Diana Furchtgott-Roth at RealClearMarkets:
What one finds when reading congressional legislation is invariably surprising. Take the Dodd-Frank financial regulation bill, for instance, which was created by merging Senate and House bills. When the Senate returns from recess one of its first actions will be to vote on the bill, which passed the House on June 30.
I was searching the bill for a provision about derivatives. What did I find but Section 342, which declares that race and gender employment ratios, if not quotas, must be observed by private financial institutions that do business with the government. In a major power grab, the new law inserts race and gender quotas into America’s financial industry.
In addition to this bill’s well-publicized plans to establish over a dozen new financial regulatory offices, Section 342 sets up at least 20 Offices of Minority and Women Inclusion. This has had no coverage by the news media and has large implications.
The Treasury, the Federal Deposit Insurance Corporation, the Federal Housing Finance Agency, the 12 Federal Reserve regional banks, the Board of Governors of the Fed, the National Credit Union Administration, the Comptroller of the Currency, the Securities and Exchange Commission, the new Consumer Financial Protection Bureau…all would get their own Office of Minority and Women Inclusion.
Each office would have its own director and staff to develop policies promoting equal employment opportunities and racial, ethnic, and gender diversity of not just the agency’s workforce, but also the workforces of its contractors and sub-contractors.
What would be the mission of this new corps of Federal monitors? The Dodd-Frank bill sets it forth succinctly and simply – all too simply. The mission, it says, is to assure “to the maximum extent possible the fair inclusion” of women and minorities, individually and through businesses they own, in the activities of the agencies, including contracting.
Andy McCarthy at The Corner:
Ms. Furchtgott-Roth goes on to point out how bedeviling the “fair” standard has proved to be. She then elaborates that Dodd-Frank
specifies that the “fair” employment test shall 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.” That last would appear to rope in law firms working for financial entities.Contracts are defined expansively as “all contracts for business and activities of an agency, at all levels, including contracts for the issuance or guarantee of any debt, equity, or security, the sale of assets, the management of the assets of the agency, the making of equity investments by the agency, and the implementation by the agency of programs to address economic recovery.” …
With the new financial regulation law, the federal government is moving from outlawing discrimination to setting up a system of quotas. Ultimately, the only way that financial firms doing business with the government would be able to comply with the law is by showing that a certain percentage of their workforce is female or minority. The new Offices of Women and Minorities represent a major change in employment law by imposing gender and racial quotas on the financial industry. The issue deserves careful debate – rather than a few pages slipped into the financial regulation bill.
Amen. And legalities aside, Ms. Furchtgott-Roth also includes informed predictions about the inefficiencies this quota imposition is likely to produce. All of it is worth reading. This is the sort of disaster you get when legislation in the thousands of pages (to be followed, inexorably, by regulations in the tens of thousands of pages) becomes standard operating procedure.
This is in the financial reform bill. Evidently, the financial crisis was caused by flawed human resources policies at Federal regulatory agencies. I am glad that our leaders are focused on the big picture, so that they are not distracted by little things like housing policy.
The media has been analyzing this bill for weeks as it moves fitfully to a floor vote. Yet none of the reports covered Section 342, which has far-reaching impact into the capital markets and banking system. It effectively puts affirmative action into every financial transaction and gives the government a huge opening for interfering with economic growth on the basis of bureaucratic whims. Anyone who has dealt with an EEOC issue will understand the arbitrary interventions this will create — and the damage it will do when every contract and trade can get suspended based on a complaint or even suspicion of violation.
Anyone interested in system stability would have struck these requirements the moment they first appeared. This is a disaster in the making, and yet another indication that Democrats want to exploit the financial collapse for their goals in social engineering.
Diversity over competence. The American banking industry will soon be just as inept as the federal government and the Ivy League.