America’s big banks are hiding behind racial equity to avoid new capital standards–but refuse to disclose the demographics of their small business lending

(Credit: Ting Shen - Bloomberg - Getty Images)

As regulators contemplate tougher capital standards for large banks (intended to prevent future banking collapses and make the financial system safer), the banking lobby is crying foul. One of their key arguments is that the new capital standards could hurt minority-owned businesses. A well-funded ad campaign from Goldman Sachs argues the new capital standards would “make it even harder for minority-owned businesses to access loans and credit.” Meanwhile, the Financial Services Forum says the proposal would “disproportionately impact historically underserved communities.”

However, capital standards are far from being the main cause of–or solution to–discrimination in small business lending. In fact, by wrapping their arguments under a cloak of racial equity, the banking lobby is preserving the status quo and letting underserved communities disproportionately bear the impact of a tightening lending market, rather than addressing the ingrained inequities in banking.