Just 3% of US top financial regulators in last 106 years were Black

In 1913, President Woodrow Wilson signed the Federal Reserve Act into law and, in the process, moved the U.S. toward a modern financial system. The initial appointments to the Fed’s board were – not surprisingly for the time – lacking in diversity.

But a detailed new study of the financial regulatory elite finds that things haven’t changed much since then, raising concerns that the financial services industry is getting away with oversight that doesn’t represent many Americans.

The study from Georgetown University law professor Chris Brummer looked at 327 individuals who have been confirmed by the Senate to different financial agencies in the last 106 years and found that just 10 of them have been Black.

“The representation has been pathetic,” Brummer said during an appearance on Yahoo Finance’s The Ticker.

Brummer’s study included the Federal Reserve Board, the Securities and Exchange Commission (SEC), the Federal Deposit Insurance Corporation (FDIC), and others.

Brummer says the consequence of his findings is that entire groups don’t have representation “to paraphrase [Alexander] Hamilton, who are in the room when it happens when it comes to devising policies” that directly impact their community. The first Black nominee found in the study was Andrew Brimmer, who joined the Federal Reserve Board of Governors in 1966.

There have been efforts to change it. The Dodd–Frank Wall Street reforms of 2010 mandated that offices of “Minority and Women Inclusion” be sprinkled across the regulatory agencies, but these offices have clearly had limited success: there is currently just one identifiable Black political appointee serving at or near the top of a U.S. financial regulatory agency: Rodney Hood, the chairman of the National Credit Union Administration.

‘The statistics are disappointing’

Sen. Sherrod Brown is the ranking Democrat on the committee that handles many of these nominees. In a statement to Yahoo Finance, a spokesperson acknowledged that “while the statistics are disappointing, Sen. Brown has and will continue to encourage and support nominees of color,” adding “everyone needs to do more to increase diversity.”

Another member of the committee, Sen. Catherine Cortez Masto (D-NV) – has made diversity part of her mandate since coming to office in 2017 as the first Latina ever to serve in the U.S. Senate.

“We should be mandating diversity,” Cortez Masto told Politico about diversity among Senate staffers. “Those individuals can go on to run for statewide office or a federal office at some point in time.”

An aide to Cortez Masto noted a challenging environment for diversity on all fronts, including just getting the full picture of the problem. “Just disclosure, just flat out disclosure [of names] has been a fight and been partisan,” the aide said. “It’s something we struggle with all the time.”

Democratic presidential candidate Joe Biden acknowledged the problem this week, saying that the leadership of Washington’s many federal agencies “do not reflect the diversity of our country.” In his newly released platform addressing economic equity, Biden specifically committed to promoting “diverse leadership in the financial regulatory agencies.” Brummer says this a significant new statement for a campaign to make that “this just isn’t right.”