by Thomas Sugrue
A few things have caught my eye this morning: Over at TAP, Devin Fergus defends an obscure clause in the recently-passed financial reform bill that creates Offices of Minority and Women Inclusion (OMWI) in federal financial regulatory agencies. Wall Street Journal editors hyperbolically find it "the most brazen attempt to hijack central bank policy since its founding nearly a century ago."
If only. But I also don't buy Fergus's argument that law firms run by minorities and women will necessarily be more sensitive to predatory lending and its impact on minority communities. The OMWI will help minority-run firms win government contracts. Yes, more diversity. And yes, the financial crisis has disproportionately affected people of color.
In 2006, the last boom year, more than half of subprime loans went to African Americans, who comprise only 13 percent of the population. And a recent study of data from the Home Mortgage Disclosure Act found that 32.1 percent of blacks, but only 10.5 percent of whites got higher-priced mortgages (those with an annual percentage rate three or more points higher than the rate of a Treasury security of the same length.
But will black or Hispanic or women regulators necessarily focus their attention on these issues more than whites? I'm remain to be convinced. After all, Fannie Mae CEO Franklin Raines was African American. And while that made him and his fellow executives really rich, it did not keep FNMA from getting all cozy with Countrywide, one of the real villains in the home mortgage crisis.