The Fintech Beat Podcast shook things up a couple weeks ago with an episode titled “Brex founder and co-CEO Henrique DuBugras co-hosts Fintech Beat to discuss regulatory diversity,” as we heard Henrique DuBugras, founder and co-CEO of Brex, a company that provides a new kind of financial OS to businesses, step up as co-host to interview the podcast’s regular host, Dr. Chris Brummer.
Before I get ahead of myself, a quick rundown: Fintech Beat, for those who don’t know, is a financial policy podcast hosted by Dr. Chris Brummer, a law professor and faculty director of Georgetown’s Institute of International Economic Law. Recorded at CQ Roll Call’s studio in Washington, DC, Fintech Week is designed to explore the future of finance and the “rapidly transforming banking and financial services sector.” Week to week, Dr. Brummer covers topics related to financial policy and technology – as well as how those industries overlap – through rundowns and interviews with various experts in these fields.
But in this particular episode, we heard Dr. Brummer shift from host to interviewee, as DuBugras says, for the first time. DuBugras goes on to say that he is excited to interview Chris not only because he and those at his company appreciate the Fintech Beat podcast, but also Dr. Brummer’s own research and work into fintech, fintech regulation, and diversity.
Thus explains the change in format. Dr. Chris Brummer is known for his research in fintech particularly in regards to policy and diversity. He has been featured on CNN, Bloomberg, Forbes, and countless others, though a major focus of this podcast episode rests on a paper he wrote called, “What Do the Data Reveal About (Black) Financial Regulators?” published by Brookings, where Dr. Brummer calls out the “virtual absence of African American financial regulators.”
In the episode’s discussion of the paper’s topic, DuBugras first asks about Dr. Brummer’s background, particularly in regards to how he got into the space of fintech with a focus on both legal and cultural elements within it. Dr. Brummer, after thanking DuBugras for the opportunity to talk with him in this format, speaks on what brought him to his interest in fintech. Put briefly, it was his own curiosity, an excitement about fintech as an industry and all the industries that intersect with it. Dr. Brummer goes on to say that fintech is an ecosystem that spans “cybersecurity to cryptocurrency, democratizing financial services, financial inclusion,” and that “breaking down barriers” was a theme that stood out to him. He found it to be an interesting space to think about both as an academic and concretely.
When DuBugras brings up the paper specifically, he mentions that 3% of financial regulators in the US have been Black, a key statistic shared in Dr. Brummer’s paper. DuBugras brings up another key statistic from Dr. Brummer’s paper that “no federal financial regulatory agency has more than three African Americans participate as members over the course of their entire existence, and that when that is averaged out over the last 9 years, this translates to approximately one African American being appointed to a federal financial regulatory agency every 10 years.”
After DuBugras states these numbers, Dr. Brummer talks more about the inception of his paper, stating that the conversations around diversity in the industry often don’t take regulators into account, despite the fact that they help to standardize and set expectations. He wanted to know what the historical representation looked like, and it didn’t look good: out of 327 financial regulators, only 10 were Black, and the stats have gotten worse. What’s more, as Dr. Brummer states in the episode, there has also never been a Black chair of SEC, or the federal reserve, or CFTC. Beyond what this shows about diversity within these roles, Dr. Brummer was also interested in the impact this has had on the implication for people’s expectations and how this trickles down into policy leadership.
In the follow up questions on this research, DuBugras asks Dr. Brummer if the trends seen in these results are contained to the US, and Dr. Brummer noted that following the article’s publication in September, 2020, many regulators from all over the world reached out to talk to him about his findings. The two go on to talk about how one is appointed as a federal regulator, and some of the theories that have emerged to explain the low numbers in regards to inclusion. Dr. Brummer commented on two theories, the first being that these positions tend to be given to staffers in the Senate, so if there are fewer Black staffers in the senate, there will inevitably be fewer Black regulators. To challenge this, Dr. Brummer points out that not all financial regulators did have Senate experience. Another theory Dr. Brummer commented on in the episode was the qualifications theory, implying that there are few qualified black candidates, but when he tested that theory he found the Black financial regulators tended to have better credentials.
The episode wrapped up with a slight divergence from Dr. Chris Brummer’s inclusion and diversity research, with DuBugras asking him what trends he was anticipating or excited for looking ahead to 2021. Dr. Brummer cited central banking and digital currencies in regards to regulation, as well as big data and the impact on fairness, ethics, and how the economy will be restructured (already considering the impacts of COVID-19). The podcast ended with Dr. Brummer’s perspective on financial regulation in Washington, DC.