collectively, the banking agencies can use their authority to influence the behavior of the institutions that comprise the banking system so that economically marginalized communities of color have full and fair access to lending and financial services—critical tools in the struggle for economic equality and prosperity. Additionally, the Federal Reserve can influence employment within the economy through its monetary policy as well as limit financial crises that hurt marginalized communities the most.
How is Better Markets working to move the regulators in the right direction?
Examples include two recent reports. In How Can the SEC Address Racial Economic Inequality Through Regulation of the Securities Markets for All Americans, we examine ways in which the Securities and Exchange Commission can address racial economic inequality through regulation of the securities markets. We show that corporate policies on racial justice have a direct impact on stakeholders and corporate profits and that they are clearly material to investors. We also cite evidence that companies with greater ethnic and cultural diversity outperform less diverse firms.
In Addressing Racial Economic Inequality Through the Banking System, we highlight the racial economic inequality in the U.S. that has not only limited economic opportunities for many people of color and undermined their quality of life, but also put in place a structurally regressive financial system that perpetuates tremendous and growing economic inequality in the United States. Black Americans, Hispanic Americans, and other Americans of color are more likely to have lower-income jobs, more likely to be unemployed, less likely to have significant savings, more likely to be underbanked or unbanked overall, less likely to own a home, and more likely to use more expensive and predatory financial products.
Want to stay in the loop? Stay tuned. This page will be regularly updated with Better Markets’ latest work to address racial economic inequality in finance.
Better Markets Key Information
Here are a few key actions that Better Markets has taken to push for equality in the financial system:
- The Supreme Court’s 2021-2022 Term
- What Is ESG and Why Is It So Important?
- An Update on Supreme Court Cases Involving the Financial and Economic Security and Prosperity of the American People
- Should Federal Reserve Chairman Jay Powell be ReappointedZ? (“The Fed’s Role in Racial Justice” section)
- The Agenda for the Fed’s Next Vice Chair for Supervision (“The Fed Needs to Better Address Racial Justice Issues” section)
- OCC Proposal to Rescind 2020 CRA Rule
- CFPB on Payday Underwriting Rescission
- CFPB on Delay of Compliance for Payday Lending Rule
- Modernizing Community Reinvestment Act Necessary to Meet Credit Needs of Underserved Communities
- FDIC Must Work with the Other Banking Agencies to Strengthen the Insufficient Bank Merger Review Process
- Better Markets Submits Comment Letter urging the Department of Justice to Strengthen the Bank Merger Process
- The Travesty of Zero Progress in Homeownership Rates in 45 Years Proves the Community Reinvestment Act (CRA) Has Failed and Must Be Strengthened
Letters to Regulators
- Letter CRA OCC rule w/ U.S. Impact Investing Alliance
- NCRC Letter Regarding the Community Reinvestment Act
- Letter Regarding the Community Reinvestment Act
- Racial Justice Priorities for the Consumer Financial Protection Bureau
- Letter to Biden-Harris Transition Team on Build Back Better Proposal
- FDIC Statement of Policy Regarding Minority Depository Institutions
- Joint Letter Opposing CFPB Payday Loan Disclosure Testing Plan
- The Swearing in of Rohit Chopra as Director of the CFPB Is a Great Day for Consumers Confronting Abusive Payday Lenders, Predatory Banks, and a Broken Student Loan System
- Federal Court Upholds Important Consumer Protections in CFPB Payday Lending Rule, But More Needs to be Done
- Better Markets Statement on the Murder of George Floyd and Racism
- Better Markets Applauds Ally Bank for Eliminating Overdraft Fees That Punish the Poorest and Most Vulnerable Americans
- New Members of the Better Markets Board of Directors: NCRC Membership, Policy and Equity Chief, Climate Change Tech Executive Join the Board of Directors
- If Justice for All Is to Mean Anything in America, the George Floyd Verdict Must Be Just the Beginning
- Better Markets Teams Up with Other Advocates, Nonprofits on Issues Impacting Main Street
- OCC’s Fair Access Rule Increases Risk, Threatens Consumers and Ignores Comments Opposing the Rule
- Better Markets and Omidyar Network Team Up to Fight for Americans’ Economic Prosperity
Op-Eds & Blog Posts