It is a great pleasure to be here with you, the great public servants of the Office of the Comptroller of the Currency. It is also particularly humbling for a securities law professor. My work is about markets, and market integrity. I spend my time researching and studying technology and innovation, international economic and regulatory coordination, and how to leverage financial markets for the underserved. I put in time as an academic and in the private sector thinking about how to build more trustworthy and credible businesses and regulatory institutions. But it is the people of the OCC—in all your colors, genders, religions, and hailing from around this vast country—who walk through the doors of this agency to help keep the economy from quite literally falling apart.
I, along with the rest of the country, owe you a massive debt of gratitude.
Black History Month is one of our most sacred times of year. It is an occasion where we think back and give thanks to our mothers, fathers, sisters and brothers, who have shaped the very history of this great nation and helped to birth our unique American story. It is a celebration of a great people, and of the great American family.
Yet it is a peculiar, even ironic celebration. It is an exercise in making the unseen, seen. Indeed, every one of you here today knows that we stand on the shoulders of giants. But we know that the names of so many of our giants didn’t make it into the history books. Black history’s giants aren’t just the Douglasses, the Dubois’s, the Oprahs, the Sojourners and the Adam Clayton Powells. They are the cooks and cleaners, bellhops and janitors, farmhands and bank tellers, who marched, agitated, and died so that we can be here today.
Our giants aren’t just the drum majors. They are the people who in their decency have made a difference, and in their numbers or through their individual sacrifice have bent the arc of history towards justice.
As I have mentioned at past Black history celebrations, bank regulation has been critical to Black people in this country since the Panic of 1873, and the failure of the Freedman’s Savings Bank which due to risky investments in railroad companies and real estate wiped out the first generation of wealth created by newly freed African Americans. Since that collapse, which underscored in part a failure of the trustees of the bank to understand the nuances, vulnerability and needs of the communities they served, Black people have sought to gain a footing into a system where they have long been ignored.
It is an aspiration that financial regulators of all colors and backgrounds work to support for all Americans. Yet the best financial regulators take heed of Dr. King and avoid the drum major instinct. They don’t go to work to be in front of cameras, or Congress. They go to work to solve people’s problems, and to keep them safe. It’s why the OCC is so critical to this country. And why you are so critical. As examiners, rule writers, innovation officers and ombudsmen, you enable and make history while preserving and safeguarding the present.
It is a mission that requires the very best of America, and input from all over America—from rural parts of my home state of Arkansas to the urban metropoles of Chicago and New York. It requires the perspective of merchants and academics, technologists and bankers, old and young.
In recent years, I have spent significant time talking about how to ensure that diverse talent is brought to our financial regulatory agencies. As I noted several years ago, historically less than 2% of appointed financial regulators were Black. Today, appointments to financial regulatory agencies are much more diverse than in the past. And we can celebrate new history makers, from the first Black woman to sit on the Board of Governors of the Federal Reserve to the first Asian American leader of the OCC.
But there is still a long way to go. Numbers can be deceptive. With the exception of the FHFA, we have no Black leadership of federal agencies, putting this administration, for all its success, on par with the last in terms of this important metric. That glass ceiling is frustratingly hard to break. The last mile, particularly difficult to run.
For all our great progress as a country, the challenges today are no different than they have been since Abraham Lincoln, the Railsplitter, read a draft of the preliminary Emancipation Proclamation to his Secretary of State William Seward, who in response warned of possible anarchy in the States. There are, even today, entrenched interests in pockets of both of our great political parties that view the participation of underrepresented minorities in financial regulation, and the elevation of their perspective, as destabilizing, and more importantly, a threat to their own hold on power.
The stakes are of course high. Financial regulators write the rules of capitalism. And as in many aspects of life, Blacks and Latinos are not part of the traditional inner circles of financial or regulatory policy. We are rarely, if ever, the go-to counselors Progressives or Conservatives call on when thinking about monetary policy or how to supervise broker dealers or exchanges. We are not always “in the room” when policy happens. So we do not have the scars from financial regulatory battles fought in Congressional trenches, which makes us outsiders to traditional ideological combatants on both sides of the aisle.
Our scars come from different battle fields. From our wars against wealth inequality. From firefights with fraud. From the professional and personal imbroglios of being ignored by those who claim to work in our interests. And as people who hail from communities for whom the legacy financial system has too often failed, we fight for more than just twitter followers or our regulatory mandate. We fight for loved ones, families and neighborhoods. We tend to be dissatisfied with the status quo, not because it doesn’t work, but because it tends to not work for our communities, or for so many of our young people who want to build businesses, wealth and a legacy. We know that in order to improve the system there must be a space for new ideas, and new voices. And that is threatening.
But my goal today is, quite ironically, not to revisit the past. Instead, I want to talk to you about what Black history will look like in the future. Ten years from now, twenty years from now, what will we celebrating? And I’d like to offer to you the perspective that that answer depends on asking just what you are willing to fight for. And whether you’ll even have the tools at your disposal to answer in a way that speaks to our collective American values.
You see, being able to answer a question depends in part on having the information to ask it, and the data to build the right answers. And those resources, that epistemic capital, is in short supply.
Increasingly, government has a propensity to turn to the Academy when trying to solve hard questions, particularly when it comes to financial regulation. And personally, I have found my conversations with regulators—from agency heads to first year rookies and law school clerks, to be among the most personally rewarding of my career. But as have others before me, it is important to note that the Academy has its own blind spots, especially when it comes to the issues that bring us here today.
Most consumers of economic data are now aware of the longstanding lack of diversity in the economics profession. A mere 21 percent of economics faculty in academia are minorities. The most recent data, from 2017, show that only 3.2% of doctoral degrees in economics are awarded to Black people each year. And it shows up in our agencies, with only one Black economist being reported among the 945-person staff of doctorate-level economists in 2021.
My professional home, the legal academy, is no different when it comes to corporate law. In 2021, I undertook a survey of some of the top faculties of law and discovered disturbing numbers: Of the 71 corporate, securities law, bankruptcy, and tax law professors teaching at US News and World Report’s “Top 5” law schools, there were no Black, Latino or Native American professors—totals that were worse, not better, than the numbers of underrepresented minorities at the top economics departments. Today in 2023, the numbers have only gotten worse as those same schools—Harvard, Yale, Chicago, Columbia and Stanford—while outstanding schools, have made more hires, none underrepresented minorities.
Underrepresented Minority Business Law Faculty in UNWR’s “Top 5” Schools
It’s not my intention to pick on this handful of schools, and it’s important to underscore that the challenge is endemic to the business law academy. How much so? Consider the European Corporate Governance Institute, one of the world’s premier forums for U.S., Asian and European corporate governance researchers. ECGI is designed, in its own words, “to undertake, commission and disseminate leading research on corporate governance.” But of their roster of over 849 members, not one is Black. Indeed, of their most recent 56 appointments “from around the world” no person from Africa or Latin America was selected. All in an organization committed to promoting research concerning “responsible capitalism” “corporate purpose,” and “responsible investment” to policymakers.
The absence of diverse inputs creates challenges when it comes to asking the right questions and getting informed answers and insights relevant to some of our most perplexing policy questions. According to a 2019 report by the American Economic Association, less than half of 1% of all top economics papers across a 30-year period explicitly address race/ethnicity. And while I haven’t conducted an extensive survey, my sense is that we in the business law academy
haven’t done much better. The rough data I collected two years ago from the Top 5 suggest that of the 2392 articles published by the tax, antitrust, corporations, securities law and bankruptcy faculty by September 2021, only 95, or 4% even touched on race. And if one was to remove just one person, Ian Ayres, Yale’s extraordinary civil rights minded lawyer and economist, the number drops to 66, or only 2.8%.
Normally, I’d stop here, but Dr. King taught us in 1968, just a stone’s throw from this building here in Washington, that there “comes a time when one must take a position that is neither safe, nor politic, nor popular, but he must take it because conscience tells him it is right.” If Black History month is not that time, I don’t know when is.
Like many of you I would hope that our great and brilliant editorialists in the financial press might raise their voice. They, even more than academics or even reporters, have enormous liberty to piece together ideas and arguments that can become the building blocks for policy. They help write the first draft of history, and legislation. They are brave women and men whom I look up to and hope to emulate.
But the hands that write those drafts come from too few communities of our great country. And stories like these are told far too few times, particularly in our newspapers’ great editorial rooms. Indeed, as between the New York Times, Washington Post and Wall Street Journal, along with a startling paucity of women, there is no Black or Latino economics or financial regulatory opinion writer. There is no Latino Paul Krugman. There is no Black Matt Levine.
|Bloomberg||NY Times||Wall Street Journal||Washington Post|
|Not publicly available||18 opinion columnists, 4 with economic interests or portfolio (Klein, Krugman, Friedman, Douthat, Majoo); 0 Black, Latino or Native American financial columnists|| 10 opinion columnists, 5 with economic interests or portfolio (Dhume, Freeman, Jenkins, Kessler, O’Grady); 0 Black, Latino or Native American financial columnists
|40 Contributing Columnists
2 with economic policy interests or portfolio (Summers, Zakaria); 0 Black, Latino or Native American regulatory columnists; 1 Black personal finance columnist (Singletary)
The cramped human experience among our financial thought leaders and economic opinion makers constrains our marketplace of ideas and robs history makers in government, whatever their background or ideology, of the epistemic capital—of the full range of ideas and perspectives—needed for them to do their job well. It makes it much harder to get the information required to make smart decisions. And the information that you receive as decisionmakers may not be as informed, well rounded, and as smart as it should be. It also creates negative feedback loops where your actions to correct longstanding problems, or to pursue new solutions or strategies, can be easily interpreted in elite channels in ways that are skewed, and misconstrued, or not subject to the full panoply of informed coverage.
So what then can we do? What can you, the financial regulator, do, regardless of your personal story or background, and whatever your politics?
First, it’s important to be aware of the limitations of perspective had by even some of the most cherished and renown experts. We are all fallible. I know I certainly am. And we all come to issues from the limitations of our own human perspective, intelligence, and experience. I would suggest that you ask yourself when reading articles, reports and opinion pages, what questions are being asked. Are there better questions concerning a particular issue that could have been asked? Why is that person devoting their time to that particular question as opposed to another? It helps to at least familiarize yourself with not just what you’re reading, but also with the author.
Next, ask yourself how the question is being answered. Is the purpose of the article to bring in more data or information about a topic, or to start with an opinion or conclusion and justify it? Are individuals taking multiple theories, and testing them, to see how they would apply to the question being asked? What is the reasoning behind the conclusions reached by the author? Are they taking the time to evaluate the limitations or tradeoffs of their methodology, or for that matter the conclusions they’re reaching? To the extent they are not, that’s a red flag. In financial regulation, as you are well aware, there are rarely absolutes. Policies that advance market integrity might not necessarily be inclusive, and vice versa. Regulatory postures aimed at preserving wealth might work well if you’re old and rich, maybe not so much for the young and historically marginalized desperate to build wealth.
I think everyone—whatever their age, race, class, sexual orientation—should draw on their own experience, carefully, knowingly and with intentionality, to test what you read to ensure informed and smart policymaking. And to do so where it matters. In those rooms, you must become sources of information yourself. Speak up when you’re in those rooms. And when you’re not, demand that you are. When you see critical perspectives missing, open that door for others.
Finally, public service is just that, service, and it demands sacrifices of you few fully appreciate. And there many who cannot serve, or teach, or become journalists because of student loans, family obligations, and illness—or because they were not given the opportunity to do so due to the barriers with which we are all too familiar. And so they have built honorable careers and expertise in our private sector, which in some ways has become more hospitable to diverse talent, and more representative of America, than the public sector. Mine these resources. They will add nuance and perspective to your vital work.
The Black History of the future will be more than stories of valor from our ancestors breaking the chains of bondage, and marching on lunch counters. It will include how fearless Black economists attacked longstanding misunderstandings embedded in economic theory concerning employment and growth; how a new generation of activists from the private and public sector demanded that policymakers take seriously the aspirations of a people to build a public safety net and private businesses and wealth; how professors expanded the vocabulary and methodology of law and economics, and social justice, to consider how marginalized communities not only survive, but also thrive in digital economies. And how banking regulators design and redefine banking in ways that speak to long overlooked needs, and new opportunities, touching all of America’s great communities.
Making this history will require a fearlessness to experiment, to test new ideas, and to understand that the costs of inaction can weigh on the historical record as much as those of ill-conceived action.
The great historian Carter G. Woodson perhaps put it best:
“If you can control a man’s thinking you do not have to worry about his action. When you determine what a man shall think you do not have to concern yourself about what he will do. If you make a man feel that he is inferior, you do not have to compel him to accept an inferior status, for he will seek it himself. If you make a man think that he is justly an outcast, you do not have to order him to the back door. He will go without being told; and if there is no back door, his very nature will demand one.”
Black history, like American history, is a history of independent thinkers. Of new ideas. Of fearless protectors and agitators for freedom. That is our creed. That is our purpose.
I look forward to recounting new chapters of Black history, of our shared American history, in the years ahead. And watching you, and celebrating you, as you play your part.
Thank you so much for the invitation to speak to you today. I look forward to your questions.