Thursday, February 18, 2010

Do Large Public Companies Do Business With Minority Firms?


Even though businesses owned by Americans of color have suffered more than white-owned businesses as a result of the recent economic downturn, President Obama has not focused on the special problems that plague minority-business owners. The President’s silence about the impact of the financial collapse on communities of color is most likely attributable to the nation’s political and social climate generated by his election. There has been a great deal of discussion about the President’s election as the precipitating factor ushering in a new post-racial era. Many Americans want to believe that the election of the first African American President signals the end of racism and discrimination, particularly as they affect the African American community. I, however, agree with Michael Eric Dyson who said that “post-racial” is not synonymous with “post-racism”. It seems that for many Americans, the assertion that we now live in a “post-racial” world means that we no longer need to engage in discussions about race and racism. Our national discourse about race and racism has been superficial and wrought with difficulty, but since President Obama’s election, the post-racial assertion mandates silence on these issues. We have elected a Black President. Racism has ended. This seems to define today’s “post-racial” era.
President Obama’s silence regarding the disparate impact the financial collapse has had on Americans of color is not likely attributable to his belief that racism and discrimination are no longer problems. He has made several comments that indicate otherwise. But his silence about racism’s link to economic discrimination based on race obscures a troubling irony relating to minority entrepreneurship. Intuitively, one would think that in the Obama era, the so-called “post-racial” era, it would be easier for Americans of color to establish and succeed in their own small businesses. The counterintuitive reality, however, is that it was easier for African Americans to become entrepreneurs and thrive in the twentieth century than it is in this second decade of the twenty-first century.

Ernesta Procope, an African American, is a twenty-first century businesswoman, who has headed Wall Street’s largest minority-owned firm for decades. Her story is a success story, but, it is a story about success achieved in spite of subtle and perhaps unconscious decision making that impedes the entrepreneurial achievement of twenty-first century African Americans. This twenty-first century narrative reveals the intractability of the problem of lack of access to opportunity for black entrepreneurs.

In the 21st century, black entrepreneurs encounter more difficulties in establishing businesses and getting credit than their white counterparts. African American entrepreneurs frequently pay higher interest rates than similarly situated white businesspeople. It is more difficult for businesses owned by African Americans to remain viable. Black businesses’ sales and profits are typically lower than those of their white counterparts. Based on data gathered from the 1999 and 2001 U.S. Census Bureau, “…African American and Latino firms are less successful on average than are White or Asian firms. In particular, businesses owned by African Americans and Latinos have lower sales, hire fewer employees, and have smaller payrolls than White-owned businesses. African-American-owned firms also have lower profits and higher closure rates than White-owned firms”.

Mrs. Procope’s story reveals a counterintuitive proposition. The impediments to entrepreneurial success for 21st century black entrepreneurs are different from the obstacles their 20th century counterparts faced, but the obstacles are nevertheless as, and perhaps, even more serious. Minority entrepreneurs in the twenty-first century find themselves in a paradoxical situation. There are several federal, state and local programs in place designed to assist small minority-owned and women-owned businesses. These programs help small women and minority-owned businesses get loans and procure business from the federal government as subcontractors. In addition to these programs, many large public companies have diversity programs that attempt to ensure that the small business owners who supply them with goods and services are racially diverse. These programs, however, cannot resolve the problems that minority business owners face as a result of the subtle, often unconscious racism of the twenty-first century.
For example, because of federal and local programs, there is likely to be a perception that minority entrepreneurs have an unfair advantage. This perception may cause many of the decision makers at large publicly-held companies to overlook minority entrepreneurs and give business opportunities to white-owned firms who are seemingly disadvantaged by minority-business programs. This is likely to happen in spite of the public companies’ supplier diversity programs. This perception that people of color enjoy unfair advantages under programs designed to mitigate the effects of centuries of race discrimination fueled energetic anti-affirmative action efforts in recent decades.

Another obstacle to entrepreneurial success for minority business owners, particularly Black and Latino businesspeople, is best examined by understanding the subprime lending debacle that unfolded in the first decade of this century. There is irrefutable evidence that African Americans and Latinos were targeted by mortgage brokers and lenders for high-interest subprime loans even when the minority borrowers qualified for lower-interest prime loans. This discriminatory targeting occurred in consumer lending also. During the height of the subprime mortgage debacle, billions of dollars in wealth were drained from minority communities. This drain in wealth means that minority consumers have less wealth, resulting in a reduction in sales for many minority businesses. And, of course, discriminatory lending practices would impact minority entrepreneurs seeking capital to start or sustain their businesses.
In September, 2009, I visited The Museum of American Finance in New York City’s financial district. The museum is affiliated with the Smithsonian Institute and is the only public museum that focuses on entrepreneurship, money and the nation’s financial history. At the museum was an exhibit called “The Women of Wall Street” containing the stories of present-day and historical female icons in American finance and economic development. Incredibly, not one of the approximately ten narratives was about a woman of color.

The museum, located at 48 Wall Street, is just a few doors away from The E.G. Bowman, Co., Inc., the full-service commercial insurance brokerage and loss control firm founded by Ernesta Procope. Mrs. Procope, a renown and revered business icon, particularly in the African American community, is affectionately known as “The First Lady of Wall Street.”. I was stunned that Mrs. Procope’s story was not included in “The Women of Wall Street” exhibit. Hers is a compelling story of a brilliant and persistent entrepreneur who transformed the store-front homeowners and auto insurance company she founded into the commercial brokerage firm it is today. Her entry into the commercial market was not easy. She had to struggle to get major corporations to do business with her firm. Her struggle was successful, yielding a client list that has included PepsiCo Inc., General Motors Corp., International Business Machines Corp. and Time Warner Inc.

I spoke to Mrs. Procope about her exclusion from “The Women of Wall Street” exhibit a few days after I visited the museum. “I am not surprised”, she told me. I listened to her with quiet resignation as she told me about the racism and sexism she has faced for her entire professional life.

One of the most troubling aspects of Mrs. Procope’s exclusion from the exhibit is that it results from the type of racism and discrimination that cannot be legislated away because it is subtle and perhaps unconscious. The museum’s all-white “Women of Wall Street” exhibit is a type of denial of access to opportunity that is just as harmful to minority business owners as a Fortune 500 company’s refusal to do business. This denial of access renders minority firms invisible to potential clients. This is a problem that lingers in the twenty-first century. It is a problem that cannot be resolved by federal or local programs designed to assist small and minority businesses, nor can it be resolved by supplier diversity programs in the private sector.

The museum’s failure to include Ernesta Procope’s successful business story may also be attributable to unexpressed, perhaps even unconscious attitudes that perceive minorities in general, and the businesses they own in particular, as inferior. This unconscious bias is likely to be shared by the major corporations with whom Procope’s company seeks to do business. In fact, her company has been asked on several occasions to sign a contract with a major company as a supplier. The major company is fulfilling a requirement that it do business with a certain percentage of minority firms in order to procure government contracts that impose such requirements. But, the deal suggested by some major companies did not include the actual provision of services from Procope’s firm. The only thing the companies required was that Procope’s firm say it was a supplier, even though it had to provide no services at all. Mrs. Procope and her managers have consistently refused to participate in these arrangements.

21 comments:

  1. Mrs. Procope's legacy is very inspirational! I researched her on google and discovered she helped spearhead the creation of the 1968 Fair Access to Insurance Requirements Plan. The Plan made insurance available to all New York homeowners, including minority homeowners who had been consistently denied insurance.

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  2. Many tend to think that since we have elected a black president racism has ceased to be a problem. Just because people are not as blatant with their racial feeling as they once where does not make it a non issue. The exclusion of Mrs. Procope from the Women of Wall Street exhibit is an example of the racial threads that still run deep in this country. Whether she is given the recognition that she deserves or not, I am glad that she is a person of integrity and refuses to help big businesses fill their "quotas" of minority business that they do business with so that they can get government contracts.
    Running a business is hard enough. But when you are a minority or a woman it is ten times harder. For bigger businesses to think that minority/women run businesses get an advantage over others is absurd. If anything, minorities/women have to work harder just to get a foot in the door.

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  3. In the Network Journal, Mr. John Prococope, Mrs. Ernesta Prococope's husband, stated, ''We've done everything we can to induce black entrepreneurs to consider our company, but they seem to prefer the large white firms." If the data gathered from the 1999 and 2001 U.S. Census Bureau, “… businesses owned by African Americans and Latinos have lower sales, hire fewer employees, and have smaller payrolls than White-owned businesses,” applies to the 2010 U.S. Census. Does the lack of access to opportunity for black entrepreneurs exist not only from large public corporations, but minority-owned businesses as well? Why?

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  4. It is interesting that even black entrepreneurs would rather go to the large white firms since they are in the same situation of being a black owned business and need support as well.

    I agree that racism is more subtle and even unconscious these days but that Mrs. Procope was excluded from the exhibit and she is on the same street is amazing and not very subtle. She was after all the first African-American owned business to be located on Wall Street when she moved there in 1979.

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  5. I have two general comments. The first is that it is not surprising to me that black entrepreneurs would rather go to large white firms, there is a possibility that the white firms could offer more services. I am not an advocate of going to black owned business just because they are "black-owned." Quality not color should matter. However, with that said, if they are of the same caliber then I am all for supporting ourselves, so to speak. Also, with regard to the post itself, very interesting. I think some African Americans assumed that because Pres Obama is biracial, then he would would consider himself 100%. I realize that is how many American's, white or black, view him, but the fact that he has not been a "savior" for the black people, is not astonishing, and actually unrealistic, even though many African Americans thought this when voting.
    Tiffany S.

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  6. It is true that racism is not such a conscious issue today; however, not every one is as open minded and receptive to helping all businesses as we should. Black women and other minority women have the obstacle of overcoming double discrimination. The developers of the "Women of Wall Street" exhibit probably feel as if they accomplished something major and historical in the business world. I do not aim to minimize the recognition that they are giving to the ten honorees in the exhibit, (I am sure the women have accomplished great things)but their lack of recognition to Mrs.Procope, and other deserving minority women, seems either conscious or an irresponsible oversight. It is commendable that the exhibit honors women that have accomplished what many probably believed they could not, but would it be too much to honor a woman that endures double discrimination and has accomplished just as much, if not more?

    Additionally, I agree with Tiffany S. to some extent. I agree that quality, not color, should matter when supporting a business, but the reality of the situation is color almost has to matter because of the fact (as you said) "there is a possibility that the white firms could offer more services." This is a cycle that must be broken though. They often have more services to offer because they have more of an income to provide those services. On the other hand, the minority businesses are struggling and can only offer certain or mediocre services to sustain. We must help these businesses by supporting them so that there may be an equal playing field. Only then will it be about quality and NOT color.

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  7. Often times, in today's society, the election of President Obama to office has been translated into a sense of "what is owed" by the African American community. Although it is an amazing and historical achievement, we as African Americans can not expect him to save the day in every situation just because of his racial background. If "the shoe was on the other foot" and such a concern was presented by the majority population just 3 years ago, we would have had a major issue. Furthermore the problems facing African American business owners has had a long history and can not be resolved in a year and 2 months.

    The only way this issue will be resolved will be if the African American owners, CEOs, and business executives (who have longer and more definite terms than President Obama) take responibility. These are the individuals we must look to regarding this historical pattern. Take for example Durham, NC, once known as the "Black Wall Street." The success of Durham was based on the responisbility, support and faith in the African American business community to efficiently handle the business of the times. Not to say that African American business' should strictly associate with only other similar firms, it would be helpful for them to diversify their association just as much as their own staff. Does the majority socity often look over minority firms, causing unneed difficulty in achieving business goals? Undoubtably yes. But... Could this issue be resolved by African American executives diversifying their business associations and utilizing firms of more diverse backgrounds? Again the answer is yes.

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  8. I agree that racism is both subtle an unconscious (In some areas, however, it is very overt). With the election of President Obama, I do feel as though many believed that it meant the end of racism and a better existence for African Americans. The election of President Obama is another stepping stone towards hope for "change" in social reformation among different races, but it was not a be all, end all to racism. We cannot expect President Obama to focus only on the special problems that plague minority-business owners. He must be the President of the United States; not just African Americans. He must take a more utilitarian approach. I do believe however, that President Obama's plan to give incentives for banks to give loans to small businesses is a way to aid businesses owned by Americans of color that have suffered more than white-owned businesses as a result of the recent economic downturn. I believe this considering the fact that many African American businesses are also small business.

    I agree that museum’s failure to include Ernesta Procope’s story may also be attributable to the unconscious attitudes that perceive minorities in general.

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  9. It was very inspiring to learn what this businesswoman accomplished. I wasn't aware of her story until I read this blog, but I found it very encouraging nonetheless. There's no doubt in my mind that racism still permeates American society on many levels. Most recent example I have come across was a Tea Party convention in Colorado (described in a TIME article this week) where one of the speakers, a well known political hawk, kept rousing the crowd by calling on top of his lungs for Barack HUSSEIN Obama's birth certificate, placing special emphasis on the president's middle name. There's nothing unconscious about that type of fear mongering.
    So it is not surprising that minority-owned businesses face the same struggles, and sometimes even larger ones, as they did in the last century. Obama's election was, for many, a way of saying "see, now minorities have a president of color, so there's nothing to complain about anymore". I have seen that sentiment expressed in many circles. This type of thinking does a great disservice to minority enterprises because it takes away from progressive thought on the issues they face, thus making persaverance in the marketplace that much harder. "Now that you have a president of color" the thinking goes, "you don't neat affirmative-action type programs to help your businesses...after all Obama did it on his own volition". And so the racial problems remain in place, for now a justification for not dealing with them exists, and the post-racial world is only a facade.

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  10. There have been alot of firsts this last past election; the first black president, the first female Republican candidate for Vice President, and a strong female nominee for the Democratic ticket. President Obama should recognize and address this directly. The impact that was made in the political arena is just a glimpse at what could be done should race and gender serve its proper role in the corporate world. The country was ready for change in this presidential election. The business world should follow suit. If it is good enough for the biggest superpower in the world, then it's good enough for wall street.

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  11. Okay...as a woman of color, I was BEYOND excited when Barack was elected. Shortly after, however, I could see what his election did to our community that was much less positive than I'd hoped for. There has been a growing sentiment that "If Barack can do it, anyone (read: Black person) can." This is so far from the truth that I would laugh if it wasn't such a harmful, pervasive notion. I mean, Clarence Thomas pulled himself up by the bootstraps, Obama became President. I suppose any person of color, from any background, can be the next Supreme Court justice or leader of the free world. Right?

    The same way that California banned affirmative action in admissions decisions, many businesses believe that there's no longer a need to encourage minority-owned businesses because the playing field is equal. The playing field won't truly be equal for a few centuries.

    The reality is this: Blacks (and other minorities) suffer from both covert and overt racism. I often wonder which type is more damaging. I think that overt is often more damaging to the spirit because it forces you to deal with ignorance very directly. However, covert racism, too, eats away at the spirit in a more insidious way because there is nothing concrete to rail against. You're just left with the feeling that something isn't quite right.

    Thank you for sharing Ms. Procope's story, even just a small part of it. I must admit I'd never heard of her before, but I'm inspired whenever I hear success stories from our community.

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  12. This reminds me of another instance where the idealistic policy goals of federal, state, are not properly realized after they are actually implemented. Similar to the financial regulatory mechanisms that we had in place before the Great Recession of 2008, federal minority-owned business programs have been in place for decades and appear wonderful in theory. Unfortunately, due to various social reasons including discrimination, such laws have not yet been successful at fulfilling their proposed goals.

    I voted for President Obama on the hope that we would see fundamental changes in our society. I was also naive in thinking that many of our country's problems would be solved overnight. Over one year into President Obama's presidency, we all are seeing the challenges he faces and the difficulty it is to make progressive change.

    I also anticipated that the election of President Obama would lead people to try and squash discussions of discrimination simply because the country elected an African-American President. In a way, I believe that President Obama is also burdened with the task of appearing non-threatening to the majority of Americans who do not share his diverse roots. He is staying away from racial justice issues, just like he stayed away from Jeremiah Wright, out of a fear that he would be alienating large segments of society. I, for one, hoped President Obama would be more forceful and aggressive when it came to issues of social and racial justice. President Obama has to engage in a kind of identity performance in his role as President. He can no longer be that community organizer that he was in Chicago. I believe he fears that this would threaten the status quo. This is the kind of identity performance that many minorities engage in outside of intimate settings of home and family.

    However, I think, like many, I made the mistake of putting too much hope in one man. There must be fundamental change in society, not simply a change in administration, for this country to truly achieve change.

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  13. "We have elected a Black President. Racism has ended." This seems to be the sentiment among the majority but for most minorities, they know this to not be true. There is still a wide gap in the earnings between minorities and whites. There are still few partners at major firms who are people of color. Racial profiling still exists. So what has really changed since Obama was elected President? What has changed is that minorities feel more hope that there will be change eventually. There is hope that if he can do it, maybe my sister, my brother or even my child can do it too.

    Jennifer B.

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  14. I agree with many of my classmates that racism is prevalent in American society despite the election of a black president. In fact, if you look at American society today on the surface it seems that much has changed, since fifty years ago you would have never imagined working in a corporation where your coworkers can come from all sorts of diverse backgrounds. But if you look closely you will find that in today’s corporation the overwhelming majority of the senior managers, and higher ups are the typical white middle-aged males. So in a sense, the only thing that has changed is that corporations have opened up their doors through affirmative action programs to fill entry level positions with people from the minority population. You can never call this racism. I just believe that minorities will have to work that much harder to prove their abilities to make their way up the corporate ladder.

    I also think it is ridiculous that people have stated it was unfair to implement programs to help minority businesses, and believe that this will give minority businesses an upper hand. If anything, I think these types of programs hurt rather than help minority businesses. I think a typical consumer might consider this type of help from the government as an indication that a minority business cannot survive on its own without government assistance, therefore would not even consider doing business with a minority business. In addition, consumers might think that all minority businesses, even the ones that do not seek assistance are inferior to white businesses. Although, I appreciate the government’s help in correcting past discrimination, I believe after a couple of years these type of programs should come to an end.

    Like Ms. Procope, I am also not surprised that she was not nominated as the top 10 women entrepreneurs to have their story displayed in the American Financial Museum. I am not sure if I have seen these situations enough in my life time that I have become immune to America not recognizing minority individuals who should be recognized. I think at a certain point you can only control your own actions, and Ms. Procope has already proven her success in her business, and it does not matter if she is recognized for it or not in a Museum display. As long as her customers and future customers recognize her great services is all that matters.

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  15. I agree that the declaration that we live in a post-racism era because we have elected a black president is a form of double speak. Although I am not surprised that Americans are using the fact that our current president is black to shirk the obligation to address discrimination problems.
    Long after the civil rights movement discrimination has transformed in such a way that makes remediation difficult. This is the reason why individuals, especially politicians, tend to stay away from the "hard questions" and the difficult issues. Therefore, By NOT addressing the discrimination problems in corporate america Obama is simply using a political tactic so that [1] he does not become unpopular to American Citizens under a very harsh and critical spotlight and [2] he does not open a can of worms that nobody wants opened.

    Like it is much easier to rely on stereotypes and preconceived notions about racial groups, it is also much easier to leave successful minorities like Ms. Procope unrecognized. Her unrecognized success is the product of federal programs and state programs that conribute to the ignorant and uninformed belief that minorities simply cannot hack it in corporate America without some assistance. Because she has been pigeonholed into this stereotype her accomplishments as an individual has gone unrecognized. I believe it is time for the American people to view people as individuals as products of their upbringing, religion, and hard work ethic rather than define and group people into categories just because it is easier.

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  16. I find it odd that minorities seek to end discrimiantion when they themselves discriminate against one another. Discrimination has infiltrated society in many ways. Whites discrimiante agaisnt blacks and blacks discriminate against blacks. With President Obama, people saw his election as a hope to the end of discrimination. But, discrimination does not end with just the presentation of hope for its end. We must work together to end it. We cannot just assume the demise of discrimination because people want it. The roots of discrimiantion run deep and we must dig into those roots and put an end to discrimination. Electing the first black president was the start, but certainly it is nowhere near the end.

    -Veronica

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  17. When President Obama was elected, I was ridiculously excited, but at he same time I was concerned because I knew that this would be yet another excuse for people to say that there is no such thing as racism anymore. When talks of doing away with affirmative action programs began to run wild, the "fact" that they were no longer needed or unfairly advantaging minorities were the reasons given. I feel that Obama's election has created the same sentiment, and it is unjustified. I also feel that people have expected him to swoop in and become this savior, both for America as a whole and for African-Americans, and have set the bar so high that it will be difficult, if not impossible for him to meet it.

    The programs designed to create a equal playing field are still very necessary, despite what some people may think. If anyone doubts whether they are, all they need to do is look at the quality of the educational programs in predominately minority communities, the minority composition of student bodies in graduate schools and in professional settings, the number of minorities in supervisory roles and leadership positions in large companies, etc. to see that that there is still a very large disparity.

    ~Maryam Adeyola

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  18. After the election of our president I was overcome by joy. It was rewarding to see someone who is Black, even if only partially, was now the leader of the free world. As a result I felt a duty to do better and be better for myself and for others that look like me, this feeling is commonly known as the "Obama Effect." However, post election I quickly began to realize that the election of a Black President did not signify the end of racism or racial biases, but in fact ignited it. It was amazing to see the vast amount of people trying to justify why they did not like President Obama calling him the likes of a "Facist", "Socialist", and "Communist" as if those words were all synonymous. Small sects would scramble for absurd reasons why his election was a mistake, when we all know in reality the only reason they do not like him is because he is Black. Instead of relishing in the election of the first Black leader of the free world, I have been concerned with the backlash of his election and what effect that will have on minorities in the professional world. This post illustrates the type of discrimination Black owned businesses and businessmen and women face, and despite Barack Obama's election to office I do not see it getting any easier for minority business owners in the near future.

    -Jeffrey Pierre-Louis

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  19. Everyone expected that when President Obama was elected, this country would miraculously change, that racism, whether subtle or blatant would dissipate the moment he was elected. I was no exception. I wanted to believe that once a black man was elected to the highest office in the country, racism would no longer be an issue. I wanted to believe that no longer would an assumption of preferential treatment be made when a minority owned business is given a lucrative construction contract or a person of color receives a fellowship. But of course that is not the case. Racism has not dissipated in our society. Post Racial is not post racism, and it is not colorblindness. Sometimes, it feels like this “post racial” era is more racial then more. When the NY Post characters the President of the United States as a monkey, you know that racism is alive and well, and it is not subtle at all. We all know that subtler attacks against Obama have been made since this incident and continue to be made.
    Given the attacks endured by Obama it is easy to see how racial discrimination is present in Corporate America. Why would corporate america change it discriminatory practices when the large new medias characterize the president in a demeaning fashion? Why would corporate america change its discriminatory practices when minority professionals would rather work at white owned companies than minority owned companies? Why would corporate america choose to do business with minority firms when they are under the assumption that these firms are receiving "unwarranted" preferential treatment? Racial discrimination in corporate america is not going to change until corporate america is willing to change, until corporate america is willing reconsider its assumptions.
    Additionally, it is easy to see why Obama choose not to address these problems. During the 2008 election, many sought to make race the primary issue. Addressing the issue of racial discrimination in Corporate America runs the risk of issue of racial discrimination taking over his presidency. Obama seeks to do a great deal with his presidency and thus has not addressed the discrimination in Corporate America.
    ~ Jahel

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  20. Obama's silence on race matters echoes what is occurring within corporations. Racism is considered taboo, and minorities must deal with the effects of overt racism and "insiders'" attempts at combating racism.

    The country needs to publicly address these issues before any change can be made. If it is addressed openly, especially by our President, it may signal change in the private sector.

    Cathy

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  21. While we are most definitely dealing with issues of race here we are also dealing with issues of gender. Instead of arguing to include Mrs. Procope in the “The Women of Wall Street” exhibit, I think I would rather see her and all those other women featured in a "Leaders of Wall Street" exhibit.

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