The Right Sees Quotas Where They Don't Exist

Sherrilyn A. Ifill
Win McNamee/Getty Images

There are many legitimate reasons to critique the recently enacted Dodd-Frank financial-services reform bill. Most of its shortcomings fall into the "it doesn't go far enough" category. And in one instance — the unfortunate decision by Congress to exempt automobile dealers from the bill's new oversight requirements — it doesn't go at all.

The enactment of what seem like basic requirements for sound, ethical banking and lending does feel — as one financial expert has suggested — like opening a package on Christmas morning and finding a "box of socks and underwear." They are "necessities," but there's little to excite the senses. Nevertheless, the Dodd-Frank bill is a much-needed response to the practices that led to the catastrophic collapse of the economy. And so it seems bizarre, to say the least, that Republicans have opposed the bill en masse, and even more strange that the critique gaining the most traction has focused on race.


By now we know that nothing quite stirs the Republican base like the threat of affirmative action. And so a whole cottage industry of critique of the Dodd-Frank bill has developed, focusing on the bill's so-called racial-quota provisions. How did a sweeping oversight of Wall Street banks and financial-services companies come to be regarded as a "quota" bill? Let's go to the text.

As is by now well-known, the Dodd-Frank bill (pdf) is more than 2,000 pages long and has more than 1,000 provisions. Most of these are devoted to rules requiring lenders to tighten lending practices to avoid the kind of subprime predatory lending that occurred in the run-up to the collapse, closing the loopholes on the creation of exotic and perilous financial instruments, and of course the establishment of a Consumer Protection Agency that will set rules designed to protect consumers in payday-loan and other consumer transactions. It's hard for the right to critique these new provisions, given the lax regulatory framework that allowed the proliferation of Las Vegas-style gambling schemes that wrecked the U.S. economy in 2008. Thus the right vaguely criticizes these provisions as "intrusive" and "far-reaching." Like that's a bad thing.

But one provision of the act — Section 342 — has provided more traditionally fertile ground for Republican critique. And of course, Section 342 is one of the most admirable provisions of the bill. It requires the creation of an Office of Minority and Women Inclusion (OMWI) at each of the Federal Reserve Banks, each of the departmental offices of the Department of the Treasury, the Federal Housing Finance Agency and other offices charged with implementing the provisions of the act.

OMWI offices are charged with creating procedures and standards to ensure "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." What this means is that agencies are expected to give meaningful consideration to the promotion of diversity in their work forces, the contracts they award, their procurement practices and all of their programs.


In too many instances, the result has been an office that provides cover for an entity seeking to certify its commitment to promoting diversity. But Section 342 goes further. It requires the agencies to submit to Congress annually a report that identifies the actions the agency has taken to promote diversity. Moreover, Section 342 identifies specific actions that agencies should take to promote diversity in their work forces, including "recruiting at historically black colleges and universities, Hispanic-serving institutions [and] women's colleges," "partnering with organizations that … place talented young minorities and women in industry internships" and "partnering with inner-city high schools, girls' high schools … to establish or enhance financial literacy programs and provide mentoring." It's this kind of specificity that makes Section 342 intriguing.

What has so many on the right up in arms is the requirement that agencies covered by the act's provisions show "good faith effort" to ensure the "fair inclusion of minorities and women." Yes, that's right — good faith and fairness. In the world of those who have made a career out of equating affirmative action and diversity with mandatory quotas, fairness and inclusion mean quotas. Some have even gone so far as to suggest that such language may be unconstitutional. In the new world of hysterical right-wing fantasies, "good faith effort" and "fair inclusion" are constitutionally impermissible.


In fact, what Section 342 does is unusual and important. It does not require quotas of any kind. What it does do is what too few diversity initiatives do: It spells out in clear language what "good faith" diversity efforts look like, without requiring any agency to hire a specific number of minorities or women, or contract with minority- or women-owned businesses. The provisions speak only to meaningful outreach.

The directors of OMWI may make recommendations to the head of an agency to terminate the contracts of agency contractors or subcontractors who fail to engage in such outreach in "good faith." Contrary to racial "takeover" scenarios being advanced in some commentary, penalties will not issue from the failure to hire minority- or women-owned subcontractors or individuals. A termination recommendation may be made only in response to a contractor's failure to comply in good faith with the outreach provisions designed to identify qualified minority- and women-owned businesses and individuals. And it is only a recommendation.


Section 342 doesn't require racial quotas, and those on the right know it. In many ways it is a garden-variety diversity initiative, but one that uniquely removes the wiggle room exercised by too many contractors and government agencies that in the past have paid only lip service to meaningful diversity efforts.

The Dodd-Frank bill may be an imperfect piece of legislation, but Section 342 stands out as a laudable effort.


Sherrilyn A. Ifill is a professor of law at the University of Maryland and a regular contributor to The Root.

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