Sen. Bob Menendez, SEC Commissioner Luis Aguilar Join Greenlining Institute in Criticism
WASHINGTON – Final joint standards just released by six federal agencies for assessing the diversity practices of the financial institutions they regulate represent a complete failure to seriously address diversity in the banking industry, policy experts at The Greenlining Institute said today, joined by Sen. Bob Menendez and SEC Commissioner Luis A. Aguilar. The standards have changed little since a draft released nearly two years ago, despite over 200 written comments from consumer advocates, racial justice organizations and members of Congress (including architects of section 342 of the Dodd-Frank financial reform law) urging that the standards be made more specific and concrete.
The standards were issued by the Offices of Minority and Women Inclusion (OMWIs) in the Office of the Comptroller of the Currency, Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, Securities and Exchange Commission, National Credit Union Administration and the Consumer Financial Protection Bureau as required by section 342. The law created Offices of Minority and Women Inclusion in 20 financial regulatory agencies and tasked them with “assessing the diversity policies and practices of entities regulated” by the agencies.
“These standards lack vision,” said Greenlining Institute Economic Equity Director Sasha Werblin. “Congress gave the OMWIs a chance to help this critical sector of our economy truly reflect America, but what came out today sends the message that either the OMWIs or their bosses don’t care. Imagine you’re back in school and your teacher tells you that you can decide whether or not to take a final exam, write it yourself, grade it yourself, and any bad results won’t appear on your transcript. That’s what they’ve done. It’s just staggering.”
“The standards issued today unfortunately fall short of what is necessary to achieve real progress,” said Sen. Bob Menendez (D-N.J.), a senior member of the Senate Banking Committee and lead Senate sponsor of the Wall Street Reform Act provision that created the Offices of Minority and Women Inclusion. “As I noted in my recent Corporate Diversity Survey, it’s no secret that the financial industry has a long way to go to improve the diversity of its leadership, workforce, and supplier base. The Offices of Minority and Women Inclusion were created to help address the lack of diversity within our financial sector, and we need much more than voluntary self-assessments to bring about much-needed transparency and meaningful change. The time has long passed for substantive and far-reaching standards to expand management, employment, and business opportunities for women and racial or ethnic minorities at all levels of the financial sector. The OMWIs must begin to live up to their potential and use their authority to push for greater diversity across the board.”
“In the end, the Agencies have chosen to do what is convenient for the companies, rather than the right thing for the long-term benefit of our country,” said Securities and Exchange Commissioner Luis A. Aguilar, who noted the industry’s long history of severe underrepresentation of minorities and women. For example, white men constitute only 31 percent of the U.S. workforce but occupy 64 percent of executive and senior level positions in the financial industry. Many believe that lack of attention to communities of color contributed to regulatory neglect of problems that led to the financial crash of 2008.
The standards allow financial institutions to do a self-assessment of diversity practices, but do not require any reporting to the public or to the OMWIs. Neither do they set any standards for reporting that would allow for meaningful comparisons between companies.
Werblin noted that effective models for promoting diversity among regulated businesses, without coercion or quotas, already exist. In California, for example, both the Public Utilities Commission and Department of Insurance have programs under which regulated firms report the degree to which they contract with firms owned by women, minorities or disabled veterans. These programs, based on transparency and including clear reporting standards, have produced marked increases in contracting with diverse businesses.
“Congress directed the OMWIs to assess the diversity policies and practices of the entities they regulate, and these standards don’t fulfill the congressional mandate,” Werblin said. “Letting the companies decide whether to report, what to report and how to report it is like having no reporting at all. We’re shocked and disappointed that they’ve disregarded so much constructive input.”