House lawmakers on Tuesday debated legislation that would require banks to conduct racial equity audits every two years in an effort to promote diversity and equity.
At a hearing hosted by the House Financial Services Subcommittee on Diversity and Inclusion, members discussed the Diversity and Inclusion Data Accountability and Transparency Act, sponsored by Congressional Black Caucus chair Rep. Joyce BeattyJoyce Birdson BeattyBlack Caucus meets with White House over treatment of Haitian migrants White House faces increased cries from allies on Haitian migrants Harris, CBC put weight behind activist-led National Black Voter Day MORE (D-Ohio).
The legislation would require companies to have biennial independent audits of their policies and practices pertaining to civil rights, equity, diversity and inclusion.
Beatty said it's time for financial firms to do more to advance racial equity following the death of George Floyd in May 2020.
“While pledges and platitudes that affirm values are important, we stand at a crossroad that demands tangible and transparent action,” she said, citing a report by the Creative Investment Research that showed U.S. corporations pledged $50 billion, including $33 billion from financial service companies in the days after Floyd’s murder, to combat racial inequity. That figure is now up to $67 billion, with pledges from 261 corporations.
Beatty’s office said they were not aware of any plans for the committee to mark up the lawmaker’s legislation, which was introduced in April and has just two cosponsors.
The hearing also included discussion of draft legislation that would build on Beatty’s bill by subjecting firms to fines of $20,000 a day for not conducting a racial equity audit. It also would investigate any ties a firm may have to the institution slavery and outline steps to reconcile the profits.
Further, the draft legislation would authorize $3 billion to create an Office of Reparations Program at the Treasury Department, which would provide grants for homeownership, startup capital and funded savings for Black communities.
Donald Cravins Jr., executive vice president and chief operating officer at the National Urban League, urged U.S. companies to take action.
“Our message to our corporate clients is simple: If you want real change, if you desire a real commitment to equity, then you must be transparent and be willing to set an example. Otherwise, you are only partially committed to equity, you’re window dressing,” he said at Tuesday’s hearing.
Darrick Hamilton, a professor of economic and urban policy at The New School, said he was in support of racial equality audits.
“If we value something then we should measure it,” he said at the hearing titled “The Legacy of George Floyd: An Examination of Financial Services Industry Commitments to Economic and Racial Justice.”
The murder of George Floyd on May 25, 2020, sparked nationwide calls for racial justice and broader structural reforms.
The protests also placed intense pressure on the financial sector. Just five days after Floyd’s death, Connecticut State Treasurer Shawn Wooden wrote an op-ed in the Hartford Courant calling on companies and banks to take a stand against racial injustice.
“It is time for the wealthy and privileged to start pulling the levers of power they hold. Wall Street and corporate America, I’m speaking to you,” Wooden wrote.
Eighteen banks and asset managers later signed onto an initiative called Corporate Call to Action: Coalition for Equity & Opportunity, spearheaded by Wooden and the Ford Foundation. Last month, the coalition outlined its plans to invest in Black communities and homeowners and provide capital to Black-owned businesses. Among the participating banks, JPMorgan Chase & Co. has pledged to invest $30 billion, followed by $1.15 billion from Citigroup Inc. and $1 billion from Bank of America Corp.
But the three banks, along with Goldman Sachs and Wells Fargo, have asked their shareholders to reject a resolution to mandate racial equity audits, arguing they are already doing enough to address the issue.
Citigroup released a proxy statement against the resolution, saying, “While we disagree with the overall approach in this proposal, we are completely aligned with its stated goal of addressing racial inequity in the financial sector.”
Bank of America also opposed a resolution to conduct an audit of the bank’s racial practices, which mentioned the bank’s low record of approving home loans to minority groups.
Beatty on Tuesday said the banks need to make good on their promises.
“We want to hear today that you are going to be a part of the trajectory of future investment in the black and rural communities,” she said.