Financial regulatory agencies are of paramount importance to America’s capitalist structure. They are tasked with determining how trillions of dollars will be regulated and more importantly, how capital will be allocated. Financial regulators are also responsible for deciding where taxpayer-backed financial assistance flows in periods of economic distress. These determinations are implemented through legislation such as the Equal Credit Opportunity Act, Community Reinvestment Act, and the Fair Housing Act.
Dr. Chris Brummer of Georgetown Law has been a vocal critic of the absence of African American financial regulators in government. He believes that this serious flaw in the system, if left unaddressed, will continue to affect the financial outcomes of millions of Americans. A new paradigm for leadership is thus required.
Dr. Brummer is a professor, lecturer, author, and founder of Washington DC’s Fintech Week. He teaches at Georgetown University Law Center, where he serves as the Faculty Director of the Institute of International Economic Law. He has spent over a decade researching the development of financial and regulatory policy and the impact of technology on how authorities operationalize supervision and regulatory oversight. He lives in the District of Columbia with his wife Rachel Loko.
In addition to his service to academia, Dr. Brummer has served also a member of the Commodity Futures Trading Commission’s Subcommittee on Virtual Currencies. He also volunteered as a member of the Consultative Working Group for the European Securities and Markets Authority’s Financial Innovation Standing Committee. Dr. Brummer was also a member of the National Adjudicatory Council of FINRA, where he received accolades for his work on advancing investor protection.
Recently, Dr. Brummer presented a working paper at an event sponsored by Georgetown Law’s Institute of International Economic Law and the Brookings Institution. The study provided a historical overview of African American financial regulators since the New Deal. The evidence was damning. In a country where 13.4% of the population is African American, only 10 out of 327 people appointed to regulatory positions were Black. Furthermore, not a single Black person has been appointed as Commissioner at the Securities and Exchange Commission (SEC) or the Commodity Futures Trading Commission (CFTC). There has also never been a Black Chairman of the Federal Deposit Insurance Corporation (FDIC), SEC, or the CFTC. Even current staff members of political appointees to these posts are rarely found to be people of color.
The malaise is not confined to the regulatory sector. In the entire judicial arena, there are currently only 140 serving African American judges. In the corporate sector, only 11% of new Directors on Boards of S&P 500 companies have been African American. And only 3% of financial regulators have been Black.
Democrats and Republicans have both failed to nominate African Americans to senior regulatory positions. According to his data, where Senate leaders enjoyed the right to suggest a name to the President, it only did so once for an African American. This bipartisan monopoly has led to appointments being dependent on action by the executive, which speaks of a systemic bias against the African American community. The lack of transparency in the decision-making process, from agency nominations to staffing decisions by newly confirmed regulators has also fuelled this systemic issue. Little to no research has been conducted on the absence of Black regulators and other forms of policy leadership. This entirely undocumented issue is at the forefront of Dr. Brummer’s study. It is the first quantitative and statistical inquiry of its kind, which provides cross-agency insights on the full scope of the challenge of diversity among regulatory agencies.
These numbers reveal a serious problem to Dr. Brummer. If financial regulators are responsible for deciding where capital is allocated, the underrepresentation of Black individuals within these posts will ultimately lead to a widening of the racial wealth and income inequality gaps. The long-term consequences of a lack of representation in the highest offices of the land can only mean one thing – fewer opportunities for African Americans.
Recently, the Biden administration turned its eyes towards the higher education sector for nominees of regulatory positions. For Dr. Brummer, this presented another opportunity to examine how talent pools impact nominations. He gathered data on corporate law professors at 5 top law schools – Columbia, Harvard, Yale, Stanford, and the University of Chicago. Once again, his findings were alarming – 67 of 71 corporate law professors are white, while 62 of 71 are men. The stark disparity in the representation of Black and female faculty members is a sign that Black communities will continue to be at an economic disadvantage. In an interview with DealBook, Dr. Brummer said, “If these numbers don’t improve, economic policy will fail the underrepresented because policymakers lack important perspectives.”
D.C. Fintech Week also highlighted the importance of financial inclusion in its 5th Annual event. Founded by Dr. Chris Brummer, it’s a forum where the brightest minds gather for discussions spanning the fintech ecosystem. The dialogues help foster a spirit of collaboration between different regulatory, private, and academic institutions that is otherwise difficult to attain. A large portion of the event was dedicated to discussions on inclusion. Many key speakers offered their thoughts on how the union of finance and technology can lead to a brighter future and a more inclusive financial economy.
To be a part of more interesting conversations like this you can join in on ‘Fintech Beat Podcast’ – where Dr. Chris Brummer brings together brilliant minds every Tuesday to tackle the challenges erupting at the intersection of finance, tech, and policy.