Dodd-Frank in the Congo
The consequences of the Dodd-Frank Wall Street Reform and Protection Act can be felt as far away as the Congo. Buried deep within the massive regulatory package is a conflict minerals statute that orders publicly-owned U.S. businesses to disclose to the Securities and Exchange Commission (SEC) their use of tungsten, tin, tantalum and gold sourced from the Democratic Republic of the Congo (DRC).
What do conflict minerals have to do with financial reform? Fair question. The minerals statute, known as Section 1502, does not address Wall Street or the financial crisis. Instead, the provision imposes costly regulations on producers and manufacturers, making products more expensive for the consumer. The provision has also proven disastrous for the Congolese people. The scope of the regulation may seem inconsequential compared to the larger measures within Dodd-Frank. But it has caused disproportionate harm to those it alleged to help.
Why Conflict Minerals Are in Dodd Frank. The DRC, a former Belgian colony and second largest country in Africa, made news during its brutal, decade-long civil war, which claimed the lives of over five million people before the creation of a transitional government in July 2003. During his visit to Washington, D.C., in 2007, Congolese president Joseph Kabila explained to then-Senator Sam Brownback (R-Kan.) that conflict lingered in the eastern half of the country because rebels profited from the sale of minerals used in popular products, such as game consoles, cellular phones, lightbulbs and clothing. A short year later, Brownback and Representative Jim McDermott (D-Wash.) introduced conflict minerals legislation that restricted trade in the Congolese mineral market in hopes of crippling the rebel forces. However, Congress had already turned its attention to the 2008 financial crisis. The primary advocates for the Brownback-McDermott bill, a group of investors and human rights organizations that made up the Responsible Sourcing Network, reorganized and successfully lobbied to have the conflict minerals language attached to Dodd-Frank.2 In the end, the U.S. government’s response to a domestic mortgage crisis included a bizarre regulation aimed at the Congolese rebels.