Reform Advocates Want More Diversity Among Finance Regulators

Corey G. Johnson, UT San Diego, April 5, 2012

To stave off fraud and future Wall Street meltdowns, some reform advocates are pushing for government regulators to become more ethnically diverse.

In a study titled “Government That Looks Like America?,” The Greenlining Institute found that, for the most part, financial regulators in the U.S. don’t reflect the ethnic and racial makeup of the country’s population. {snip}

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The institute obtained workforce data at 19 federal financial regulatory agencies, including the U.S. Department of the Treasury, Federal Deposit Insurance Corp. and Federal Reserve banks in Atlanta; Boston; Chicago; Cleveland; Dallas; Kansas City, Mo.; Minneapolis; New York; Philadelphia; Richmond, Va.; San Francisco and St. Louis.

The study found blacks were best represented among all people of color in the mid-level management category. In two agencies, they make up 28.4 and 39.7 percent of reported mid-level managers. In five agencies, they were between 12.6 and 13.6 percent of the mid-level management category.

The San Francisco Federal Reserve Bank received praise as well. Of 15 agencies, San Francisco’s bank had the third-highest percentage of ethnically diverse executive managers, with people of color making up about 16.7 percent of the agency’s decision-makers.

Latinos made up the group with the smallest number of managers, according to the report.

Even though Latinos made up 36 percent of the California civilian labor force in 2010, they constitute only 3.3 percent of executive management and 6.5 percent of mid-level management at San Francisco’s Federal Reserve Bank. Only at Dallas’ Federal Reserve Bank did Latinos have a significant mid-level presence (19.3 percent).

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“A glaring piece of data in the report is the huge lack of representation of Latinos,” said Orson Aguilar, executive director of Greenlining. “If their management more mirrored the workforce, it could have prevented the mortgage fiasco.”

The study examines the impact of a section of Congress’ financial reform bill that mandates that regulatory agencies and their contractors improve their diversity policies and make a “good-faith effort” to increase their ethnic representation.

The requirement was added to the law by U.S. Rep. Maxine Waters, a Los Angeles Democrat, who argued regulatory agencies couldn’t prevent discrimination and other abuses without an adequate understanding of ethnic communities at the senior management level. As a result, 20 agencies have now created Offices of Minority and Women Inclusion to monitor diversity efforts.

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  • To stave off fraud and future Wall Street meltdowns, some reform
    advocates are pushing for government regulators to become more
    ethnically diverse.

    As a reaction to a meltdown that was driven by a maniacal push to make the legions of America’s homeowners more diverse.

    • The_Bobster

      We are living in the Bizarro world.

  • Nothing the banks would like more than more diversity in the regulators. But those doing that job need to be good at math.

    • redshirts

      Who better to hide the evidence and blame Whitey?

  • Eagle_Eyed

    I hope Steve Sailer hears about this. 

    Only a diversity clown would argue that we need more Hispanic regulators to fix a problem largely caused by giving sub-prime loans to Hispanic and black borrowers.

  • redshirts

    Racism never raises its ugly head until something uglier first appears.

  • I’m sure everyone here has seen the 2004 CSPAN tape of a congressional hearing on Fanny mae/FreddieMac, If you did then you’ll remember every black on the panel defended the practices of the 2 GSE’s, and in fact they wanted them to go even further in handing out morgages to blacks, this despite being show proof of the malfeasance going on at the GSE’s and being warned of the impending collapse. It’s hard to imagine that more black regulators would have changed anything.  I think the real agenda is to extend the reach of the CRA, to revive the very scheme that started the collapse in the first place.  note that obama fully supports the CRA to this day.

  • How about the rest of the government employees? Do they reflect the ethnic and racial makeup of America? I read that 40% of government employees were black, while they make up only 13% of the population. 

  • JackKrak

    Can we then argue to for more whites to be placed on city councils in Detroit, Newark, Oakland etc. to “prevent” disasters there?

    No, wait – no amount white leadership in a majority black city can save it from oblivion. Nevermind.

  • June39

    But they do reflect the “look” of our founding fathers who would never in a million years anticipate what our “diverse” nation has become.

  • The_Bobster

    If “diversity” is the answer, it must be a pretty dumb question.