WASHINGTON, D.C.— Better Markets’ President and CEO Dennis Kelleher and Dedrick Asante Muhammad, Chief of Membership, Policy and Equity at the National Community Reinvestment Coalition, highlight the urgent need for financial market regulators to address racial economic inequality and lay out steps to tackle these persisting issues in an Op Ed in the American Banker. Excerpts are below and the full Op Ed can be read here.
“One basic but critically important step is for the financial regulatory agencies to ensure diversity in their own leadership and staff and to encourage diversity at the financial institutions they regulate. Congress contemplated this in the Dodd-Frank Act, which created the Office of Women and Minority Inclusion at the agencies, but over a decade later, people of color continue to be grossly underrepresented. At the Securities and Exchange Commission, only a handful of political appointees have been Black, and as of 2021, only 7.1% of senior staff were Black.”
“Financial regulators can also expand disclosure by financial firms and public companies to increase public awareness and accountability. Indeed, the SEC’s primary regulatory tool is the requirement that companies disclose material information to investors. Disclosure of diversity data, from board composition to lending and procurement practices, is undoubtedly material to investors who seek to maximize the returns on their investments. The fact that companies that do better on diversity outperform their less-diverse peers financially provides powerful evidence that such information would be material to a reasonable investor.”
“The Fed in particular should also be disclosing more metrics more often regarding its updated ‘broad and inclusive’ view of full employment and what it sees as the impact of that goal on the U.S. economy. In addition, to address egregious “banking while Black” abuses that can make simple acts like cashing a check a crucible for Black Americans, banking agencies should put emphasis in their examinations not just on what products and services are being offered to low-income and or low-wealth communities and in what quantity but also on how they are being offered. And there should be meaningful consequences when abuses are identified.”
“The persistence of racial economic inequality, which leads to disproportionate suffering for minorities, is an unjustifiable moral blight, born of centuries of racial bigotry. It hurts our entire economy, so we all have a stake in solving the problem. The financial regulatory agencies must play a key role, and every member of the public can engage with those agencies and support their efforts as they craft rules and policies designed to promote racial economic equality.”
Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies—including many in finance—to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.org.