Politico's Carrie Budoff Brown reports on a little-noticed section of the financial-reform law, which gives the federal government power to end its contracts with any financial firm that "fails to ensure the 'fair inclusion' of women and minorities":
At its core, the section establishes at least 20 new Offices of Minority and Women Inclusion across the Treasury Department, Federal Reserve, Securities and Exchange Commission and other finance-related agencies. It orders the directors of these offices to develop standards that “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.”
This applies to “services of any kind,” including investment firms, mortgage banking firms, asset management firms, brokers, dealers, underwriters, accountants, consultants and law firms, the legislation states. Every contractor and subcontractor must now certify that their workforces reflect a “fair inclusion” of women and minorities.
Conservatives are predictably infuriated by this provision, but if you're OK with the idea of minority-hiring preferences, it makes perfect sense given the demographics of the financial-service industry -- particularly at the management level. As of 2008, according to a report released this year by the Government Accountability Office, white males held 64 percent of management-level positions in the financial-services industry. White women held 26 percent of those positions, with the remaining 10 percent filled out by minorities. Here's a graph from the report:
This is all speculation, but I wouldn't be surprised if you could trace the targeting of minority communities with subprime mortgages to the fact that there are vanishingly few minorities working on the management level in the financial-services industry. By encouraging companies to change that, it's possible that the provision could help prevent a recurrence of the past few years.
-- Jamelle Bouie