More than 50 years have passed since the Civil Rights Act of 1964 and the Voting Rights Act of 1965. As national leaders for the Black business and faith-based movements, we believe that the promise and the potential of the civil rights movement has not yet been achieved within the financial services industry. Blacks and most other minorities continue to receive surprisingly few small business loans, high-level employment promotions and business contract opportunities.
In light of this grim progress,Congresswoman Maxine Waters secured in the 2010 Dodd-Frank Act provisions that would require the collection of data by race and gender on three matters of great importance to our nation's 45 million blacks. Federal regulators were meant to collect detailed data on small-business loan recipients, business contracts with minority- and women-owned businesses, and minorities' employment opportunities at financial firms.
But a unique combination of bureaucracy and lack of federal regulatory leadership, rather than any strong opposition from the banking industry, has delayed the collection of small-business lending data. This inertia means that it is equally unlikely we will be able to collect any meaningful data on employment or contracts over the next decade.
Compounding the problem is the Small Business Administration's failure to improve lending to minorities, despite the efforts of the agency's new head Maria Contreras-Sweet. In 2014, only 2% of the dollar amount of SBA-guaranteed loans were awarded to black-owned business, according to the information we received after filing a Freedom of Information Act request.
Moreover, according to the analysis of the National Diversity Coalition's banking expert George McDaniel, non-SBA business lending to blacks could make up as little as 00.5% of the total dollar amount of business loans.
The financial industry's low level of black engagement may be attributed in part to the fact that the number of black-owned banks has plummeted over the past 30 years from 55 to just 20 today, according to the Federal Deposit Insurance Corp. Even more disturbing, all of the current black-owned banks are below $1 billion in assets, which limits their ability to effectively serve areas with larger black communities.
In recent months, President Barack Obama and Attorney General Loretta Lynch have put a spotlight on the civil rights issues relating to the plight of the black community as well as other minority populations. This includes a focus on continuing police brutality, disproportionate black incarceration rates, new violations of the Voting Rights Act and disproportionate exclusion of blacks from juries. It is important to draw attention to these issues, but doing so is not necessarily helpful unless the people in power are prepared to take action to remedy the situation — in particular by providing the employment opportunities that could support progress.
In order to increase these opportunities, the government should release on an annual basis the EEO-1 reports that every financial institution provides to the Secretary of Labor on the number and percentage of minorities and women in each employment category. Unfortunately, Secretary of Labor Thomas Perez has so far refused to release this data, despite our many requests.
The information would also shed light on the employment records of major bank competitors. Nonbank companies are not yet covered by the Dodd Frank Act but could be pressured to release similar information. Google, for example, has disclosed that its employment of blacks is far lower than virtually any bank at just 2% in 2014. Unlike the vast majority of systemically important banks, Google has yet to appoint any blacks to their board of directors.
There are other ways that the Obama administration could intervene without waiting for congressional approval. The president and attorney general can at any time request that each government department release in detail all federal contracts by race, ethnicity and gender. This would set an example for the financial industry, which has been reluctant to release specific information by race or gender relating to its contractors. This goes against the intent of section 342 of the Dodd-Frank Act, which explicitly states that its goal is to ensure "fair inclusion of women and minorities in the workforce of the contractor."
The government's failure to require full racial transparency from the banking industry as well as other business sectors has far-reaching consequences. A lack of complete and accurate data has allowed the racial wealth gap to continue expanding even as growing numbers of blacks and Latinos graduate from college. Despite major increases in minority college enrollment, the wealth gap has continued to expand. Data from the nonprofit Demos shows that that black and Latino families, respectively, hold 6% and 7% of the wealth of a typical white household.
Improved transparency on the lack of financial opportunities for minorities could address the situation. For example, this data would enable the African Methodist Episcopal churches and the black chambers of commerce to develop a rating system that would encourage the financial industry to compete for the best grades, thereby spurring greater opportunities for minorities.
We call on the president, attorney general and Federal Reserve chair to immediately seek greater transparency as to the gaps in employment, small business lending, and contract opportunities in order to help minimize the growing income and racial wealth gaps in America.
Mark Whitlock is the senior minister of Christ Our Redeemer AME Church in Irvine, Calif., chair of the National Diversity Coalition and a former Wells Fargo staffer. Aubry Stone is the president and CEO of the California Black Chamber of Commerce and the chair of the U.S. Black Chambers of Commerce.