Score One Against Racial Discrimination, and the Federal Reserve

Update below.

On January 11, 2011 the United States Court of Appeals for the District of Columbia Circuit ordered that the case [Cynthia Artis, et al., Appellants v. Ben Bernanke of the Board of Governors of the Federal Reserve System, Appellee] be "remanded for further proceedings, in accordance with the opinion of the court filed herein this date."

That opinion overruled the excuse given by the Feds for failure to proceed with the production of statistical data and other evidence of blatant racial discrimination alleged to be blocking advancements for African Americans for over 30 years. While the appeals court stopped short of using the term "false" or "stonewalling," the intentional nature of the Fed's delay of resolution (the Fed alleged that all 16 plaintiffs acted in "bad faith" during their attempts to counsel) of the merits of their racial discrimination, the essence of unfair play by the Fed is unmistakable in the language of the opinion.

Nineteen minority women, with over 200 years cumulative service at the Board of Governors, filed a racial discrimination case against the Alan Greenspan Federal Reserve in 1995. They sought to represent a class of approximately 350 employees employed by the Board of Governors. In all those years the lawyers for the Fed, some hired from private law firms, argued to prevent a full hearing on the evidence behind their claims of racial discrimination. The defense that the women did not participate in or receive sufficient or proper counseling at the Fed before filing their suit as required by law was overruled.

The Fed's plan of attack delayed access to evidence for about 16 years. The District Court's ruling that the employees failed to act in "good faith" was soundly rejected by the Appeals Court. (Artis et al, counsel, Walter T. Charlton was contacted. He declined to comment on the pending case.) This ruling follows on the heels of the Southern District of New York's and the United States Court of Appeals for the Second Circuit's rejection of the Fed's failure to disclose stimulus funding recipients.

The 1995 Artis filing followed a 1993 verdict against the Greenspan Fed in a suit by another African American who had been a Fed employee for twenty years. That employee (Bennett) had worked for the Federal Reserve Board of Governors as a Senior Statistical Assistant providing support to economists. She had been employed at the Fed for more than 20 years. For twelve years she sought a promotion to the next category of Research Assistant. In the early 1980s her attorney, William A. H. Briggs Jr., said that she was told by Fed officials that she could not be promoted because she did not have a college degree.

For seven years she went to night school while working full-time and raising six children as a single parent, and obtained a degree in accounting in 1989. Again she asked to be given the job of Research Assistant. But according to Briggs "she was told that even though she had a degree, she had not taken the right courses." She filed a race discrimination charge with the Fed's in-house Equal Opportunity Office (EEO). A settlement was reached that "essentially provided her with a list of courses she had to complete", said Briggs."

The Fed's continued runaround, including a farce with the Fed's in-house Equal Opportunity Office, ended when she sued again, charging that she had been repeatedly denied promotion. She won the case when "a federal jury in Washington found that she was denied the promotion because of her race and then retaliated against for filing an EEO compliant." (Bennett v. Greenspan, Dt, DC, C.A.No.93-1813-RMU, filed 4/20, 1991) Federal District Judge Ricardo Urbina ordered Greenspan to retroactively promote the employee, give her back pay and $150,000 in compensatory damages. Attorney fees were paid out of the $150,000.

After the 1995 suit was filed what did the Fed do to the minority women who sued for racial discrimination?

Some of the women were "invited" to resign with a payout dubbed by the Fed: "career transition pay". At a seminar at the National Press Club (arranged by Jake Lewis and me, and sponsored by Ralph Nader, January 7, 2001), televised on C-SPAN, I interviewed two of the longtime Fed employees who had sued, one of whom, Cynthia Artis, was a secretary for Virgil Mattingly, General Counsel of the Board and of the Federal Open Market Committee, the top legal counsel at the Fed until his retirement in 2004. One of these women said she was called into an office, informed of her "career transition pay" and told to sign a resignation letter. She said that "the minute you sign the agreement" you are told to leave even though the resignation letter has a later date. She added: "They pay you for not coming to work."

Despite the altruistic sounding name, this payment to a Fed employee who sues for racial discrimination is nothing more than a bribe for the employee's signature on a resignation letter or for the employee to drop the suit. The Department of Justice (DOJ) and the courts should determine if these Fed actions were unlawful uses of federal funds, amounting in essence to evasion of the civil rights laws set out by Congress.

Despite this extreme response by the Fed, 16 of the women who initially sued in 1995 represented by counsel, persevered.

Chairman Bernanke, how much did the Fed spend on outside private law firms hired to fight the claims of these women during all those years? Should the Fed spend substantial amounts of taxpayers' money to hire private law firms or use its own lawyers and receive assistance from Justice Department lawyers who are committed by the government to civil rights?

How much did the Fed pay a minority woman who rose to be Vice President of the Chicago Fed Bank to settle her racial discrimination case? She had been asked to investigate problems concerning minorities at the Chicago Fed Bank. When she came back with the "wrong" answers that made it appear that minority employees at the Bank had some valid complaints she was essentially demoted, according to court records. She sued for racial discrimination. The Chicago Fed settled with her for an undisclosed amount. She (or perhaps the Fed) terminated her employment. Perhaps one condition of the settlement was to remain silent about what happened.

Since the 1970s, gender and racial bias were exposed in Congressional oversight and investigations by House Banking Committee (now Financial Services Committee) Chairmen Henry Reuss and Henry B. Gonzalez, whom I assisted. In Chapter 8, "Standing in the Door Against Civil Rights," of my book, Deception and Abuse at the Fed, I describe the civil rights problems found at the Fed.

The Greenspan Fed consistently said that it was not covered by the Civil Rights Act of 1964. Yet, the Federal government's Equal Employment Opportunity Commission (EEOC) had told Greenspan emphatically as early as 1989 that the Commission's position was that Title VII of the Civil Rights Act applied fully to the Federal Reserve.

The Bernanke/ Greenspan Fed's defiance is all the more incongruous in light of the fact that the Federal Reserve is charged with enforcing laws to eliminate discrimination in lending by the nation's banks.

In 1966, fifty three years after the Federal Reserve was founded, President Lyndon Johnson nominated the first black member to serve on the Board of Governors. This was Andrew Brimmer, a distinguished economist with a PhD. from Harvard. Sixty four years after the Fed was founded House Banking Chairman Henry Reuss led the passage of the Federal Reserve Reform Act of 1977. The act directed the Board to appoint three directors at each of the 12 Fed Banks "without discrimination on the basis of sex or race, creed, color or national origin..." Reuss had previously issued a press release stating that " ... the Fed has never had a woman among the 1,042 directors in its 62-year history" (6/10/1976) The Board responded by appointing two well qualified women. Sister Generose Gervais, a well known Catholic nun, was appointed to the Minneapolis Fed Bank in 1979. If the Board had thought a nun would be reticent to present her views they were mistaken. The other woman was Jean Andrus Crockett, a full professor at the Wharton School (of business) at the University of Pennsylvania and chairperson of the Wharton Finance department. She served as director of the Philadelphia Fed Bank from 1977 to 1982.

Chairman Bernanke should bring an end to unlawful civil rights practices at our nation's central bank.

Update: Just after my blog, Score One Against Racial Discrimination, and the Federal Reserve, was posted on Huffington Post today (1/18/11), the Fed sent out a press release. Was it a coincidence that it followed the adverse court decision last week that I describe? What about the 16 minority women that they have been tied up in court proceedings for 16 years and the other material I describe?

The Fed Press Release states that Sheila Clark will be one of the heads of the "diversity and inclusion offices" at the Board. I have a copy of a letter sent by her (10/27/1995) stating that "while the Board of Governors of the Federal Reserve System has taken the position that [missing 'it"] is not subject to the civil rights Act of 1964, as amended, and its associated executive orders and regulations, it subscribes fully to their basic goals and spirit." Yet, the Federal government's Equal Employment Opportunity Commission (EEOC) had told Greenspan emphatically as early as 1989 that the Commission's position was that Title VII of the Civil Rights Act applied fully to the Federal Reserve.

Sheila Clark was at the center of the inadequate counseling claims against the employees that the appeals court rejected.. An affidavit has been filed in the case that includes severe allegations of her part in their treatment. Putting her in charge should be a clear indication of what the Bernanke Fed is doing: public relations trumps reality.

The inspector General of the Fed should make this clear to Chairman Bernanke, except for a major problem. The Inspector General is appointed by Chairman Bernanke.

Excerpts from the Fed Press Release:

Press Release

Release Date: January 18, 2011

For immediate release

The Federal Reserve on Tuesday announced the establishment of offices to promote diversity and inclusion at the Federal Reserve Board and at all 12 of the Federal Reserve Banks.

The offices will build on the Federal Reserve System's long-standing efforts to promote equal employment opportunity and diversity, and will continue to work to foster diversity in procurement, with a focus on minority-owned and women-owned businesses. The Dodd-Frank Wall Street Reform and Consumer Protection Act required that diversity and inclusion offices be established at certain federal agencies, including the Federal Reserve Board, and at the Federal Reserve Banks. In addition to promoting diversity at the Board and throughout the System, the Board's Office of Diversity and Inclusion will play an integral role in the development of standards to assess the diversity practices at entities regulated by the Federal Reserve as required by the Dodd-Frank Act.

The heads of the diversity and inclusion offices are:

• Federal Reserve Board, Sheila Clark. Clark, program director, has overseen the Equal Employment Opportunity programs at the Board since 1995. Prior to joining the Board, Clark was manager of workplace diversity programs at Dow Jones Company. Clark holds a bachelor's degree in management from Marymount College, Tarrytown, New York.