By Tank Murdoch

(TNS) One of the major causes of the “Great Recession” of 2007-08 was the practice of giving government-backed, government-guaranteed subprime housing loans to Americans who wouldn’t normally qualify for one.

It was a financial Ponzi scheme to end all such schemes, and when the subprime bubble burst, it nearly wrecked the U.S. and global economy.



Now, a decade later, as reported by Fox News, Democrats want to change current bank-rating rules to include “diversity” mandates that would force lending institutions to add minorities to their management staff as part of rating the overall ‘health’ of banks and credit unions:

House Democrats are proposing that all banks and credit unions receive a new “diversity and inclusion” rating in an unprecedented step that would fundamentally alter federal regulators’ critical “CAMELS” rating system that currently employs a series of metrics that solely assess the financial health of banking institutions.

The “Promoting Diversity and Inclusion in Banking Act of 2019” is draft legislation supported by Democrats on the House Subcommittee on Diversity and Inclusion, which was created by House Financial Services Committee chairwoman Maxine Waters Rep. Maxine Waters, D-Calif. Waters has long pushed for government-led diversity efforts, even as Republicans have challenged her knowledge of fundamental economic issues.

The CAMELS system, known as the Uniform Financial Institutions Rating System, assesses banks’ (c)apital adequacy; (a)ssets; (m)anagement capability; (e)arnings; (l)iquidity; and (s)ensitivity to market risk, each on a scale of 1 to 5.

All of those categories involve financial information, and the CAMELS rating is then used by federal authorities that oversee and regulate banks; a failing CAMELS score is considered so significant that it is ordinarily hidden from public view to avoid a run on the bank involved.

If passed, the bill would alter the equally disastrous and over-regulatory Dodd-Frank Wall Street Reform and Consumer Protection Act so that the CAMELS system includes an additional diversity category for the “Board of Governors, the Comptroller of the Currency, the Corporation, and the National Credit Union” to analyze.

The new category specifically examines whether banking and lending institutions have policies to “encourage diversity and inclusion” in hiring practices; whether they train employees on diversity and inclusion; and whether they have a “Diversity and Inclusion officer” who reports to the CEO (forcing each bank to add another salaried position).

Any “equivalent rating by any such agency under a comparable rating system” should also have a diversity score, the bill states.

“We need to change it and we need to change it right away. The excuse that we can’t find any, that’s what I’m hearing from some of you, that’s not acceptable,” Rep. Al Green, D-Texas, said at a Wednesday hearing held by the subcommittee.

“When you have power, you have to use it. We have the power. Regulations may be the thing to do. I think the carrot was a good idea, but after having heard some things today, I think we have to move to the stick, that’s regulations.”

Further, the bill mandates that asset management firms publish a request for services in “print and online publications oriented towards women, minorities, and veterans,” to consider at least one of these firms that submits a proposal, and if one of these firms submits a proposal that “satisfies the criteria set forth in request for proposal, to invite at least one such diverse individual-owned and controlled asset management firm to present their proposal to the person,” Fox News reported, citing the legislation.

Auntie Maxine also claimed at the hearing this week she had visited Silicon Valley recently and was “appalled by the lack of diversity” in the ranks of tech firms — a direct implication that tech firms, which are run by folks who support Left-wing Democrat causes, are racist.

“I have a question that I would like to propose,” Waters began. “But before I do that, since you mentioned Silicon Valley, I too, was there recently. I was appalled at the lack of diversity. I know that there are a number of organizations, civil rights organizations that have been working very hard to increase participation of minorities and women in the Silicon Valley businesses.

“They have not done very well, and of course I would be anxious to be of assistance to them in making sure that we could reduce the costs and reduce the hassle of becoming IPOs,” she added. “But we certainly must take into consideration whether or not these companies are developing, understanding that some of us are going to be focused on diversity in those companies.”



If minorities aren’t flocking to the banking industry as it is, it’s not clear how it will comply with new ‘diversity’ rules mandated by Democrats in government.

That said, for now there’s little chance the legislation will pass anyway. But were Democrats to take back all levers of legislative power, they have made it clear this bill would become a reality, which, Republicans have argued, would undermine the supposed stability Democrats claimed they wanted to bring to the financial industry with Dodd-Frank.

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