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Do Financial Institutions Care About Bigotry?

posted by Adam Levitin

Do financial institutions care about bigotry?  I don't ask that facetiously.  I want to be clear that I am not raising the question of whether financial institutions themselves want to discriminate based on race, gender, national origin, religion, sexual orientation, etc. (or "have a taste for discrimination" in Gary Becker's terminology).  Instead, what I am asking is whether they care about bigotry and discrimination in society writ large?  That is, do financial institutions believe they have some sort of social responsibility?  Do they, as corporate entities believe in diversity and inclusion, and human rights?  Or even if they don't, do they believe that bigotry and discrimination in society are bad for their bottom line?  

Certainly that's what they have told us in the past.  Large banks have repeatedly made statements about how diversity and inclusion help them to be better businesses and to better serve their customers.  Indeed, many large financial institutions have statements of corporate values that typically include things like diversity and inclusion and human rights.  These institutions also sponsor charity events that advocate for these values.  But how much of this is just lip service and token payments to improve community relations?  We're about to find out. The major financial services trade associations just got a letter from the Ranking Democratic Members of the Senate Banking and House Financial Services Committee, as well as from Senator Elizabeth Warren and Rep. Keith Ellison.  The letter outlines concerns about Stephen Bannon's appointment to a senior White House position and asks the trade associations to publicly oppose Bannon's appointment.  Will the trade associations (and the banks that fund them) take a stand against bigotry, even if it costs them political capital with the incoming administration?  If they don't, what sort of message are they sending about their commitment to comply with fair lending laws?  About equal opportunity employment?  About hostile workplace environments?  It'll be interesting to see what happens.  Obviously the trade associations aren't quite the same as their members, and cannot be seen as speaking for any particular member institution, but this is a case in which silence counts as action, and if the trade associations are silent, then it's on the members to speak up if that silence does not represent them. As the letter says, "This moment is a test of the moral leadership of the banking and finance community."  

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