02/12/2020 - A Review of Diversity and Inclusion at America’s Large Banks - (EventID=110498)

Video Description

Connect with the House Financial Services Committee Get the latest news: https://financialservices.house.gov/ Follow us on Facebook: https://www.facebook.com/FinancialDems/ Follow us on Twitter: https://twitter.com/FSCDems Wednesday, February 12, 2020 (10:00 AM) -- A Review of Diversity and Inclusion at America’s Large Banks ________ The witnesses for this one-panel hearing are: • Kenneth Bentsen, President and Chief Executive Officer, Securities Industry and Financial Markets Association (SIFMA) Diversity and Inclusion Council • Dr. Naomi Mercer, Senior Vice President, Diversity, Equity and Inclusion, American Bankers Association (ABA) • Rawan Elhalaby, Senior Economic Equity Program Manager, The Greenlining Institute • Subha Barry, President, Working Mother Media • Joseph Vaughan, Executive Director, Corporate Diversity and Inclusion Forum • Dr. Gail Greenfield, Principal, Workforce Strategy and Analytics, Mercer Purpose This hearing will review the findings and recommendations of a report prepared by the Majority staff of the Committee on Financial Services entitled, “Diversity and Inclusion: Holding America’s Large Banks Accountable” (Committee Staff Report or Report). Background Congress included provisions in the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act) to promote diversity and inclusion in the financial services industry, including the collection of diversity data. Specifically, Section 342(e) of the Dodd- Frank Act established and requires the Offices of Minority Women and Inclusion (OMWI) to submit an annual report to Congress regarding the actions taken by the respective financial services agencies and the OMWI office, which shall include “the challenges the agency may face in hiring qualified minority and women employees and contracting with qualified minority-owned and women-owned businesses,” and “in operating minority and women outreach programs,” among other things. To comply with this section of the law, the financial services regulatory agencies adopted the Joint Standards for Assessing the Diversity and Policies and Practices of Entities Regulated (Joint Standards) in June 2015. Regulators agreed that industry compliance in sharing diversity data per the Joint Standards would be voluntary. As a result, regulators have received limited information from their regulated entities, including banks. For example, the prudential banking regulators—the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency and the Board of Governors of the Federal Reserve System—noted in their 2018 annual OMWI reports that they had 16.7%, percent, 9.3% percent and 5% percent response rates to their diversity survey, respectively. After the megabank CEOs testified before the Financial Services Committee in April 2019, Subcommittee Chair Beatty asked the financial institutions to share more detailed information on their banks' diversity and inclusion data and practices.... Key Findings of the Committee Staff Report The key findings of the Committee Staff Report are that: 1) large banks’ boards of directors are not diverse; 2) their senior employees are not diverse; and, 3) they have limited spending and investments with diverse firms. Despite these shortcomings, the Report also found that some banks are implementing diversity-focused policies and practices including: 1) recruiting diverse talent; 2) establishing employee resource groups; and, linking diversity and inclusion results to performance. The Report also details how some banks have achieved pay equity between male and female employees, and at nearly all banks, the ratio of male to female employees approximately mirrors the U.S. general population. In addition, the overall proportion of racial and ethnic minorities at the large banks approximates the U.S. general population. While all 44 banks acknowledged in some way that they need to improve with respect to diversity and inclusion, nearly half of the banks surveyed did not share any specific challenges in implementing their diversity and inclusion goals. For those banks that identified challenges, the most prevalent challenges reported: the competition for talent in science, technology, engineering, math (STEM) and finance; the absence of a consistent definition of diversity and inclusion; and, data collection and self-identification problems. Key Recommendations of the Committee Staff Report The Committee Staff Report recommends that Congress consider the following legislative actions to improve diversity and inclusion at American’s largest banks: • Require that banks share diversity and inclusion data with their regulators and the public; • Require banks to track and make efforts to increase their spending with diverse firms; and, • Require banks to publicly disclose the diversity of their boards. Hearing Page: https://financialservices.house.gov/calendar/eventsingle.aspx?EventID=406119