Wall Street Reform: Opportunity or Hiring Quota? A little-notice provision of the Dodd-Frank Wall Street reform law requires financial services firms to hire more women and minorities if they want to do business with the federal government. The law gives federal agencies authority to terminate contracts with firms that don’t practice “fair inclusion” of women and minorities in their workforces. It applies to financial companies from the biggest Wall Street banks to small accounting and law firms contracting with the Treasury Department, Securities and Exchange Commission, Federal Reserve Board, Federal Housing Finance Agency and other financial regulatory agencies. Conservative critics charge that it will lead to hiring quotas, although the law does not mention quotas or goals. The provision’s sponsor, Rep. Maxine Waters, D-CA, said the financial services sector has one of the poorest records of employing women and people of color. “I wrote this legislation to make sure that federal financial regulatory agencies ensure diversity in their hiring and promotion, as well as in their contracting, so that competent and qualified minority and women professionals and small, minority- and women-owned businesses have a seat at the table,” she said in a statement. But Diana Furchtgott-Roth, who was chief economist at the Labor Department during the Bush administration, charged, “In a major power grab, the new law inserts race and gender quotas into America’s financial industry.” She highlighted the issue in a column for RealClearMarkets.com on July 8. The law directs Treasury and other financial regulatory agencies to create Offices of Minority and Women Inclusion. The directors of these offices “shall develop and implement standards and procedures to ensure, to the maximum extent possible, the fair inclusion and utilization of minorities, women, and minority-owned and women-owned businesses in all business and activities of the agency at all levels, including in procurement, insurance, and all types of contracts,” according to Section 342 of the law. It requires “that a contractor shall ensure, to the maximum extent possible, the fair inclusion of women and minorities in the workforce of the contractor and, as applicable, subcontractors.” If the office determined that a contractor was not complying, it would recommend to the agency head that the contract be terminated, although the agency could impose lesser penalties. The law applies to “to all contracts of an agency for services of any kind, including the services of financial institutions, investment banking firms, mortgage banking firms, asset management firms, brokers, dealers, financial services entities, underwriters, accountants, investment consultants, and providers of legal services.”