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MINORITIES AND WOMEN IN 

FINANCIAL REGULATORY REFORM: 

THE NEED FOR INCREASING 

PARTICIPATION AND OPPORTUNITIES 

FOR QUALIFIED PERSONS AND BUSINESSES 

JOINT HEARING 

BEFORE THE

SUBCOMMITTEE ON 

OVERSIGHT AND 

INVESTIGATIONS 

AND THE

SUBCOMMITTEE ON 

HOUSING AND 

COMMUNITY OPPORTUNITY 

OF THE

COMMITTEE ON FINANCIAL SERVICES 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED ELEVENTH CONGRESS 

SECOND SESSION 

MAY 12, 2010 

Printed for the use of the Committee on Financial Services 

Serial No. 111–135 

( 

(II) 

HOUSE COMMITTEE ON FINANCIAL SERVICES 

BARNEY FRANK, Massachusetts, Chairman 

PAUL E. KANJORSKI, Pennsylvania 

MAXINE WATERS, California 

CAROLYN B. MALONEY, New York 

LUIS V. GUTIERREZ, Illinois 

NYDIA M. VELA ́ ZQUEZ, New York 

MELVIN L. WATT, North Carolina 

GARY L. ACKERMAN, New York 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

DENNIS MOORE, Kansas 

MICHAEL E. CAPUANO, Massachusetts 

RUBE ́ N HINOJOSA, Texas 

WM. LACY CLAY, Missouri 

CAROLYN MCCARTHY, New York 

JOE BACA, California 

STEPHEN F. LYNCH, Massachusetts 

BRAD MILLER, North Carolina 

DAVID SCOTT, Georgia 

AL GREEN, Texas 

EMANUEL CLEAVER, Missouri 

MELISSA L. BEAN, Illinois 

GWEN MOORE, Wisconsin 

PAUL W. HODES, New Hampshire 

KEITH ELLISON, Minnesota 

RON KLEIN, Florida 

CHARLES A. WILSON, Ohio 

ED PERLMUTTER, Colorado 

JOE DONNELLY, Indiana 

BILL FOSTER, Illinois 

ANDRE ́ CARSON, Indiana 

JACKIE SPEIER, California 

TRAVIS CHILDERS, Mississippi 

WALT MINNICK, Idaho 

JOHN ADLER, New Jersey 

MARY JO KILROY, Ohio 

STEVE DRIEHAUS, Ohio 

SUZANNE KOSMAS, Florida 

ALAN GRAYSON, Florida 

JIM HIMES, Connecticut 

GARY PETERS, Michigan 

DAN MAFFEI, New York 

SPENCER BACHUS, Alabama 

MICHAEL N. CASTLE, Delaware 

PETER T. KING, New York 

EDWARD R. ROYCE, California 

FRANK D. LUCAS, Oklahoma 

RON PAUL, Texas 

DONALD A. MANZULLO, Illinois 

WALTER B. JONES, JR., North Carolina 

JUDY BIGGERT, Illinois 

GARY G. MILLER, California 

SHELLEY MOORE CAPITO, West Virginia 

JEB HENSARLING, Texas 

SCOTT GARRETT, New Jersey 

J. GRESHAM BARRETT, South Carolina 

JIM GERLACH, Pennsylvania 

RANDY NEUGEBAUER, Texas 

TOM PRICE, Georgia 

PATRICK T. MCHENRY, North Carolina 

JOHN CAMPBELL, California 

ADAM PUTNAM, Florida 

MICHELE BACHMANN, Minnesota 

KENNY MARCHANT, Texas 

THADDEUS G. McCOTTER, Michigan 

KEVIN McCARTHY, California 

BILL POSEY, Florida 

LYNN JENKINS, Kansas 

CHRISTOPHER LEE, New York 

ERIK PAULSEN, Minnesota 

LEONARD LANCE, New Jersey 

JEANNE M. ROSLANOWICK, Staff Director and Chief Counsel 

(III) 

SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

DENNIS MOORE, Kansas, Chairman 

STEPHEN F. LYNCH, Massachusetts 

RON KLEIN, Florida 

JACKIE SPEIER, California 

GWEN MOORE, Wisconsin 

JOHN ADLER, New Jersey 

MARY JO KILROY, Ohio 

STEVE DRIEHAUS, Ohio 

ALAN GRAYSON, Florida 

JUDY BIGGERT, Illinois 

PATRICK T. MCHENRY, North Carolina 

RON PAUL, Texas 

MICHELE BACHMANN, Minnesota 

CHRISTOPHER LEE, New York 

ERIK PAULSEN, Minnesota 

(IV) 

SUBCOMMITTEE ON HOUSING AND COMMUNITY OPPORTUNITY

MAXINE WATERS, California, Chairwoman 

NYDIA M. VELA ́ ZQUEZ, New York 

STEPHEN F. LYNCH, Massachusetts 

EMANUEL CLEAVER, Missouri 

AL GREEN, Texas 

WM. LACY CLAY, Missouri 

KEITH ELLISON, Minnesota 

JOE DONNELLY, Indiana 

MICHAEL E. CAPUANO, Massachusetts 

PAUL E. KANJORSKI, Pennsylvania 

LUIS V. GUTIERREZ, Illinois 

STEVE DRIEHAUS, Ohio 

MARY JO KILROY, Ohio 

JIM HIMES, Connecticut 

DAN MAFFEI, New York 

SHELLEY MOORE CAPITO, West Virginia 

THADDEUS G. McCOTTER, Michigan 

JUDY BIGGERT, Illinois 

GARY G. MILLER, California 

RANDY NEUGEBAUER, Texas 

WALTER B. JONES, JR., North Carolina 

ADAM PUTNAM, Florida 

KENNY MARCHANT, Texas 

LYNN JENKINS, Kansas 

CHRISTOPHER LEE, New York 

(V) 

C O N T E N T S 

Page 

Hearing held on: 

May 12, 2010 ..................................................................................................... 1 

Appendix: 

May 12, 2010 ..................................................................................................... 33 

WITNESSES 

WEDNESDAY, MAY 12, 2010 

Bethel, Pamela J., Esq., Partner, O’Riordan Bethel Law Firm, LLP, on behalf 

of the National Association of Minority- and Women-Owned Law Firms ....... 11 

Boston, Thomas D., Professor of Economics, Georgia Institute of Technology ... 12 

Brown, Orice Williams, Director, Financial Markets and Community Investment, Government Accountability Office (GAO) ............................................... 4 

Chaparro, Alexander, Chairman, National Association of Hispanic Real Estate 

Professionals (NAHREP) ..................................................................................... 14 

Graves, Orim, Executive Director, National Association of Securities Professionals (NASP) ...................................................................................................... 16 

Loumiet, Carlos E., Partner, Hunton & Williams LLP, and Chair, New America Alliance, on behalf of the U.S. Hispanic Chamber of Commerce ............... 18 

Wimbish, Vincent, President and Chief Executive Officer, National Association of Real Estate Brokers (NAREB) ................................................................ 20 

APPENDIX 

Prepared statements: 

Moore, Hon. Dennis .......................................................................................... 34 

Bethel, Pamela J. ............................................................................................. 35 

Boston, Thomas D. ........................................................................................... 40 

Brown, Orice Williams ..................................................................................... 44 

Chaparro, Alexander ........................................................................................ 62 

Graves, Orim ..................................................................................................... 66 

Loumiet, Carlos E. ............................................................................................ 77 

Wimbish, Vincent ............................................................................................. 82 

(1) 

MINORITIES AND WOMEN IN 

FINANCIAL REGULATORY REFORM: 

THE NEED FOR INCREASING 

PARTICIPATION AND OPPORTUNITIES 

FOR QUALIFIED PERSONS AND BUSINESSES 

Wednesday, May 12, 2010 

U.S. HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON OVERSIGHT AND

INVESTIGATIONS, AND

SUBCOMMITTEE ON HOUSING AND

COMMUNITY OPPORTUNITY, COMMITTEE ON FINANCIAL SERVICES, 

Washington, D.C. 

The subcommittees met, pursuant to notice, at 2:48 p.m., in room 

2128, Rayburn House Office Building, Hon. Dennis Moore [chairman of the Subcommittee on Oversight and Investigations] presiding. 

Present from the Subcommittee on Oversight and Investigations: 

Representatives Moore of Kansas, Adler; Biggert and Lee. 

Present from the Subcommittee on Housing and Community Opportunity: Representatives Waters, Cleaver, Green, Clay, Donnelly; 

Capito, Biggert, Jenkins, and Lee. 

Also present: Representatives Watt and Hinojosa. 

Chairman MOORE OF KANSAS. This joint hearing of the Subcommittee on Oversight and Investigations and the Subcommittee 

on Housing and Community Opportunity of the House Financial 

Services Committee will come to order. 

I apologize for the delay in getting started. They called votes and 

we just finished, we are back, and more members, I hope, will be 

filtering in as we go along here. 

Our hearing this afternoon is entitled, ‘‘Minorities and Women in 

Financial Regulatory Reform: The Need for Increasing Participation and Opportunities for Qualified Persons and Businesses.’’ We 

will begin this hearing with members’ opening statements up to 10 

minutes per side, and then we will hear testimony from our witnesses. For each witness panel, members will have up to 5 minutes 

to question our witnesses. 

The Chair advises our witnesses to please keep your opening 

statements to 5 minutes to keep things moving so we can get to 

members’ questions. Also, any unanswered question can always be 

followed up in writing for the record. 

Without objection, all members’ opening statements will be made 

a part of the record. 

2 

I will recognize myself for 2 minutes for an opening statement. 

At some point, I think Chairwoman Maxine Waters will be over 

here as well. Mr. Chris Lee is occupying that chair right now. 

As the Senate continues debating financial regulatory reform and 

key issues such as increasing consumer and investor protections 

and ending ‘‘too-big-to-fail,’’ I am pleased our two subcommittees 

are focused on something today that is too important to ignore, and 

that is the importance of increasing participation and opportunities 

for all qualified persons, including women and minorities. 

I want to commend my colleague, Chairwoman Waters, for asking me to do this joint hearing with her on this important issue. 

She has been a vigorous defender of equal protection of the law and 

ensuring that all Americans, no matter who they are or where they 

are from, have a chance to do great things. 

She always contributes her ideas and works hard on every piece 

of legislation this committee considers to make certain everyone 

has a fair opportunity to participate and no one is shut out of the 

process. 

For today’s hearing, I look forward to hearing from GAO, which 

issued an excellent report a few years ago entitled, ‘‘Financial Services Industry, Overall Trends in Management-Level Diversity and 

Diversity Initiatives, 1993 to 2004.’’ I look forward to hearing 

GAO’s observations and any update they can provide on this important report. 

One concern I have is that women- and minority-owned businesses are adversely impacted by the aftermath of the financial 

panic we saw in 2008 and the ensuing great recession. I am also 

concerned that in the administration of TARP, not enough focus 

was paid to who was getting the money. We need to review this 

and ensure that no one was shut out of the process to become a 

contractor or recipient of TARP funds. 

As the Senate debates financial regulatory reform, we need to 

make sure that diversity is considered and fully incorporated into 

the final bill the President will sign into law. 

Every financial agency, both old and new, must redouble their efforts to pay more attention to these issues and provide everyone 

within their agency a chance to move up and become the next Federal Reserve Chairman or Secretary of the Treasury. We owe that 

to all of our constituents. We owe that to our children and our 

grandchildren. 

At this time, the Chair will recognize Mr. Lee for 1 minute. 

Mr. LEE. Thank you, Mr. Chairman. I am pleased that we are 

having this opportunity to hear from Ms. Williams Brown today 

about this issue. I think it is important that we understand the dynamics of what is going on in the financial market and what impact it is having on the minority community. 

I am looking forward to your testimony. With that, I yield back. 

Chairman MOORE OF KANSAS. The Chair will recognize Ms. 

Waters for up to 5 minutes for an opening statement. 

Chairwoman WATERS. Thank you, Chairman Moore, for joining 

me for this joint hearing on minorities and women in financial regulatory reform, the need for increasing participation and opportunities for qualified persons and businesses. 

3 

Last year, the House passed a comprehensive regulatory reform 

bill, H.R. 4173, the Wall Street Reform and Consumer Protection 

Act of 2009. That bill included an important provision authored by 

me and nine other Congressional Black Caucus members of this 

committee. 

Our amendment would establish offices of minority and women 

inclusion at each of the Federal banking agencies to address the 

lack of employment and contracting opportunities available to minorities and women in our financial services agencies. 

The case for the amendment was as clear then as it is now. Minorities and women remain underrepresented in our government financial services agencies. For example, according to data from the 

Office of Personnel Management, Hispanics only account for 8 percent of employees at the Treasury Department; 4.2 percent of employees at the FDIC; and 4.8 percent of employees at the Securities 

and Exchange Commission. 

Within the Department of the Treasury, African Americans and 

Hispanics have an average pay grade of 8.8 and 8.3, almost a full 

grade lower than Whites, who have an average grade of 9.6. 

The picture in the private sector is not much better, as GAO will 

testify today, minorities and women remain limited in their participation in the financial services industry. From 2005 through 2008, 

African Americans and Hispanics only held 6.3 percent and 5 percent of management positions in this sector. 

In addition, minority- and women-owned businesses frequently 

find themselves excluded from contracting opportunities with financial services agencies. 

The financial meltdown elicited an historic response from agencies such as Treasury and the Federal Reserve while undertaking 

efforts to shore up our economy. These agencies entered into contracts, some of which were no bid, with companies they regularly 

contract with, in order to assist them in carrying out these economic recovery programs. 

For example, the Federal Reserve selected 4 firms to manage its 

$1.2 trillion mortgage-backed securities purchase program through 

a closed RFP process. 

While I believe our agencies should have the ability to act quickly in the event of an emergency, I am concerned that because of 

the challenges facing minority- and women-owned businesses, they 

are less likely to be known entities and are therefore less likely to 

have existing relationships with these agencies. And as these kinds 

of contracts can often lead to more contracts, this kind of exclusion 

can become permanent. 

We have raised these concerns with the Administration and they 

have taken some steps to address these disparities, for example, 

the White House has taken its first steps to address this problem 

by issuing an Executive Memorandum to establish an interagency 

taskforce to improve contracting to small businesses. 

In addition, the Treasury required all of the fund managers for 

its Legacy securities public/private investment program to partner 

with minority- and women-owned businesses. 

While I commend the Administration for these actions, it remains vitally important to institutionalize access for minorities and 

4 

women through the establishment of offices of minority and women 

inclusion. 

These offices would ensure that whether it is an emergency or 

if it is simply the day-to-day business of the agency, a senior level 

person charged with diversity will be in the room and will be able 

to inform the agency about the impact of their decisions on 

minority- and women-owned businesses. 

The offices would also be charged with increasing diversity within the agency and among its contractors. This is a solution that is 

long overdue. 

I welcome the testimony of our witnesses on this important provision, and I thank you, Mr. Chairman, and yield back the balance 

of my time. 

Chairman MOORE OF KANSAS. Thank you. I am pleased to introduce our first witness this morning, Ms. Orice Williams Brown, Director of Financial Markets and Community Investment, GAO. 

Ms. Williams Brown, it is a pleasure to have you before our subcommittee again. Without objection, your written statement will be 

made a part of the record. You are recognized for 5 minutes. 

STATEMENT OF ORICE WILLIAMS BROWN, DIRECTOR, FINANCIAL MARKETS AND COMMUNITY INVESTMENT, GOVERNMENT ACCOUNTABILITY OFFICE (GAO) 

Ms. WILLIAMS BROWN. Thank you. Mr. Chairman, Madam Chairwoman, Ranking Member Capito, and members of the subcommittees, I am pleased to be here today to discuss our past work on diversity in the financial services sector. 

While most of our findings are based on past work, we have updated several key statistics through 2008. My statement today will 

focus on the status of minority and women diversity in the financial services sector, and efforts the industry has taken to increase 

diversity and the challenges it faces. 

First, let me highlight a few key statistics. Our past work revealed that from 1993 through 2004, White women representation 

among managers and officers was about one-third throughout this 

period. Minorities had increased from 11.1 percent to 15.5 percent. 

EEOC’s revised data for 2005 through 2008 show that representation by White women decreased by almost one percentage point 

during this period, and minority representation increased almost 

two percentage points, primarily due to increases in Asian and Hispanic representation among managers and officers. 

However, in the past, you may recall that we pointed out that 

this broad category of officers and managers, which includes everyone from CEOs to managers of a small bank branch, may overstate 

the representation of women and minorities among senior managers in the industry. 

Recognizing this limitation, EEOC revised its category of managers and officers by splitting this broad category into two more 

narrow categories: one that captures senior level managers and executives; and another that captures first and mid-level managers 

and officers. Using data from the new category of senior level executives, we found that the old broader category did in fact overstate the level of women and minority representation in upper 

management, specifically in 2008, the representation of White 

5 

women among executives and senior level officials was 27 percent, 

and 10 percent for minorities. By minority group, the breakout 

was: 2.8 percent for African Americans; 3 percent for Hispanics; 

and 3.5 percent for Asians. 

As noted in our 2006 report, although financial services firms 

and trade groups told us they had initiated programs to increase 

workforce diversity, these initiatives faced challenges that may provide some insight into why diversity at the management level has 

not changed substantially. 

Most said that diversity was an important goal and the top leadership was committed to recruiting and retaining minority and 

women candidates. 

A few firms had even started to link managers’ compensation 

and performance in promoting workforce diversity. 

Among the challenges cited were gaining buy-in of employees 

such as middle managers who play a key role in implementing diversity initiatives, and fully leveraging the internal pipeline of minority and women for management positions. 

For example, as mentioned earlier, in 2008, the executive or senior level officers and managers’ category showed that 27 percent 

were White women and 10 percent were minorities. However, the 

first and mid-level managers and professionals’ categories, a possible pipeline for top management talent, was more diverse, with 

White women representing 38 percent of first and mid-level managers and 39 percent of professionals, and minorities representing 

19 percent of first and mid-level managers and 25 percent of professionals. 

In closing, with the implementation of a variety of diversity initiatives over the past 15 years, diversity at the management level 

in the financial services industry has improved but not changed 

substantially. 

Further, EEOC’s new data provide a clear view of diversity 

among top management, showing that diversity is lower than the 

overall industry management statistics had indicated. Initiatives to 

promote management diversity at all levels within financial services firms face several challenges. Moreover, the impact of the recent financial crisis on diversity also warrants ongoing scrutiny. 

Without a sustained commitment to overcoming existing challenges, management diversity in the financial services industry 

may continue to remain largely unchanged over time. 

Mr. Chairman, Madam Chairwoman, and Ranking Members, this 

concludes my oral statement, and I would be happy to answer any 

questions that you may have. Thank you. 

[The prepared statement of Ms. Williams Brown can be found on 

page 44 of the appendix.] 

Chairman MOORE OF KANSAS. Thank you for your testimony, Ms. 

Williams Brown. I recognize myself for 5 minutes for questions. 

Reviewing the two charts on pages six and seven of your testimony, those lines are very flat. If you compare these numbers with 

the demographics in the United States, minorities, which made up 

34 percent of the general population in 2008, according to the Census Bureau, are underrepresented by roughly 50 percent in the financial industry, making up only 17 percent of management, but 

the most recent data ends in 2008, and I am concerned there is a 

6 

distinct possibility that women and minorities, perhaps new to 

their management positions, bore the blunt of the layoffs and lost 

jobs as a result of the financial crisis. 

Is that a possibility, Ms. Williams Brown, and if so, what are 

your thoughts about the possible impact on efforts to improve diversity initiatives? 

Ms. WILLIAMS BROWN. I think really without the data, it is hard 

to speculate about what it would show. I think it is possible it 

could change based on the new category that EEOC introduced in 

2007. We now have a clearer picture for what diversity actually 

looks like at the very top level at organizations. 

I think it is an understandable concern and it is one that has 

been raised by others, and that is what impact the financial crisis 

has had on diversity. There is a possibility that the actual statistics 

could be a lagging indicator of the impact. 

Another area that we have tracked is the pipeline issue, and that 

is looking downstream at other positions that could eventually flow 

into top management positions, and also monitoring those statistics 

to see if there is an impact at that level. It could actually impact 

the statistics at upper management levels in future years. 

Chairman MOORE OF KANSAS. Thank you. I appreciate the quick 

work that you and your colleagues at GAO did to update these 

numbers. You also note in your testimony that the kind of data 

available used for your 2006 report has changed and that makes 

it difficult to view trends with respect to some of that information. 

It would seem worthwhile to give GAO some time to write a new 

report focusing on trends in the industry since the 2006 report with 

a special focus on the impact of the financial crisis on women and 

minorities in the financial industry. 

Would that make sense to you, Ms. Williams Brown? 

Ms. WILLIAMS BROWN. I would say yes, it does make sense. Our 

only concern would be that when we did this work, we really did 

focus on trend analysis versus a particular point in time, and we 

were able to update this through the available statistics which 

went through the end of 2008. 

In several months, EEOC should have available the statistics for 

2009. That will give us an additional data point, but we also think 

that a couple of additional years would be the most informative, 

but this is something that once again I think it makes sense to continue to monitor. 

Chairman MOORE OF KANSAS. Very good. Chairwoman Waters, 

would you be interested in working with me to make this formal 

request of GAO for a new report identifying the key issues that we 

would like GAO to focus on, and I would welcome other members 

who might be interested, too? 

Chairwoman WATERS. Absolutely. I look forward to that. 

Chairman MOORE OF KANSAS. Very good. I have 11⁄2 minutes left. 

I will ask you one more question, if I can, please. 

Starting on page 11 of your written testimony, you mention 4 key 

challenges that may have affected the success of financial industry 

workforce diversity initiatives. 

If you could only choose one that most troubles you from the 

standpoint of being the largest obstacle to improving diversity, 

which one would you choose and why? 

7 

Ms. WILLIAMS BROWN. I would go to fully leveraging the internal 

pipeline and I think the most recent EEOC statistics really illustrate the challenge associated with that. If you look at the upper 

level positions and the demographic makeup among those positions, and you look at the pipeline, you actually see greater diversity at the first and mid-level as well as the professionals’ category 

compared to the upper level management, so I think to the extent 

that organizations have been challenged in finding a way to leverage that pipeline so they actually are able to retain their talent 

and have them fill those upper level positions, that has been a 

huge challenge for the industry. 

Chairman MOORE OF KANSAS. Very good. Thank you. 

Ms. WILLIAMS BROWN. You are welcome. 

Chairman MOORE OF KANSAS. I will now recognize Ranking 

Member Capito for up to 5 minutes for questions. 

Mrs. CAPITO. Thank you, Mr. Chairman, and I want to thank the 

witness. In your testimony, you mentioned that diversity in the financial services industry at the management level did not really 

change significantly from 1993 to 2008. 

My question is, is the pool of minority candidates limited or are 

potential candidates going somewhere else? Have you been able to 

identify what the stumbling blocks are of getting more candidates 

and more people interested and more people actually filling these 

positions? Can you pinpoint some problem areas? 

Ms. WILLIAMS BROWN. When we discussed this issue with representatives in the industry, a few issues rose to the surface. One, 

once again, is the pipeline issue. Part of that is the external pipeline. 

In the financial services sector, many point to the issue that you 

often need a Bachelor’s degree, and in some cases, a Master’s degree is preferred. You have to look to the pipeline of available 

MBAs, for example, and watch trends there. 

Many affinity groups as well as organizations have been taking 

steps to try to increase the pipeline of available talent. 

We also heard from some of the associations and affinity groups 

that we spoke to that organizations tend to continue to go to the 

same universities, for example, to attract their talent, and those 

universities may not have a diverse pool of potential talent. Many 

recommend they broaden their potential pool of talent when they 

are actually recruiting. 

Mrs. CAPITO. I guess what we are seeking obviously is diversity 

and opportunity for all groups, for every group, for women, minorities, men, whomever, young, educated folks. 

Do you have any experience with actually trying to legislate that 

these things move forward or is the best legislation to create 

awareness and statistics that maybe back up the trends? 

Do you have a sense of the best way to really shine a light on 

this topic? That is a big general question, I understand. 

Ms. WILLIAMS BROWN. I will give it a try. I think shining a light 

is a huge part of the process. I also look to certain recent initiatives. For example, the SEC recently passed a rule that requires 

corporations in their proxy statement to disclose their efforts to address diversity at the corporate board level, and that disclosure has 

to be put in the proxy statement, and it also should address the 

8 

issue of how any practices they have in place are going to be measured. 

I think one of the things that really comes to light in terms of 

diversity, and it is one of the key practices, is tone at the top. Another is accountability and measurement, and one of the things 

that came out in the 2007 SIFMA study of the industry on diversity, they raised the point that what is measured gets done. 

I think it takes effort at every level, but most of it really has to 

happen at the firm level. 

Mrs. CAPITO. Thank you, Mr. Chairman. 

Chairman MOORE OF KANSAS. Thank you. Ms. Waters, you are 

recognized for 5 minutes for questions. 

Chairwoman WATERS. Thank you very much. I would like to 

thank Ms. Williams Brown for being here today. I am pretty much 

familiar with the statistics and your data. 

We have known for many, many years that most of the minorities in these firms are at the entry level and the lower levels, and 

this has persisted for many years now. 

It is not about whether or not they are moving up the pipeline. 

It is about whether or not you have a pipeline and whether or not 

you intend to have a pipeline, and whether or not you are committed to a pipeline. History has taught us this has not changed, 

that they are concentrated at the bottom and basically never make 

it to the top. 

We have come up with what we think can be a solution, and 

while that is not your job to do, I would like to explain to you, as 

we looked at the Wall Street Recovery bill, and we looked at the 

Consumer Protection Financial Agency, and the oversight committee that was being created, it was glaring. There were no minorities. There were all Whites, only two women, and all of your 

financial services agencies were identified there, from Treasury to 

the FDIC to the Fed. 

We thought just from looking on the government side that in 

order to have these issues raised and have some attention paid to 

it, we really have to have people who are committed to it and who 

see it in the best interest of those communities to be involved. 

We came up with several things on the government side. We 

came up with the offices of minority inclusion, to be created for 

each of these financial services agencies, so there is someone who 

is sitting at the table who can say ah, friends, do you not remember that we just had a subprime meltdown where minority communities were targeted, where they were sold bad products, where 

they were talked into no doc loans and ARMs, that the greatest 

foreclosure problems are in those communities. 

The very people who had suffered because of the lack of anybody 

caring and watching out are the very people who cannot get hired 

in government or in the private sector. We came up with those offices of minority inclusion to put some people at the table. 

We think that whether it is in the private sector or in the public 

sector, unless you create something inside these businesses or government whose attention will be directed toward solving this problem, it is not going to happen. 

9 

You could come here year after year, and I do not know how long 

you will be in service or how long you have been there, but I have 

been hearing this for many years, the concentration at the bottom. 

The goodwill statements, we believe in diversity, but the proof of 

the pudding is not in the eating. We have to take affirmative steps 

to do something. That is why we did the office of minority inclusion 

that is being resisted by the same people who resist diversity. 

Having said all that, do you agree that this problem is one where 

people say they are concerned about it but their actions have not 

shown they have taken a lot of steps to do anything about it? 

You talked about a little something that has been done at the 

SEC. Do you see any other real efforts that you can identify that 

is being put forth to address this diversity issue? 

Ms. WILLIAMS BROWN. I will say one of the things I did in preparation for the hearing is I went on to a variety of Web sites this 

morning to see what a cross section of institutions had to say. They 

all had diversity statements. They had nice diversity statements. 

When I look at that, and I also look at a survey conducted by 

Toigo Foundation, I found that many of the folks in the industry 

believe that there is not a true commitment to diversity, and they 

have begun to see somewhat of a shift since the financial crisis. 

I would say yes, they say they believe in diversity, but when you 

look at the statistics, it does raise an obvious question. 

Chairwoman WATERS. I would like to thank you. We just have 

been fighting this problem and struggling with it for so many 

years, until sometimes you want to give up, but you know you cannot. Whether we are talking about in the financial services industry or for example, with the new appointment to the Supreme 

Court, who says Thurgood Marshall is her idol, and she had 29 

White men at Harvard, not one Black, and a couple of women. 

We know that the spoken words are not matched with real actions, and we have to come up with ways by which to take concerted action and effort to do something about this problem. 

For those of us who are trying to bring about justice and equality 

in this society, we just cannot continue to sit and hear the information year after year after year about everybody who believes in diversity but does nothing about it. 

We are going to submit your information to the Senators on the 

other side as we deal with the office of minority inclusion. We are 

going to do everything we can to make it public. Your observances 

of having looked at all these Web sites and seeing the spoken word 

but not seeing the actual results of any real action taken, we will 

try to use that to help us to open these opportunities up. 

I thank you so very much. 

Chairman MOORE OF KANSAS. I thank the gentlelady. At this 

time, without objection, Representative Watt will be recognized as 

a member of the subcommittee for the duration of this hearing, and 

sir, if you have questions, you are recognized for up to 5 minutes. 

Mr. WATT. Mr. Chairman, I think I will pass. I missed the wonderful opportunity to hear Ms. Williams Brown. I will certainly review carefully her testimony and express my thanks to her for 

being here. I will not question her for fear I will re-tread territory 

that has already been tread. 

10 

Chairman MOORE OF KANSAS. Thank you, sir. At this time, the 

Chair will recognize Mr. Green for up to 5 minutes. 

Mr. GREEN. Thank you, Mr. Chairman. I thank the witness for 

appearing. 

I would like to share a statement that I heard just today that 

I think is relevant. It was stated by a member whose name I shall 

not mention. It was indicated by this member that if you are not 

at the table, you are on the menu. If you are not at the table, you 

are on the menu. I have been on the menu most of my life. It feels 

good to be at the table, but not everyone who is at the table is a 

diner. 

We have a constant struggle and a constant battle to accord 

equality of opportunities to persons who are capable, competent, 

and qualified. It is important to mention this. Capable, competent, 

qualified, and when you are talking about businesspeople, capable, 

competent, qualified, and who have money. Capable, competent, 

qualified with money, and still cannot do business. 

We have to find, as the chairwoman of the Housing Subcommittee has indicated, a better way to do business. Year in and 

year out, reports are not quite enough to make the difference that 

we seek. 

The office of inclusion, rather the offices, really, of inclusion, because they will be in a multiplicity of agencies, they provide the opportunity for us to have a hands-on experience to a limited extent 

on a day-to-day basis, so that we do not have to wait until the end 

of a year to pick up some empirical evidence that may be irrelevant 

by the time that we acquire it. 

I salute you for what you do, and I compliment you for what you 

do. My hope is that what you have presented to us by way of empirical testimony and empirical evidence will provide us the means 

by which we can move now to this office of minority inclusion, or 

these offices, so that we may have this notion of inclusiveness, 

equality of opportunity, for capable, competent, and qualified people on the agenda on a daily basis. 

Final point: My belief is you are eminently correct when you indicate that the tone and tenor is set by the person at the top. If 

the person at the top wants it to happen, it usually occurs. The 

person at the top has to be willing to say there are capable, competent, and qualified people who can do this, let’s not continue to 

exclude capable, competent, and qualified people that we do not 

necessarily know, who may not look like us. 

You have to want it to have it. I think the office of minority inclusion would provide an additional impetus for us to do this. 

I am so grateful that the chairwoman stood by the concept and 

I stand by her and hope that we will continue to see this move forward in legislation that will be before us shortly in Congress. 

Mr. Chairman, I thank you, and I will yield back the balance of 

my time. Ma’am, by the way, no reflection on you, I think your testimony was outstanding. I just wanted to make a few comments. 

Mr. Chairman, I thank you for the time. 

Chairman MOORE OF KANSAS. Thank you, Mr. Green. Thank you, 

Ms. Williams Brown, for your testimony today. You are now excused. 

11 

I will invite the second panel of witnesses to please take your 

seats. 

Chairwoman WATERS. [presiding] Our second panel consists of: 

Ms. Pamela Bethel, a partner of O’Riordan Bethel Law Firm, on 

behalf of the National Association of Minority- and Women-Owned 

Law Firms; Mr. Thomas Boston, professor of economics, Georgia 

Institute of Technology; Mr. Alexander Chaparro, president, National Association of Hispanic Real Estate Professionals; Mr. Orim 

Graves, executive director, National Association of Securities Professionals; Mr. Carlos Loumiet, partner, Hunton & Williams LLP, 

and president, New America Alliance, on behalf of the U.S. Hispanic Chamber of Commerce; and Mr. Vincent Wimbish, president 

and chief executive officer, National Association of Real Estate Brokers. 

Thank you. I welcome you. You will each be recognized for 5 minutes. I will start with Ms. Bethel. 

STATEMENT OF PAMELA J. BETHEL, ESQ., PARTNER, 

O’RIORDAN BETHEL LAW FIRM, LLP, ON BEHALF OF THE NATIONAL ASSOCIATION OF MINORITY- AND WOMEN-OWNED 

LAW FIRMS 

Ms. BETHEL. Good afternoon. I would like to thank the Chair. I 

would like to thank Ms. Capito. And I would like to thank the 

other honorable members of this subcommittee for the opportunity 

to present the case, the abominable case, of the exclusion of 

minority- and women-owned law firms in the government’s business. 

My name is Pamela J. Bethel. I am executive partner of the 

O’Riordan Bethel Law Firm located here in Washington, primarily 

with a national practice in Federal procurement and business representation. 

I am here today representing the National Association of 

Minority- and Women-Owned Law Firms, an organization that was 

established in 2001, and a national minority law group established 

in 2005. 

To the member’s point, Mr. Green, we are capable, competent, 

and qualified. Membership in both organizations requires that both 

the firm and the individual lawyers have obtained the highest peer 

rating available to lawyers, and that is a rating published by 

Martindale-Hubbell, and it is an AV rating. All firms who are 

members of the organizations that I represent have the same rating as any member of any brand name firm. 

The two organizations have joined together to make known the 

exclusion of minority- and women-owned law firms by government 

agencies and others with respect to the contracting opportunities 

related to the financial crisis and the restoration of our financial 

systems. 

The government’s track record regarding use of minority- and 

women-owned firms is poor. It is exceedingly poor. Federal spending increased over $300 billion between the years 2001 and 2008, 

while the Federal contracts secured by minority- and women-owned 

firms have seen shortfall after shortfall. 

12 

With the release of the Fiscal Year 2008 data, we find that the 

government failed to meet its remarkably low goals in each category—women and minorities. 

As poor as the utilization of minority- and women-owned firms 

is in general, in Federal contracting, it is almost nonexistent when 

it comes to legal services and other professional services. 

We as a country have only begun to understand that it makes 

good business sense to include companies of all stripes in Federal 

procurements relating to certain industries, such as construction, 

the teaming agreements, the joint ventures, those are things that 

have entered into our commonplace business vocabularies and understanding. 

The government has failed miserably in its responsibility to ensure that the same inclusionary goals and principles are being incorporated into the government’s procurement of legal and other 

professional services. 

While tens of millions of dollars in legal contracts have been 

awarded by the Treasury Department at the top, no significant dollar amount has gone to minority- or women-owned law firms. Diverse firms were not even provided an opportunity to compete for 

such contracts. 

In reading the newspaper reports of name brand firms receiving 

contracts worth millions of dollars in the middle of the night with 

charges to the government for the services of individual attorneys 

ranging from $700 to $1,000 an hour, while millions of our tax dollars have gone to pay for legal services for the purposes of assisting 

the government and getting us out of this crisis, very few of those 

dollars have gone to firms that are anything other than what we 

used to call in the old days ‘‘white shoe firms.’’ 

The same firms over and over again are being called upon for lucrative contracts to provide services that our firms can ably provide. 

I say to you that I also make the case that the cost of these contracts are astronomical. As I cited, we have all seen the newspaper 

articles with the fees of $700 to $1,000 an hour. Firms in my organizations and other minority- and women-owned firms can provide 

competent, qualified services at far lower prices than the government is now paying. 

I respectfully request your vote in support of the bill passed by 

the House and now pending with the Senate, which would establish a series of offices of minority and women inclusion. Those 

would be for employment inside the regulatory agencies as well as 

the contractors whom they employ. 

Thank you very much for this opportunity. 

[The prepared statement of Ms. Bethel can be found on page 35 

of the appendix.] 

Chairwoman WATERS. Thank you very much, Ms. Bethel. 

Mr. Thomas Boston. 

STATEMENT OF THOMAS D. BOSTON, PROFESSOR OF 

ECONOMICS, GEORGIA INSTITUTE OF TECHNOLOGY 

Mr. BOSTON. Thank you, Chairwoman Waters, and members of 

both subcommittees. I am deeply honored to have been invited to 

testify before you regarding something that I think is extremely 

13 

important, and that is these offices of minority and women business inclusion at the financial agencies of the country. 

I, without qualification, strongly support this effort and I hope it 

materializes as it is conceptualized. It is endowed with the appropriate authority to actually have positive outcomes in regards to 

the disparities that minorities encounter. 

My name is Thomas Boston and I am testifying both as a professor of economics at Georgia Tech where I have served on the faculty since 1985, and I am also a business owner. My company, 

EuQuant, specializes in economic and statistical research, and one 

area of specialization is particularly a focus on minority business 

and community economic development. 

If you will allow me, I am going to say what I have written here, 

but I want to vary it a bit so that I can get it in within the amount 

of time allotted, so I will summarize some of the comments. 

I want to just simply make a point and that is that these offices 

of minority and women business inclusion, the concept behind that, 

is broader than just the issue of social equity; it also represents the 

value added of minority- and women-owned businesses to society as 

a whole. 

I want to spend a minute just simply talking about that. First 

of all, these comments are going to be based on my examination of 

the records of all businesses, small businesses, that are registered 

with the Central Contractor Registration system with the Federal 

Government, over 47,000 that we have examined. 

What we found is that procurement opportunities with the government actually matter. They matter a great deal. Although 18 

percent of all firms in society as a whole are minority-owned firms, 

those firms represent 40 percent of all of the firms that are pursuing government contracts. The reason they represent 40 percent 

is because minorities in general feel like their opportunities to be 

successful are much greater with the government contracting than 

it is in the private sector as a whole. 

Government procurement programs have served as a point of 

entry into the marketplace for many minority firms that have gone 

on to be successful. 

You may be aware that in 2010, there was a study commissioned 

by the Minority Business Development Agency that also indicated 

all of the various patterns of disparity in lending to minority-owned 

firms. 

That study showed that minority firms were more likely to be rejected in their applications for loans. When they received loans, 

those loans were more likely to have a lower value, and also they 

were more likely to have been awarded at higher interest rates. 

These kinds of findings have been backed up by numerous studies. 

Minority firms that are registered with the government program 

through CCR, there are about 19,000 of those firms, and of those 

firms, there are also firms that are 8(a)’s and SDBs. There are also 

firms that are not minority-owned but are not a part of either one 

of those programs, and there are about 10,000 of those firms. 

When we analyzed those firms against similarly situated non-minority firms, we found that disparity in revenue was about 

$500,000, even after controlling for the fact that they had similar 

attributes. 

14 

The importance that is made by the SDB and 8(a) program is 

that they added $2.8 million to the annual revenue of minorityowned firms, yet those firms still had $900,000 less revenue than 

they would have had had they been treated equally as non-minority-owned firms are. 

We found that the firms that participate in the government procurement programs, and these are about 15,000 firms, they add almost $44 billion annually to the economy in terms of the revenue 

that they generate, and they employ 287,000 workers. This was in 

2006. 

When we looked at the firms that participated in the 8(a) program and analyzed their economic impact, we found that as a result of being in the 8(a) program, the economic impact was $3.7 billion, and they added about 86,000 jobs. 

There were also firms that have graduated from the program. 

When you add those graduated firms together with the firms that 

are in the program, they had an annual economic impact of $5.5 

billion and created 124,000 jobs. 

Moreover, the jobs that they created tend to be more heavily concentrated in low-income communities where there is economic distress, that the income that they generated was generated through 

the kinds of ventures that were of higher value. 

I will conclude by saying over and beyond just the social necessity of creating equality in the marketplace, there is a compelling 

economic value for why we should have this program of minority 

and women inclusion. 

Thank you. 

[The prepared statement of Professor Boston can be found on 

page 40 of the appendix.] 

Chairwoman WATERS. Thank you very much. 

We will now hear from Mr. Alexander Chaparro. 

STATEMENT OF ALEXANDER CHAPARRO, CHAIRMAN, NATIONAL ASSOCIATION OF HISPANIC REAL ESTATE PROFESSIONALS (NAHREP) 

Mr. CHAPARRO. Chairwoman Waters, Chairman Moore, and 

members of the subcommittees, thank you for this opportunity to 

testify on this very important subject, the ability of minority- and 

women-owned businesses to access government contracting opportunities in the areas of housing and financial services. 

I am pleased to offer my views as a small business real estate 

owner and as the chairman of the National Association of Hispanic 

Real Estate Professionals, NAHREP. 

NAHREP is a nonprofit trade association with over 18,000 members and 65 local chapters nationwide. Our mission is to increase 

sustainable Hispanic homeownership by empowering real estate 

professionals who serve the community. 

NAHREP members are real estate agents, brokers and mortgage 

and settlement service providers, and other housing professionals. 

The Federal Government procurement process is complicated and 

labor intensive. Larger companies with substantial experience and 

vast resources have an insurmountable advantage competing for 

government work. Most minority-owned firms are small businesses 

15 

that generally lack the experience and human capital to successfully navigate through the process. 

Hispanic-owned firms have acquired contract work from financial 

institutions at an alarmingly low rate. Although it is difficult to get 

complete data, NAHREP estimates that Hispanic-owned firms currently acquire less than 1 percent of the total supplier contracts 

from financial institutions. 

Considering the mass consolidation of the financial services industry and the extensive government interventions, it is extremely 

important that the Federal Government become increasingly vigilant to ensure that minority-owned firms receive a fair share of 

supplier contracts. Not doing so will likely lead to even greater disparities in the unemployment rate between minorities and non-minorities and will be a setback to the Nation’s stabilization efforts. 

NAHREP receives many requests for support around the government contracting process from its members. One member from Riverside, California, who prefers to remain unnamed, says that she 

has been actively pursuing government work for almost 2 years 

with no success. Her story typifies the experience of the large majority of minority-owned firms. 

This individual has owned and operated a successful business for 

more than 10 years. Her company is minority- and women-owned 

with an impeccable track record, 30 of her 35 employees are minorities and she is very active in her community and her industry. 

In our view, she runs the type of operation that should be ideal for 

government work, reputable, capable, with a strong track record of 

community investment. 

During the past year, she has invested more than $27,000 in consultants and has dedicated more than 70 percent of her managerial 

time preparing proposals and earning certifications. All of this was 

done in an effort to better position her company for success in government contracting space. To date, she has failed to acquire any 

government business. She describes the process as complicated and 

exhausting and says, ‘‘It is like taking a difficult exam and never 

being told why you failed.’’ She has recently decided to abandon the 

pursuit of government contracts and focus her energy and resources on other business opportunities. 

Other members describe similar experiences but consistently 

state that the government contracting process is difficult, demoralizing, and with a complete lack of transparency. 

For all of these reasons, NAHREP stands in full support of the 

provisions in H.R. 4173 that would create an office of minority and 

women inclusion at each of the major Federal financial regulatory 

agencies. This provision is similar to the one in the Housing and 

Economic Recovery Act that applied to the Federal Housing Finance Agency, Fannie Mae, Freddie Mac, and the Office of Finance 

of the Federal Home Loan Bank System. 

Our members’ experience is that HERA law has had a noticeable 

and beneficial impact on improving the Federal contracting opportunities for minorities and women. 

In April, our organization submitted a comment letter to the 

FHFA in support of its regulation. We are in complete support of 

the bill. 

16 

On behalf of NAHREP, we thank you for your efforts. We really 

appreciate it. 

[The prepared statement of Mr. Chaparro can be found on page 

62 of the appendix.] 

Chairwoman WATERS. You are certainly welcome. 

Mr. Graves? 

STATEMENT OF ORIM GRAVES, EXECUTIVE DIRECTOR, NATIONAL ASSOCIATION OF SECURITIES PROFESSIONALS 

(NASP) 

Mr. GRAVES. Good afternoon, Chairwoman Waters, Ranking 

Member Biggert, and Representative Watt. I appreciate the invitation to appear before you today representing the National Association of Securities Professionals or NASP. 

My name is Orim Graves. My career has spanned more than 2 

decades in financial services. 

The National Association of Securities Professionals, representing more than 100 firms, is the premier trade organization 

supporting minorities and women in leveling the playing field in 

the financial services industry. 

Founded in 1985, NASP is based in Washington, D.C., with 10 

chapters in major financial centers throughout the United States. 

Our members represent the most senior minorities and women in 

majority owned investment banking and asset management firms, 

as well as the largest minority- and women-owned firms in the 

country. 

In the past 3 years, unprecedented events have reshaped the financial services industry. During this economic upheaval, it has 

been widely reported that the United States Government implemented over $12.6 trillion of direct financial intervention into our 

economy. 

This massive mobilization of taxpayer funds required the rapid 

hiring of numerous government contractors by the Treasury Department, the FDIC, and the Federal Reserve Bank of New York, 

to name a few. In the early days of the crisis, lawyers, accountants, 

consultants, and asset managers were hired with an extremely limited RFP process, in some instances, using expedited contracting or 

no process at all. 

The RFPs that were widely circulated had barriers to inclusion 

for minority- and women-owned firms that were arbitrary and capricious. For example, the initial RFPs for the Legacy securities 

and Legacy whole loan programs of the Treasury Department required minimum assets under management of $100 million and 

$25 billion, respectively. 

The initial RFP for the public/private investment partnership or 

PPIP, likewise, contained a minimum $10 billion in eligible assets 

under management, and a demonstrated capacity to raise at least 

$500 million. 

Despite Section 107(b) of the Emergency Economic Stabilization 

Act of 2008, minorities and women and entities owned by them 

were not included to the maximum extent practical. These requirements falsely presupposed that large is equated with the best or 

better. 

17 

Another example of the lack of access to contracting opportunities with the Federal Government in financials services was the 

$1.2 trillion agency mortgage-backed securities purchase program 

undertaken by the Federal Reserve. In this instance, four firms 

were selected to manage the mortgage-backed securities assets in 

a closed RFP process. 

NASP compared minority- and women-owned MBS money managers’ aggregate performance in 1, 3, and 5 years to the larger majority firms selected. The minority firms performed better than 

three of the four firms selected according to third party independent performance evaluations. 

Lastly, the most egregious example of a large contract awarded 

without an RFP process is Blackrock’s management of the $165 

million Maiden Lane funds on behalf of the Federal Reserve Bank 

of New York. The Wall Street Journal reported that Blackrock 

earned $71 million in 1 year as their asset management fee for this 

assignment. Today, the crisis has subsided, yet Blackrock is still 

managing those assets. 

Section 116(h) of the Emergency Economic Stabilization Act of 

2008 directs the Comptroller General to report to Congress the 

total dollars spent with all contractors, as well as the amount spent 

solely with minority- and women-owned firms. To our knowledge, 

such a report has never been received by Congress. 

Likewise, Section 1116 of the Housing and Economic Recovery 

Act of 2008 requires regular reporting of the dollar amounts paid 

to minority- and women-owned firms juxtaposed against payments 

made to all firms for contract services. 

Despite the prudence of complying with congressional directives, 

Fannie Mae, Freddie Mac, and the Federal Home Loan Banks have 

similarly not reported their contractual relationships with 

minority- and women-owned firms. 

I will now turn my remarks to the lack or minimum levels of participation of minority- and women-owned firms in the area of asset 

sales. 

The transfer of hundreds of billions of dollars in assets through 

the FDIC’s receivership and structured asset sales is an historic opportunity for the Federal Government to encourage the participation of small, women- and minority-owned investors. 

Inclusive policies for these programs should be adopted by the 

FDIC considering its use of debt is backed by the full faith and 

credit of the United States. 

While the FDIC has changed its bidding instructions to include 

a questionnaire asking minorities to voluntarily describe their race 

and gender, the language in the form naturally leads investors to 

question the FDIC’s commitment to minority investors. 

Not only is the form optional, but the FDIC in bold print announces that minority status ‘‘will not affect the scoring of the application.’’ 

The FDIC should include clear and affirmative language in all its 

communications that the encouragement of minority-owned investors is a priority for the agency and will be among the non-price 

or best value considerations in determining bidder eligibility. 

18 

We fully support Section 4173, the inclusion of minorities and 

women diversity, and we fully agree with the support of the goals 

and intent of this section. 

[The prepared statement of Mr. Graves can be found on page 66 

of the appendix.] 

Chairwoman WATERS. Thank you very much. I am sorry. We 

have to move on. 

Mr. Carlos Loumiet. 

STATEMENT OF CARLOS E. LOUMIET, PARTNER, HUNTON & 

WILLIAMS LLP, AND CHAIR, NEW AMERICA ALLIANCE, ON 

BEHALF OF THE U.S. HISPANIC CHAMBER OF COMMERCE 

Mr. LOUMIET. Thank you very much. It is my great honor to appear before you today to provide testimony on behalf of the New 

America Alliance, a national organization of Latino business leaders focused on the advancement of the American Latino community 

for the benefit of the United States as a whole, which I happen to 

chair, and also as a representative of our distinguished sister organization, the United States Hispanic Chamber of Commerce, which 

for years has ably represented millions of Latino businessmen and 

businesswomen from across the Nation. On behalf of our organizations and myself, thank you for the opportunity. 

I had the privilege of appearing before the Subcommittee on 

Oversight and Investigations just 4 years ago to comment on the 

prior GAO report, which frankly was not much more heartening or 

much less heartening than the one we heard about today. 

I wish that I could say now, 4 years later, anecdotally that there 

have been great advances made in these last 4 years in terms of 

the role of women and minorities in our Nation’s financial services 

industry, but I cannot any more than the GAO could. 

I also wish I could tell you that these past 4 years have witnessed great strides in the manner in which Treasury, Federal 

banking agencies, and the GSEs interact with women and minorities and the importance they attach to bringing about an industry 

that even remotely represents the population of our great country. 

Unfortunately, with rare exceptions, again, I cannot. 

The Census Bureau is hard at work right now as we testify gathering information on the demographic makeup of America in 2010. 

Let me anticipate the results. Some two-thirds of our Nation’s population will be found to consist of women and minorities. However, 

anyone who believes that these numbers are even remotely reflected at the management and particularly senior levels of our 

country’s financial services industry is very mistaken. 

Let’s take banking as an example. That I know of right now, 2 

of the 25 largest banks in this country are headed by minority individuals, neither of them are Latino, and that I know of, none of 

them by a woman. 

A friend and fellow NAA member serves on his very distinguished and prominent financial firm’s 80-person management 

committee. He is the only minority to do so. 

The Office of the Comptroller of the Currency’s Web site indicates that as of the end of 2009, there were 7 Latino-owned national banks in this country out of 1,800 or so altogether, about 

one-half of one percent. 

19 

Overall, our banking system does somewhat better, slightly over 

200 of the Nation’s 8,000 or so FDIC insured banks or somewhere 

between 4 and 5 percent, are controlled by women and minorities. 

Of course, measured in terms of the deposits of assets, these small 

percentages are even smaller. 

In terms of asset management, in accordance with data carefully 

assembled by one of our members in 2009, in the U.S. $12.5 trillion 

tax exempt market, firms owned by women or minorities managed 

about $90 billion or less than one percent, and Latino-owned firms, 

$21 billion or less than one quarter of one percent. 

Federal pension funds have approximately U.S. $268 billion in 

assets. That we know of, none of the 60 or so Latino-owned asset 

managers or brokers in our country is involved. 

So on and so on. To anyone, as you have heard from other witnesses today, who believes that women and minorities are for some 

reason less capable of success in the financial services industry, 

these numbers may not be disturbing. To everyone else, these numbers at least must be embarrassing if not troubling. Frankly, I 

have difficulty thinking of many other industries where the numbers are as bad. 

What can the U.S. Government do? One would naturally think 

that the government itself would be particularly mindful of including qualified persons from all backgrounds but as we have heard, 

that is not the case. 

I believe that Congress in the last 2 years or so with Section 107 

of the Emergency Economic Stabilization Act of 2008 and with Section 1801 of H.R. 4173 and through the personal efforts of Members of Congress like Congressman Frank, Congresswoman Waters, 

Congressman Xavier Becerra and Senator Bob Menendez, have 

made great efforts to prod the Executive Branch to focus on doing 

so. 

Sadly, however, as we have again heard, these efforts have often 

fallen on deaf ears and only rarely have we seen successes. 

I would like to digress a little bit from the rest of my testimony, 

which will be provided in writing, to mention that we have an 

amendment pending in the Senate to the financial reform bill 

which calls for the same provisions that for 20 years have applied 

to allow the FDIC to work with women- and minority-owned firms 

in certain contexts in connection with the resolution of thrifts to be 

extended to the banking industry, because today it is the banks 

that are failing, not the thrifts. 

Last night, I heard for the first time that this amendment may 

actually encounter some opposition in the Senate and even from 

the Administration itself. Frankly, we do not understand. To us, 

this is a step backwards in our government’s commitment to the 

advancement of women and minorities in this industry, and I 

would hope that the members of this committee would help us to 

bring this into law in the final legislation that emerges. 

Thank you. 

[The prepared statement of Mr. Loumiet can be found on page 

77 of the appendix.] 

Chairwoman WATERS. Thank you very much. 

Mr. Wimbish? 

20 

STATEMENT OF VINCENT WIMBISH, PRESIDENT AND CHIEF 

EXECUTIVE OFFICER, NATIONAL ASSOCIATION OF REAL ESTATE BROKERS (NAREB) 

Mr. WIMBISH. Madam Chairwoman, Mr. Chairman, and members 

of the Subcommittee on Housing and Community Opportunity and 

members of the Subcommittee on Oversight and Investigations, 

first, I want to take this opportunity to thank Chairwoman Waters 

and Chairman Moore for their leadership in convening this joint 

hearing on minorities and women in financial regulatory reform, 

the need for increasing participation and opportunities for qualified 

persons and businesses. 

I come before you today as president and chief executive officer 

of the National Association of Real Estate Brokers, the Nation’s 

oldest minority trade association, formed in 1947, to ensure democracy in housing. 

For more than 6 decades, NAREB has worked not only to promote sustainable homeownership for all Americans and African 

Americans in particular, but also to ensure that business opportunities are accessible and available for our realtist members. 

For the record, ‘‘realtist’’ is the designation given to every 

NAREB member. Realtists are predominately African-American 

real estate professionals representing the full spectrum of the real 

estate industry. 

It is important to note that NAREB promotes and abides by the 

highest standards of professional integrity. We follow a strict code 

of real estate industry ethics. We require professional certifications 

and accreditations. 

We advocate for public policies that protect and expand sustainable homeownership, and in keeping with today’s proceedings, 

NAREB works tirelessly to open and to keep open the doors of economic opportunities for African Americans and other multi-cultural 

real estate professionals. 

With this as a backdrop, I want to speak with some level of detail on NAREB’s support for the incorporation of the office of minority and women inclusion in H.R. 4173, the Wall Street Reform 

and Consumer Protection Act, and the reasons we believe this provision is critical to ensuring economic opportunities for minority 

real estate professionals. 

As you are aware, minority business development continues not 

to reach its full potential, whether due to intentional legislative 

omissions, unintended consequences of loose legislative language, 

or misinterpretations of rules, regulations, guidelines or laws. 

Minority real estate professionals have virtually been locked out 

and shut out of the business opportunities made available through 

the Federal Government agencies. 

A glaring example is the bundling of contract solicitations that 

limit a successful response to large, highly capitalized general market firms with a performance history of doing business with Federal agencies dealing with the financial crisis. Consequently, the 

solicitation requirements immediately bar minority- and womenowned businesses from participating in the bidding process. 

This is particularly critical in regard to the recent legislation affecting reform of the financial services and investment industries, 

and while language was put forth by Chairwoman Waters to make 

21 

minority inclusion a legislative imperative, every best effort was 

not made in the legislation’s final passage and implementation. 

Again, much to the dismay of the minority business community, 

minority real estate professionals, minority financial services companies and other professionals were left outside the door without 

the benefit of legislatively mandated recourse. 

I am here also to express concern with regard to the limited contracting opportunities with major financial institutions. Major 

banks, lending institutions and GSEs tend to ignore or overlook minority businesses when awarding contracts for asset and property 

management, appraisals, brokerage, development and commercial 

leasing business opportunities. 

Again, these contracts are awarded to major conglomerates and 

real estate franchises that do not feel the need to include or to extend subcontracting or joint venture opportunities to qualified minority businesses, and when subcontracting opportunities are offered, the price points are so prohibitive that it is not financially 

feasible to perform the work required. 

NAREB commends the leadership of these two subcommittees 

with the sincere hope that change is in the offing. One recommendation that I would like to leave with you today is the consideration of unbundling, breaking up the mega procurements that 

prohibit participation by minority businesses. 

We specifically recommend reducing the size by 50 percent of 

government services and supply contracts awarded for financial, 

professional and real estate services. 

Further, we recommend that a number of these contracts be at 

the $1 million to $5 million price mark, which we believe will significantly increase the number of minority bidders. 

Additionally, these contracts need to cover smaller geographical 

areas. By taking these measures in addition to eliminating the current bonding requirements, minority business participation will 

rise. 

As I conclude, I again thank Madam Chairwoman and Mr. Chairman for the opportunity to bring forth the concerns of minority real 

estate professionals. The over 60,000 African Americans in the real 

estate industry are counting on your support and your continued 

vigilance. 

Thank you. 

[The prepared statement of Mr. Wimbish can be found on page 

82 of the appendix.] 

Chairwoman WATERS. I would like to thank all of our witnesses 

on the second panel for coming today and sharing with us basic information that will help us to try and solve what appears to be an 

intractable problem of discrimination and exclusion. 

I would like to further grant myself 5 minutes to ask you a few 

questions. 

One of the most difficult processes to watch was what took place 

following the subprime meltdown here in this country, where the 

Treasury Department and the Fed, I suppose, had the opportunity 

to contract with minority and women professionals in the securities 

industry. 

The way they handled that, you started to make some recommendations, and I think just before I gaveled your 5 minutes 

22 

were up, you started your recommendations, and I do not think I 

remember hearing them. 

It was obvious that something wrong was taking place. I see over 

87 contracts, 14 of them fall within the category of small, women, 

minority, so we do not know how many were African American or 

how many were Latino or Asian for that matter. That lumped into 

this 14 all of that. 

You mentioned something about perhaps no big contracts or unusual and extraordinary requirements for how much money you 

had to have under your control, etc. 

Could you reiterate for us one or two recommendations if we had 

to do legislation that would prevent that kind of exclusion through 

rules and regulations that are made up by these regulatory agencies? 

For you, Mr. Graves? 

Mr. GRAVES. Thank you, Chairwoman Waters. I would submit to 

you that there are two things that we think would get to the heart 

of this. 

First, tie compensation, bonus pay, and evaluation of the various 

agencies and departments to their level of inclusion for minorityand women-owned firms. We think that will go a long way to getting their attention and putting some teeth and commitment behind the need to increase the level of contracting and exposure 

with women- and minority-owned firms. 

Second, we would offer that agency heads should sign some form 

of commitment on an annual basis as they report to Congress or 

report to the various authorities that they have made or are in concert with the law, with the current law if it passes, the inclusion 

amendment, so that the heads of these agencies are on record as 

committing and actually putting in place and hiring or contracting 

with minorities and women who are in the securities industry. 

We think those two things would go a long way. 

Chairwoman WATERS. Mr. Loumiet, you mentioned something 

that has been bothering me for a long time, and that is the lack 

of minority involvement in public pension funds. We really do need 

to do something legislatively. 

Do you have any concrete suggestions or is there something you 

could send me on what you think we can do to open up this? This 

is so unfair. 

Mr. LOUMIET. I agree. Congresswoman. I will be delighted to 

send you something in writing on behalf of the NAA, and we will 

consult with some of our fellow organizations represented here before doing so. 

Chairwoman WATERS. Thank you. Mr. Wimbish, many minorities 

have talked about unbundling for years, and we have not done it. 

We need to do it. This business such as we saw in TARP of requiring minimum assets under management of $100 billion or $25 billion, respectively, whether it is in the Treasury Department or 

other agencies of government, these kinds of requirements do nothing but exclude. Certainly, that is too much. 

I see some of your recommendations going to how we could deal 

with a smaller amount. I would like to have further written advice 

from you on this and some discussion. I think we need to move aggressively with legislation in that area also. 

23 

Finally, let me just say to Mr. Chaparro that I started to meet 

with some real estate professionals. I want to meet with your association, the Association of Hispanic Real Estate Professionals. We 

have started to contact the banks and bring them out to talk about 

what they are doing. We know what they are doing. 

For example, the REOs are not being listed with minorities. 

Number two, when they are listed with minorities and minorities 

are making the offers that their clients are giving them to offer on 

the properties, they are not taking them even if it is more than the 

speculators are getting. 

The speculators are speculating on large numbers of properties, 

maybe 10, 15, 20, 30, 50, what-have-you. They are way under market value and they are cutting out the real estate brokers and the 

small ones, for example. 

Then there is another broker organization that is out there that 

calls itself the Association of Real Estate Brokers for REO properties who have direct connections with these banks and they have 

a limited number of people that they will allow into their association, which eliminates for the most part minorities. 

We have a handle on this. We are going to break this up. What 

they are doing is they are squeezing these communities where real 

estate professionals have been working for years and have been responsible for buying and selling, and it is an important economic 

engine in our communities that is being cut out. 

I would like to meet with your association and I would like to 

bring the bankers in, just as I am doing with consolidated Realtors 

in the L.A. area, to talk about how we do this. While everybody is 

opposed to any kind of pure affirmative action, we are looking at 

zip codes. 

It does not make good sense, for example, in South Central L.A., 

for the real estate brokers out of Beverly Hills to be getting the 

listings and the people who live and work there not getting them. 

We are onto that. We get it. We understand it. As a matter of 

fact, some of us understand all of this. We need to have you on 

record in terms of your knowledge and your experience about what 

has happened in your industries. 

With that, my time has expired. I am going to turn to my colleague on the other side of the aisle, Ms. Biggert, for her questions. 

Mrs. BIGGERT. Thank you, Madam Chairwoman. I am sorry I 

missed the first panel due to being on the Floor. 

I think it was Mr. Loumiet talking about how much has not been 

accomplished since 2004. As I recall, in the year 2000, I was a cosponsor with Representative Velazquez on a bill, the Equity in 

Contracting for Women Act of 2000. I would have to say that not 

much has happened since then either. 

The bill was really to work with the SBA and the SBA was going 

to have the regulations. This was really in the Small Business 

Committee, but it was to give women more opportunities to get into 

the businesses. 

The bill went forward but the regulations and everything were 

not drafted. It was for creating the women’s procurement program 

to help women successfully compete for government work. It boiled 

down to finally they said there were only four types of categories 

and it would limit the women to those four categories. That was 

24 

national security and international affairs’ coding, engraving, heat 

treating and allied activities, household and institutional furniture 

and kitchen cabinet manufacturing, and then other motor vehicle 

dealers. 

I think Representative Velazquez’s opinion was that women were 

only to be in the kitchen cabinet business or in the kitchens, I 

guess. 

I was a co-sponsor of it. We are still sitting here. 

Maybe my question would be even when we do the bills, we are 

not getting that message out. I have to say when I went to law 

school, I was told I was taking the place of someone who belonged 

there—a man. I went anyway. 

I also thought I wanted to get an MBA. I wrote for an application 

from the universities. I got back a letter saying we are sorry, we 

do not take women into the business school. You could take a few 

courses if you wanted to. 

Unfortunately, I scrunched that answer up so I cannot use it to 

show what has happened since then. I have to say in law, it is 51 

percent or over now are women. It took a long time and it took a 

long time in the educational field. 

How long is it going to take us in the business world to do that? 

If you could just give me one thing that you think would work to 

improve this. It might be the bill. I do not know. 

Mr. Loumiet? 

Mr. LOUMIET. Unfortunately, Congresswoman, I do not think 

there is a magic bullet. I just think that everybody who cares about 

this issue of some day having an industry that at all levels looks 

like America just has to keep working. It is going to take an awful 

lot of effort to get there. 

I will be very honest with you. There are many times when I 

deal with the Executive Branch, different agencies of the Executive 

Branch, and I wonder, who do they think they represent? It is not 

clear to me that they think they represent all of the country. That 

is very disheartening, but frankly, we do not have a choice but to 

keep moving forward because we all believe in this cause, as you 

did when you tried to enact your legislation. We just have to stay 

on top of them. 

Mrs. BIGGERT. Ms. Bethel? Not the silver bullet but in a nutshell, 

what do you think we should do? 

Ms. BETHEL. All the problems that my fellow panelists have 

cited, in fact, in my written testimony, I talk about the bill that 

you co-sponsored with Representative Velazquez, and what happened with the SBA. 

In fact, I think the U.S. Women’s Chamber even had to sue the 

SBA. That is almost comical when you think about it. 

I think, to paraphrase the young lady—I do not think you heard 

it from the GAO. 

Mrs. BIGGERT. No. I did miss your testimony, too. I am sorry. 

Ms. BETHEL. It has to start at the top. If your boss cares about 

it, you care about it. I do not know how much plainer to put that. 

Until they care about it, like the general counsels, when you go and 

see them, we have always used brand name firms. Yes, and we can 

pay them $700 an hour, and all the firms and the organizations 

25 

that I represent, being a lawyer, you understand, we are all AV 

rated, every firm, every member. Let’s talk about $400 an hour, $500 an hour, versus $1,000 an 

hour, what some of the firms have gotten. It is just a constant. The 

general counsel cares about diversity. The people who report to the 

general counsel care about diversity. 

If the person in charge of asset management, whatever title, 

cares about diversity in asset management, there is going to be diversity in asset management. 

Mrs. BIGGERT. Thank you. Would anybody else like to comment? 

Mr. Boston? 

Mr. BOSTON. Yes. I have just a couple of things that I would 

mention very briefly that I think are very important, particularly 

since this person is going to be endowed with both responsibility 

and the authority to track the performance of these agencies, so in 

that regard, and I have looked at agencies from all levels of government, and here is what happens. 

When that tracking process starts, it is important beforehand to 

have some agreed-upon procedures. In other words, what is being 

tracked, what information is being captured, how that information 

is being measured. 

You can come up with different percentages if you have a different denominator. What we found is when corporations report 

their diversity usage, it varies, and it varies because they are using 

a different subset. That is the first thing. 

Secondly, it is also important, and you just mentioned it, that 

there be some way of identifying the supply chain, where in the 

supply chain are these firms being used. Some firms, if they want 

to achieve a goal, they can achieve a goal by hiring maintenance 

firms. There is nothing wrong with that. That may be completely 

outside of the scope of their value-added supply chain. That is important. 

How do you define the good faith efforts and how do you determine whether or not a firm has made good faith efforts, and finally, 

second tier contracting. There are some, for example—I have 

worked with some businesses in the financial services industry who 

say we have a threshold, we do not deal with minority businesses 

with less revenue than $10 million. That excludes most of them. 

They can deal with them through second tier subcontracting. 

Are there procedures also to capture the use of firms that a 

prime financial institution will mandate on a subcontractor that is 

passed down to a second tier subcontractor. 

Mrs. BIGGERT. Thank you. I see my time has expired. I yield 

back. 

Chairwoman WATERS. Thank you very much. Mr. Watt? 

Mr. WATT. Thank you, Madam Chairwoman. Let me start by 

apologizing to the last two witnesses. I had to step out but I was 

in the back room multi-tasking, meeting with some people and listening to your testimony. I appreciate having an opportunity to 

hear you. 

Mr. Wimbish, we actually had a pretty aggressive initiative going 

with Fannie and Freddie before they kind of went south and got 

put into conservatorship. We were not ever satisfied with the 

amount of minority contracting and hiring and staffing and whatVerDate Nov 24 2008 15:06 Sep 23, 2010 Jkt 058045 PO 00000 Frm 00031 Fmt 6633 Sfmt 6633 K:\DOCS\58045.TXT TERRIE
26 

have-you they were doing, but my impression is they were doing 

a heck of a lot better then than they are now. 

Is my impression wrong or right? 

Mr. WIMBISH. Congressman Watt, you are probably correct. The 

opportunities at Fannie and Freddie now, they have informed us 

they do not make the decisions, that the conservator, FHFA, the 

Federal Housing Finance Agency, is making most of those decisions. 

Mr. WATT. Who is the responsible party at FHFA? That is the 

Federal Government, is it not? 

Mr. WIMBISH. Yes. 

Mr. WATT. To the extent that they are not doing very well, it is 

our own Federal Government we ought to be putting the pressure 

on, I take it, is what you are saying. 

Mr. WIMBISH. Yes. 

Mr. WATT. Is anybody tracking minority contracting there? Who 

was it who testified? Mr. Graves, I think, testified that we are due 

some reports that we are not getting. That is in your written testimony also, is it not? 

We should try to crank up a letter, Madam Chairwoman, to 

FHFA saying they are not complying with the law. 

Are they exempt from the law because they went into conservatorship? Mr. Graves? 

Mr. GRAVES. To my knowledge, no, that is not the case. They are 

bound to uphold the law. 

Mr. WATT. Your observation, Mr. Wimbish, and you, too, Mr. 

Graves, I guess, if you have been watching this, is that they are 

not doing very well in terms of contracting or staffing or any of the 

other criteria that we used to try to hold them accountable for? 

Mr. GRAVES. That is exactly right. Back in 1992, they started 

what was called the Access Program, which allowed participation 

for minority- and women-owned firms in a piece of their debt 

issuance, if you will, but it was only a small amount. 

To my knowledge, that program still exists. It has not grown. In 

1992 dollars, if you think about it, many of the firms or many more 

firms—firms have obviously gotten larger as the overall economy 

has, but their efforts are sort of stuck with respect to that particular program in 1992 levels. 

Mr. WATT. I hope we have consensus here to try to generate a 

letter to FHFA to try to hold them more accountable on this. If we 

do not hold them accountable, nobody else is going to do that. 

Ms. Bethel, my impression is this thing we called in the law ‘‘the 

chilling effect’’ has been at play fairly substantially ever since 

Adarand was decided. A lot of folks just say, well, you know, we 

cannot do minority contracting any more because the courts will 

not let us do that. 

Is my impression there wrong? 

Ms. BETHEL. You are absolutely correct. 

Mr. WATT. Is it your understanding that the Adarand case has 

anything to do with the Federal Government? 

Ms. BETHEL. It has something to do with it. In the industries 

that we are talking about, underutilization, you do not even need 

to do a study. 

27 

Mr. WATT. Do you not have to have a benchmark under 

Adarand? 

Ms. BETHEL. Yes, Adarand at least says—to some extent it can 

be read to say that you have to have some demonstrated reason for 

engaging in the ‘‘preferential treatment.’’ We are talking about 

legal services, professional services, asset management services. 

They have never used so. They could not even find the bench to 

establish the benchmark. That is my opinion. 

To the extent that you use Adarand, let’s be clear that the kinds 

of things we are talking about, the government has never used us. 

We have been here. The government has never used us. That is not 

a legal excuse, although I am sure you will get told that. 

Mr. WATT. Madam Chairwoman, my time has expired. I did want 

to tell the gentleman whose name I cannot pronounce, from 

Hunton & Williams— 

Mr. LOUMIET. ‘‘Loumiet.’’ 

Mr. WATT. Yes, Mr. Loumiet. Congratulations. You probably did 

not know this, but my good friend, Frank Emory, who is one of 

your associates, one of your partners down in the Charlotte office, 

was just honored by the Chamber of Commerce locally. He is doing 

very well. 

Mr. LOUMIET. He is a terrific person. Thank you for telling me. 

I had not heard that. 

Mr. WATT. I yield back. 

Chairwoman WATERS. Thank you very much. Mr. Cleaver? 

Mr. CLEAVER. Thank you, Madam Chairwoman. Adarand impacts mainly municipal and county governments. It is not applicable here. It was not designed for the Federal Government, which 

I am glad, because the Federal Government is worse than municipalities and counties. 

Ms. BETHEL. Absolutely. 

Mr. CLEAVER. What I am concerned about is what can we do? 

Apparently, legislation does not work. Apparently, meeting with 

the heads of all of the regulatory agencies did not work because we 

did meet with them on more than one occasion and heard them all 

say it is going to be fine, we are going to do our part, and then 

obviously, you would not have taken the time out of your day to 

be here if they had done their part. They have not. 

Is it a question of qualification? 

Ms. BETHEL. If I can take that part for what I said, the firms 

that we present have the highest rating available to lawyers, that 

is the Martindale-Hubbell AV rating. I do not know how an argument could be made—we are not the only firms that have that rating. That is the group that I represent. 

I do not see how a credible argument can be made that they are 

talking about competency. I think Mr. Graves talked about independent third party measurement or evaluation of the portfolio 

management, and how the minority firms excel. 

We are not talking about qualification. 

Mr. CLEAVER. Mr. Graves, is there any explanation beyond the 

obvious when we talk about the fact that the minority- and womenowned broker-dealers who were admitted to the TALF program 

were not able to complete a transaction before the expiration of the 

program? 

28 

Mr. GRAVES. By the time the minority- and women-owned firms 

were actually approved for their TALF certification, it was 1 month 

after the larger majority-owned firms, and by that time, all of the 

clients, the borrowers ultimately, who would have utilized the 

structure had gone through a pretty rigorous review process related 

to their ability to pay back or borrow funds from the Federal Reserve to basically purchase those securities. 

The process was already completed by most of the major clients 

and therefore, when the minority firms got involved, they were not 

able to access the same clients, plus there was a pretty onerous approval process; the Federal Reserve wanted the minority firms to 

back stop or guarantee if their client did not perform. That was a 

pretty onerous requirement as well. 

Mr. CLEAVER. Were any of the regulatory agencies easy to work 

with? Is there one that shined brighter than the others? Were all 

of them pale? 

Mr. GRAVES. They are all in various forms relatively difficult. We 

have had a reasonable relationship with Treasury. There is one individual in Treasury who gets it, whom we have been working with 

actively, and who has gone out of his way to include us in various 

discussions and in contracting with our members to do business. 

Again, that is it. 

Let me just add this point. I have done business as an investment consultant for one of the top five firms in the country. I have 

done business with corporate plans. I have done business with municipals. I have done business with Taft-Hartley plans. The Federal 

Government without question is the lowest on that list in terms of 

the ability for minority firms to do business. It is not even close. 

It is a shame in this day and age that we are sitting here at this 

point. Everybody else sort of gets it. Granted, we are not where we 

need to be with other places, but we are lightyears ahead of where 

we are with the Federal Government. 

Mr. CLEAVER. We are ahead in the NBA. Outside of basketball, 

I am trying to figure out what we need to do. Is there anything 

that you can recommend for us that would be helpful to you? Any 

of you? Mr. Boston? 

Mr. BOSTON. Congressman, I think the position that is conceptualized within the financial services agencies is the right way to 

do it because it gives the authority at the top and then it also endows that person with monitoring responsibility. 

If there is a way that person then is held to the standards that 

the position calls for, I think you begin to have the elements. What 

happens, over the period of time when the data are collected, you 

have information that you then can make modifications or make 

stronger interventions if needed in order to ensure remedies for 

minority- and women-owned firms that are excluded. 

That is really what the court says. The court says you should 

capture data, you should monitor that data and determine whether 

or not there is exclusion before you take an even more aggressive 

step. 

This program, I think, is set up in such a way that it really conforms with the case law in this area. 

Mr. CLEAVER. Thank you, Madam Chairwoman. 

Chairwoman WATERS. Thank you. Mr. Green? 

29 

Mr. GREEN. Thank you, Madam Chairwoman. I thank the witnesses as well. I am sorry that I did not get to hear all of your testimony. I am sure all of you heard me. You probably have some 

sense of what I think about what we are doing. 

I am concerned about those at the top. I am concerned that we 

do not have a system that fairly evaluates those at the top because 

the tone and the tenor are set by the people at the top. 

If you never evaluate the top, you never get to the people who 

actually make things happen. 

If you walk into an office and you see diversity, probably the person at the top has made diversity an issue, because it is so easy 

to just do other things and allow things to just kind of happen. 

My concern is, how do we deal with the people at the top? You 

would probably say well, that is your job, Congressman, how are 

you going to deal with them? I want to know about your experiences with the people at the top. We have to at some point evaluate 

people at the top. 

Ms. Bethel, do you have some comment that you would like to 

make? By the way, I am beyond the capable, competent, qualified, 

people who say we cannot find anybody. I am beyond that. We will 

go on and try to provide empirical evidence of persons who can do 

things, and that is a wonderful thing, but we know there are capable, competent, and qualified people. 

We also know there are people who are capable, competent and 

qualified with money who would like to make investments. I have 

had bankers come to me and complain that they are ready but they 

cannot do business. 

It says to me we have some leadership problems that have to be 

addressed. What I want to do is hear from you. Eventually, they 

all sit where you are sitting. It will accord me an opportunity to 

ask some of the questions that are important for us to continue this 

process of moving in the right direction. 

Ms. BETHEL. Sadly, the private sector in terms of lawyers and 

legal services is doing a better job than the Federal Government. 

There are probably 30 to 40, maybe 50 now, major Fortune 100 

companies that signed on to a call to action for the utilization of 

minority- and women-owned law firms and minority partners in 

majority law firms, and this is starting at the top. 

I do not know what makes one of similar skills, a head of a government agency, not see both the business and the compelling reason for doing that. 

A comparison between the Government Assistant Secretary or 

Secretary and General Counsel with his or her counterpart in commercial, and I can get you a list of the companies and the commitment they have made in terms of their utilization for the next two 

or three business cycles, that might be a place— 

Mr. GREEN. Has that comparison been codified? Is it there? Do 

we have a study? 

Ms. BETHEL. No. We have not. The call to action is about 2 years 

old. To my knowledge, there has not been a study. We can certainly 

provide the commitments that the companies have made. I do not 

know that we have now yet gathered the data to say who has lived 

up to that commitment. 

Mr. GREEN. Anyone else? Yes, sir? 

30 

Mr. CHAPARRO. I will tell you, the stakes are high in the sense 

that the minority practitioners are vested in the community, when 

we were talking about the REOs. The minority practitioner is living in the community, is vested in the community, and can help 

bring first time home buyers in neighborhoods that need them to 

be there. 

What we feel is the reporting requirements of these agencies 

need to be strengthened and possibly even reporting directly to 

Congress. It was said in this meeting that when it is reported, it 

generally happens. We are eager to see this bill and we are backing 

this bill. 

Mr. GREEN. Thank you for backing it. How important is this aspect of the bill, the office of inclusion? Is it so important that if it 

is not in the bill, the bill is incomplete to the extent that one might 

say it is flawed and should not go forward? How important is it? 

If the bill comes forward and it is not there, there will be those 

who will talk about how we have to do what we have and there 

will not be a lot of talk about how we are going to get these other 

things included. 

How important is it? Anybody. Tell me quickly, if you would. 

How important is this to the bill? 

Mr. BOSTON. Congressman, I think it is indispensable to the integrity, credibility, and validity of the bill. 

Mr. GREEN. Because my time is up, if you agree it is indispensable, I hate to treat you this way, but would you kindly extend 

a hand into the air, just so I can get a quick reading. 

[show of hands] 

Mr. GREEN. Let the record reflect that all assembled have raised 

their hands and see this as indispensable to the bill. 

Madam Chairwoman, I apologize for going over. I yield back. 

Chairwoman WATERS. Thank you so much. We have been joined 

by Representative Hinojosa. Without objection, he will be considered a member of the subcommittee for the duration of this hearing, and I will call on him for 5 minutes of questioning. 

Mr. HINOJOSA. Thank you, Madam Chairwoman. My first question would be to Ms. Bethel. In light of the fact that only 2.4 percent of all minority- and women-owned firms are in the finance and 

insurance industries, what type of educational programs should we 

offer to empower minority- and women-owned businesses? 

Ms. BETHEL. It is a very good question. I think it has to begin— 

we have to strengthen and encourage, particularly as it concerns 

women. I think it is demonstrated that women do less well in certain academic areas than their male counterparts, certainly in high 

school and grade school. I think that is true probably in minority 

communities where if you are trying to get the basic ABC’s, sometimes there is not a lot of educational opportunities for some of the 

other endeavors. 

I think we have to strengthen it. I think it is some of our responsibility to go back and make sure that we counsel and guide and 

tutor and mentor our young people as to what this means and what 

the wave of the future is, and I think it is on our universities and 

our colleges. They, too, have to take an active effort. A lot of times 

people coming out of minority communities are not aware of these 

31 

careers. They have never seen a stockbroker. They have never seen 

an asset manager. 

It is a societal responsibility, in order to start early and often, 

to apprise young people— 

Mr. HINOJOSA. If I may interrupt, because they only gave me 5 

minutes, I agree with you that it is a societal responsibility. Before 

I ask the next question, note there has been a change in what you 

thought was the case, that men were doing better. We are graduating more women from high school and many more women from 

college in the last 5 years than men. 

I want to ask my next question to Mr. Alexander Chaparro, 

president of the National Association of Hispanic Real Estate Professionals. What have been your association’s members’ experiences 

in working with States and local governments with regard to the 

neighborhood stabilization program and have your members obtained any contracts to market the NSP properties? 

Mr. CHAPARRO. That is a great question. It is one that many of 

our members have been eager to be involved with because it directly impacts the communities, and NAREB’s strength has been 

with our 65 chapters throughout the country within the communities. 

We have had a few, from what I am aware of, we have had one 

of our members who has had a meaningful contract. Not enough. 

We feel the opportunity is great to revitalize our communities and 

we would like to be able to make sure that the minority practitioner is involved in rebuilding the communities that we live in. 

We have had some members and we are proud of them, but I 

think there is more ground for us to tread, and I would be happy 

to provide you a report of where we are. 

Mr. HINOJOSA. Do you think they might be able to do better if 

they got technical assistance as they prepare the applications to be 

competitive? 

Mr. CHAPARRO. I think it can be helpful, but many of our members who are applying are very capable. We had talked about the 

qualifications. These are top notch individuals who have been in 

the field— 

Mr. HINOJOSA. Would you say the readers of the applications, 

since they are competitive, are possibly not being fair to your members? 

Mr. CHAPARRO. We definitely feel that the process in multiple 

layers that we have discussed in this panel are broken, that need 

to be addressed. I am proud to be here today with this distinguished panel because that is what we are talking about, fixing a 

process that needs to be fixed because the people who— 

Mr. HINOJOSA. We definitely are going to look into it. I want to 

ask one more question to Mr. Graves. Given the unprecedented 

number of banks that have failed and the resulting assets now resident within the FDIC, can you please comment on the lack of 

minority- and women-owned firms’ participation in those asset 

sales? 

Mr. GRAVES. Yes. Essentially, what has happened is that the 

FDIC’s barriers to entry for minority and women investors, minority and women bankers, are basically too high. 

32 

There are a number of programs or initiatives that can be undertaken to alleviate that, which will not violate what the FDIC consistently throws up, which is the least cost issue. The least cost, 

I believe, is mandated by law, that they cannot accept a bid that 

is lower in cost than they could otherwise get. Obviously, getting 

the highest price for the bank or the asset they are trying to sell. 

What happens is you have a lot of parameters that are a lot larger or requirements that are a lot larger that minority and women 

investors and banks cannot meet. There are a number of examples 

which are in the testimony that we cite where there has not been 

a concerted effort to try to include minority- and women-owned 

businesses into the mix to be able to be effective purchasers of 

FDIC assets. 

Mr. HINOJOSA. My time has run out. Those are interesting responses that all three of you gave me. Thank you. 

Chairwoman WATERS. Thank you very much. Thank you, Mr. 

Hinojosa. I would also like to thank our witnesses who have appeared here today. I know many of you and the consistent involvement that you have had in trying to bring about justice and equality in the area of contracting and all the other areas you have mentioned here today, employment, etc. We appreciate your work. 

The Chair notes that some members may have additional questions for this panel which they may wish to submit in writing. 

Without objection, the hearing record will remain open for 30 days 

for members to submit written questions to these witnesses and to 

place their responses in the record. 

We do have some written submissions to be made a part of the 

record before we adjourn. The written statements of the following 

organizations will be made part of the record of this hearing: Dr. 

Derrick Hamilton of The New School, Minority Business Development Agency, an article entitled ‘‘Disparities in Capital Access Between Non-Minority and Minority Businesses,’’ Real Estate Executive Council, and also contracting information from Section 105(a), 

and report to Congress. 

With that, this hearing is adjourned. Thank you very much. 

[Whereupon, at 4:39 p.m., the hearing was adjourned.] 

(33) 

A P P E N D I X 

May 12, 2010 

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