Back to General Resources

HFSC Hearing on Slavery and Financial Institutions

House Financial Services Committee: Subcommittee on Oversight and Investigations

An Enduring Legacy: The Role of Financial Institutions in the Horrors of Slavery

and the Need for Atonement

Tuesday, April 5, 2022

Topline

  • The hearing focused on recommendations for reparations, auditing, changes to the CRA, and establishment of a federal Department of Reconciliation.

Witnesses

  • Daina Ramey Berry, Oliver H. Radkey Regents Professor and Chair of the Department of History, University of Texas at Austin
  • William A. Darity, Jr., Samuel DuBois Cook Professor of Public Policy, African and African American Studies, Economics, and Business, Duke University
  • Sven Beckert, Laird Bell Professor of History, Harvard University
  • Nikitra Bailey, Senior Vice President of Public Policy, National Fair Housing Alliance
  • Sarah Federman, Assistant Professor at the School of Public and International Affairs, University of Baltimore

Opening Statements
Subcommittee Chairman Al Green (D-Texas.)

In his opening statement, Green discussed touted H.J.Res.64, the Original Slavery Remembrance Day Resolution, calling for an annual day of slavery remembrance and said the financial services industry must atone for its role in slavery. He then emphasized the need for a federal Department of Reconciliation.

Subcommittee Ranking Member William Timmons (R-S.C.)

In his opening statement, Timmons touted progress since slavery, discussed how the financial industry has acknowledged their role in slavery, and stated that we must keep in mind rising prices and inflation, which have increased racial disparities.

Chairwoman Maxine Waters (D-Calif.)

In her opening statement, Waters discussed the role of the financial industry in slavery.

Testimony
Dr. Daina Ramey Berry, Oliver H. Radkey Regents Professor and Chair of the Department of History, University of Texas at Austin

In her testimony, discussed enslaved people as financial investments and the roles of insurance agencies, state laws, and the banking industry.

Dr. William A. Darity, Jr., Samuel DuBois Cook Professor of Public Policy, African and African American Studies, Economics, and Business, Duke University

In his testimony, Darity stated that reparations must be a federal project aimed at making direct payments to eligible recipients in an amount sufficient to build average black assets to a level comparable with average white assets. He then discussed steps that can be taken to enhance racial equity without a project for true reparations, like addressing the endowment gap.

Dr. Sven Beckert, Laird Bell Professor of History, Harvard University

In his testimony, Beckert provided some broad insights from his research guide the Committee’s thinking, including slavery’s importance to U.S. economic development, the significance of those numbers, industry benefit from the slavery complex, the national scope of slavery’s economic impact, the contemporaries’ cognizance of slavery’s economic importance and national reach, financial institutions’ roles in enabling slavery, private banks’ roles in providing financial services to the plantation sector, public banks’ investment in the slave economy, insurance companies’ involvement, and slavery’s deep legacy on patterns of inequality.

Nikitra Bailey, Senior Vice President of Public Policy, National Fair Housing Alliance

In her testimony, Bailey reviewed the direct connection between the institution of slavery and financial services, discussed the competitive advantage banks receive from national charters to operate, explained how banks and financial institutions continue to perpetuate discriminatory practices that contribute to existing disparities in financial services, homeownership, and wealth, and elevated restorative justice solutions for atonement, including conducting a transparent and publicly available Racial Equity Audit, creating or expanding access to quality, sustainable mortgages, through first generation down payment assistance programs targeted to Black and other people of color, considering race to the greatest extent possible when designing down payment assistance and other programs intended to close the racial homeownership and wealth gaps, prioritizing the use of grants instead of loans to increase access to homeownership for Black and other borrowers of color, providing down payment assistance of at least 5% to help Black borrowers who are more likely to have a higher loan-to-value (LTV).

Dr. Sarah Federman, Assistant Professor at the School of Public and International Affairs, University of Baltimore

In her testimony, Federman highlighted that institutional wealth has compounded for over 200 years without addressing the souls that suffered for it or the harm inflicted upon descendants. She recommended that corporations commission an independent study of their history, update companies’ origin stories based on the findings, make a public statement about the history, engage with affected communities to develop a meaningful response through commemoration, compensation, or other programs.

Question & Answer

Reparations

Waters asked if banks and insurance companies should be mandated to provide descendants of slavery with reparations. Berry said absolutely and that we have the records available to do this. Darity said institutions should take steps to improve conditions of racial equity but that we should not refer to those steps as reparations and that we should remember that the actions those institutions took were legal at the time, adding that the ultimate responsibility falls on the federal government. Rep. Nikema Williams (D-Ga.) highlighted H.R.40, the Commission to Study and Develop Reparation Proposals for African Americans Act, and asked how the Commission can guide the private sector to atone for slavery. Berry said sharing publicly available archives is a good place to start.

Auditing

Rep. Rashida Tlaib (D-Mich.) asked if companies can feasibly conduct an audit on their connection to slavery. Beckett highlighted exiting data that companies have connecting them to slavery. Berry emphasized that some data is no longer available and that if information is made available, it needs to stay available.

Community Reinvestment Act (CRA)

Rep. Sylvia Garcia (D-Texas) discussed the need to improve access to credit for minority communities and what regulators should consider when modernizing the CRA. Bailey said CRA needs to be more race conscious and that regulators should target first-time down payment assistance by first generation.

Department of Reconciliation

Green asked if there should be a federal Department of Reconciliation. Berry, Darity, Bailey, and Federman said yes and Beckert said that sounds plausible.

For more information on this hearing, please click here.

For an archive of past SIFMA hearing coverage, please click here.