Democratic Rep. Ayanna Pressley of Massachusetts asked Secretary of the Treasury Janet Yellen if “racism” posed a threat to the American financial system during a Tuesday hearing.
Yellen testified before the House Financial Services Committee in a hearing to review the annual report of the Financial Stability Oversight Council. Pressley noted that financial services companies had failed to make “institutional policy changes.”
“Secretary Yellen, when financial institutions perpetuate and benefit from racism, discrimination, and the exploitation of black communities, they exacerbate systemic risk in our financial system,” Pressley said. “The FSOC analytic framework for financial stability risks published last November pointed out that a risk to low income minority and underserved communities can become serious enough to pose a threat to financial stability. For example, 2007 to 2009 financial crisis, we saw how decades of redlining made black communities more vulnerable targets for subprime mortgages. In light of this — and I hope this is a simple yes or no answer — Secretary Yellen, do you agree that racism and racial inequity is a threat to the financial system?”
“Well, it could be and it is one of the factors that Dodd-Frank told us to take into account in considering designations,” Yellen responded.
Pressley blasted the drug store chain Walgreens in a Jan. 30 speech on the House floor over the closure of a Roxbury, Massachusetts, store, claiming the chain’s decision was “life-threatening” based on racial discrimination and economic grounds.
“I’ll take that as a yes, very good. And to follow up on that, what steps is FSOC taking to monitor and mitigate the threat that racist practices and policies perpetuated by banks can pose to the financial system?” Pressley asked.
“Well, individual supervisors of banks are responsible for ensuring for example, that CRA requirements are met by banks and the CFPB has authority to make sure that our fair lending and other laws are obeyed,” Yellen responded.
Yellen criticized the Supreme Court’s rulings in Students for Fair Admission v. University of North Carolina and Students for Fair Admission v. Harvard, which struck down the use of race-based admissions policies in a July speech promoting “equity as a priority” for economic policy.
“For generations, there has been the intentional refusal of mortgages to black residents, the systemic denial of loans to black entrepreneurs, and the wholesale redlining of black neighborhoods,” Pressley told Yellen prior to asking the question. “I truly believe that the banking industry has long contributed to the problem and must now work toward the solution… Unfortunately, there has been little to no progress in the category of institutional policy changes.”
“This category is focused on the internal policies of a bank, not just the external investments. It includes things like eliminating overdraft fees, expanding language access, opening physical branches in black communities and promoting black people to the highest leadership levels of the bank,” Pressley continued. “Our final analysis is that steps have been taken, but not enough. We need long-term change not just one-time investments to root out racial injustice in the banking industry.”
Pressley then asked Republican Rep. Patrick McHenry of North Carolina, the chairman of the House Financial Services Committee, to bring the CEOs of major banks in to be questioned.
All content created by the Daily Caller News Foundation, an independent and nonpartisan newswire service, is available without charge to any legitimate news publisher that can provide a large audience. All republished articles must include our logo, our reporter’s byline and their DCNF affiliation. For any questions about our guidelines or partnering with us, please contact [email protected].
Republished with permission from Daily Caller News Foundation