[Congressional Record Volume 157, Number 79 (Friday, June 3, 2011)]
[Extensions of Remarks]
[Page E1043]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                      GOOD INTENTIONS GONE HAYWIRE

                                 ______
                                 

                           HON. JACK KINGSTON

                               of georgia

                    in the house of representatives

                          Friday, June 3, 2011

  Mr. KINGSTON. Mr. Speaker, I would like to submit an article which 
explains some of the problems and unintended consequences of the Dodd-
Frank Wall Street Reform and Consumer Protection Act (P.L. 111-203).

               [From Forbes Magazine, by Mallory Factor]

       The Dodd-Frank Wall Street Reform & Consumer Protection Act 
     is supposed to shield consumers from problems in the 
     financial services sector that many believe led to the 
     financial meltdown. But Section 342 of the act introduces a 
     brash example of social engineering that masquerades as 
     consumer protection and financial reform. This section 
     imposes gender and racial employment quotas on the financial 
     services industry, which accounts for one-tenth of our 
     economy. The quota provisions will affect over 50,000 
     financial services firms and other businesses, and the 
     consequences will be enormous.
       Dodd-Frank requires at least 29 federal bureaus to open 
     Offices of Minority & Women Inclusion, involving ten branches 
     of the Treasury Department, the Federal Reserve and its 12 
     regional banks, the Securities & Exchange Commission and the 
     Federal Deposit Insurance Corp. The new diversity offices 
     will implement rules to ensure ``the fair inclusion and 
     utilization'' of minorities and women in all firms doing 
     business with each agency. The offices will terminate 
     contracts with any service provider that fails to meet these 
     as yet undetermined standards. Just running these offices is 
     estimated to cost over $58 million annually, says David 
     Patten in a recent story on Newsmax.com.
       These new offices will also assess the ``diversity policies 
     and practices'' at all entities that fall under their 
     regulatory eye, including banks, broker-dealers, registered 
     investment advisors and now hedge funds. Along with more than 
     40,000 financial services firms, another 10,000-plus 
     businesses, including accounting and law firms that do 
     business with these government offices, will be subject to 
     this new diversity oversight of their hiring.
       What does this mean for the financial services sector? 
     Assuming each firm hires at least one new worker to satisfy 
     the new law, this provision could raise costs $4 billion or 
     more annually, depending how far forthcoming regulations will 
     extend. Firms doing business with the government will face 
     additional expenses because they will now have to monitor the 
     hiring practices of their subcontractors as well. In addition 
     to these reporting burdens, firms must prove to their 
     regulators and to government offices with which they do 
     business that they are meeting or working toward racial and 
     gender hiring guidelines. In many cases this will require 
     additional hiring beyond the needs of the business.
       Forcing America's private firms to hire on the basis of 
     racial and gender ``guidelines,'' rather than solely on need 
     and qualifications, is inefficient and makes our businesses 
     less competitive than their global counterparts. Moreover, 
     four out of the eight members of the U.S. Commission on Civil 
     Rights wrote a letter to Congress stating that this section 
     of the act would likely ``promote discrimination,'' and urged 
     its removal from the bill.
       There is a better, more cost-efficient solution: Let 
     private companies come up with their own approaches. 
     Deloitte's 19-year-old Women's Initiative, for example, has 
     boosted the percentage of female partners, principals and 
     directors from 7% in 1994 to 23% in 2010. And minorities and 
     females currently make up 60% of kpmg's workforce.
       While the idea of encouraging greater participation of 
     minorities and women in the financial services sector is 
     admirable, the government is overreaching when it mandates 
     gender and racial quotas for private businesses. An 
     affirmative action provision has no place in a financial 
     services reform bill and puts additional government burdens 
     and costs on an already struggling sector of our economy, 
     putting our recovery at risk.
       The megabills that fly through Congress provide legislators 
     the opportunity to insert politically motivated provisions--
     under the radar. As Rahm Emanuel famously said after 
     President Obama had been elected, ``Never allow a crisis to 
     go to waste.'' The financial crisis has given the President 
     and Congress cover to impose their political agenda on 
     private business activity. Watch out: Your industry could be 
     next.

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