The Dodd-Frank financial regulatory bill, ostensibly aimed at reforming Wall Street and preventing a future financial crisis, will impose racial and gender quotas on financial institutions if passed, according to economist Diana Furchtgott-Roth.
Section 342 of the bill will establish Offices of Minority and Women Inclusion in at least 20 federal financial services agencies. These offices will be tasked with implementing “standards and procedures to ensure, to the maximum extent possible, the fair inclusion and utilization of minorities, women, and minority-owned and women-owned businesses in all business and activities of the agency at all levels, including in procurement, insurance, and all types of contracts.”
So called “fair inclusion” will apply to “financial institutions, investment banking firms, mortgage banking firms, asset management firms, brokers, dealers, financial services entities, underwriters, accountants, investment consultants and providers of legal services.”
The provision goes on to assert that the government will terminate contracts with institutions they deem have “failed to make a good faith effort to include minorities and women in their workforce.”
Diana Furchtgott-Roth, former chief economist at the U.S. Department of Labor and senior fellow at the Hudson Institute, spotlighted the controversial section in an article at Real Clear Markets on July 8th. She told The Daily Caller that the law amounts to a quota system.
“This is a radical shift in employment legislation,” she said. “The law effectively changes the standard by which institutions are evaluated from anti-discrimination regulations to quotas. In order to be in compliance with the law these businesses will have to show that they have a certain percentage of women and a certain percentage of minorities.”
Furchtgott-Roth worries that this might be a harbinger of things to come.
“So what does this mean? Are we going to get rid of anti-discrimination laws all together and just put in quotas? Could this be what’s to come in other sectors?” she questioned.
The office of California Democratic Representative Maxine Waters confirmed to The Daily Caller that Waters is responsible for the insertion of this provision. Her office did not provide further comment, but did point to the Congresswoman’s June 18th letter to the Wall Street Journal for explanation. In the letter, Waters accused the paper of misrepresenting the mandate as requiring financial institutions to make loans based on race and gender.
“The provision does not even mention lending. The offices will only be responsible for employment, management and business activities of the agencies,” she wrote. “The provision is designed to broaden and improve the workforce 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.”
On July 1, Waters issued a press release explaining the urgency of mandating diversity.
“Many industries lack the inclusion and participation of people of color and women, perhaps none more egregiously than the financial services sector,” Waters said in the statement.
She continued, “I wrote this legislation to make sure that federal financial regulatory agencies ensure diversity in their hiring and promotion, as well as in their contracting, so that competent and qualified minorities and women and minority-, women- and small-businesses have a seat at the table.”
At the time of publication neither Connecticut Democratic Senator Christopher Dodd nor Massachusetts Democratic Congressman Barney Frank had returned requests for comment.