Select Page

Legislative Intent And Section 342

The social aims of section 342 were heavily advocated by US Representative Maxine Waters..  There is no question that the goals of the OMWI are noble and should be lauded; and diversity in the workplace is shown to foster an excellent marketplace of ideas – resulting in positive benefits to the workplace environment.  Specifically attaining these goals via section 342, however, may be financially flawed – potentially increasing costs to all Americans.  Despite Waters’ accurate social assessments, recent evidence from congressional hearings indicates she may not have been able to see the long term cost increases that section 342 will produce.  

Public Policy And Section 342

As concern over potential long-term costs from section 342 increase, some of the country’s top employment law specialists have publicly belied the expensive redundancy of  its repetitive reporting requirements.   With multiple permanently-appointed positions in each of the 20 OMWI offices commanding salaries in excess of $250,000 (before benefits and other entitlements) OMWI’s annual salary costs alone exceed $20 million per year.  In light of current US debt-ceiling and congressional budgetary clashes, creating 20 new, expensive and possibly redundant federal offices seems to be against the interests of any taxpayer – regardless of race or gender.  

In addition to the potential tax burden that might result from the advent of the OMWI, it appears that costs for individual financial services users will likely increase as well.   Because the regulatory cost increases for each of the 20 agencies now charged with supporting an OMWI office cannot be wholly subsidized by the taxpayer, these costs must also be passed along to the users of financial services that are regulated by these agencies by way of increased regulatory fees.  Concern has been expressed by small credit unions across the country; citing a fear that these fees will destroy the small financial services institutions that serve the same minority communities the OMWI aims to benefit.   The CEO of the Michigan Credit Union League recently voiced concern to the National Credit Union Association (NCUA) that its 2011 operating budget had to be increased by $24.5 million (or 12%) largely to accommodate the OMWI provisions mandated by Dodd-Frank.  Id. As the national agency costs of OMWI are pushed along to individual service providers (as they were in Michigan), the burden for individuals to bear these new costs becomes particularly overwhelming for small credit unions.

Notwithstanding the additional OMWI costs (such as mass media, non-senior personnel, HBCU recruiting, advertising, evaluations, contract processing/review and costs reporting by the agencies and private entities under the direction of the OMWI) the costs that have been detailed here will likely have negative effects in three primary areas: for the taxpayer the individual financial services user and the small financial services provider in primarily underserved and minority communities.  In light of that evidence, it is perhaps better public policy to leave these social concerns to agencies that are already funded by American taxpayers to specifically address them (such as the EEOC), not the US financial regulatory agencies.  Despite the noble ends sought by this section, age-old adages prove that its flawed means cannot be thus bested: “L’enfer est plein de bonnes volontés et desires”.