Wall Street execs received a curious letter last month asking them to contribute $50,000 or more toward Reverend Jesse L. Jackson's Wall Street Project to promote diversity in the securities industry. But the civil-rights activist won't use the money to organize boycotts of Wall Street firms or demand they come up with affirmative-action plans. Instead, Jackson, along with his two key backers, Travelers Group Inc. Chief Executive Sanford I. Weill and New York Stock Exchange President Richard A. Grasso, write that the funds will pay for a Jan. 14-16 conference to call "attention to the success of the Wall Street community in recruiting and promoting minority executives."
ABYSMAL RECORD. Hello? The Street has an abysmal record of employing minorities. The top five retail brokerage firms employ only a handful of African-American branch managers, says Tony Chapelle, editor of a newsletter on black securities-industry professionals. A scant 2.2% of the industry's sales force is black, according to the Equal Employment Opportunity Commission. Goldman, Sachs & Co. has two black managing directors out of 405--the only two in its history. Overall, the percentage of African Americans employed in the securities industry has dropped from 10.6% in 1990 to 8.4% in 1996. And 58% are office and clerical workers, says the EEOC. Even Securities & Exchange Commission Chairman Arthur Levitt Jr. thinks Jackson should pressure Wall Street to clean up its act: "I think the right message is [that] this industry has to do a better job."
So why is Jackson extolling its virtues? Because he is using the Street as a piggy bank to go after his main target, Corporate America. "Jesse is taking the Trojan horse approach," says one minority Wall Street executive. Jackson's Rainbow/PUSH group is buying shares in companies and plans to agitate at shareholder meetings for everything from hiring minority accountants to buying supplies from minority firms.
Wall Street knows a good trade when it sees one. Securities firms want to be sure they don't make the list of companies that Jackson, in his new role as corporate gadfly, intends to haunt. Rather than use confrontation, Jackson says he is on Wall Street to point out that it is in Corporate America's best interest to hire minorities and invest in inner cities because they are "the emerging markets of the future."
The problem with this approach is that it lets Wall Street off the hook. Jackson has raked in some $600,000 from the likes of Merrill Lynch and Salomon Smith Barney, but that's just lunch money to this crowd. Raising the money was even easier since he used the names of conference speakers Levitt and Federal Reserve Chairman Alan Greenspan--though without their consent. Jackson says it was an oversight. In hopes of reviving his own initiative on race, President Clinton agreed to speak on Jan. 15, Dr. Martin Luther King Jr.'s birthday.
Wall Street does deserve some credit. Travelers named Thomas W. Jones a board member and vice-chairman last year, making him the highest-ranking black on Wall Street. Merrill Lynch & Co.'s top African American, Stanley E. O'Neal, is co-head of investment banking and capital markets. And the big Wall Street firms have improved their record in recruiting minority college students.
But in an industry that thrives on numbers, the securities business should set specific goals and timetables for minority hiring and promotions. Otherwise, the impact of the conference will be nil. If Wall Street bonuses were based on the number of minorities that managers recruit and retain, Jackson could more appropriately declare victory.