Community Reinvestment Act’s Shortcomings and the Judicial Plays

After affirmative action was ended in June 2023, will the Community Reinvestment Act be next?

October 17, 2023

| BY: Celina Pena

The Supreme Court’s decision on June 29, 2023, effectively ending the consideration of race in college admissions in Students For Fair Admissions, Inc. V. President And Fellows Of Harvard College, has had far-reaching implications. The ruling overturned a longstanding precedent that had provided benefits for Black and Latino students in higher education. The new legal regime prohibits universities from factoring in race or other related factors when admitting students. The decision is expected to have immediate consequences, with selective universities predicting a significant decrease in Black and Hispanic students.

Beyond its impact on college affirmative action programs, this ruling has broader implications within and outside academia. It may undermine minority scholarship programs and diversity, equity, and inclusion efforts in the corporate world. There are already cases in lower courts challenging the constitutionality of certain initiatives. These legal challenges threaten programs such as the Small Business Administration’s efforts to support businesses owned by Black, Latino, Native, and Asian American entrepreneurs.

Diminishing Diversity Initiatives

One such case, Nuziard v MBDA, questioned the constitutionality of the Minority Business Development Agency, which dates back to the Nixon Administration. Another case, Do No Harm v Pfizer, targets the pharmaceutical company’s program aimed at helping individuals from Black, Latino, and Native American communities attain leadership positions within the company. All eyes are now on the 2nd Circuit, where the appeal for the latter case resides, to observe how it interprets the Supreme Court’s ruling.

The consequences of diminished diversity initiatives are significant, not just in academia but also in the business world. Research has consistently shown that companies with diverse management teams experience financial benefits. The influence of diversity on creativity, decision-making, and recruitment is also widely recognized in the business media. Moreover, diverse institutions have proven to be more resilient overall, as they benefit from a broader range of perspectives that enable them to recognize critical changes and better prepare for future events. A recent study by Glassdoor found that one in three job seekers would not even consider applying to a company lacking employee diversity.

How Will This Affect the Community Reinvestment Act?

In summary, the Supreme Court’s ruling to disallow the consideration of race in college admissions has triggered concerns about its egregious impact on minority opportunities beyond education. It can potentially undermine programs fostering diversity and inclusion, with far-reaching consequences for minority entrepreneurship, leadership representation, and overall business success.

With Title VI now considered unconstitutional, will the Community Reinvestment Act be next? If so, what does this mean for Community Development?

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