The CFPB’s Office of Minority and Women Inclusion (OMWI) has issued its third annual report to Congress covering the OMWI’s activities in 2015. The Dodd-Frank Act required the CFPB and various other federal agencies, including the Fed, OCC, FDIC, NCUA, and SEC, to establish an OMWI, and also required each OMWI to submit an annual report to Congress.
From industry’s perspective, the most noteworthy task Dodd-Frank assigned to each OMWI was the development of standards to assess the diversity policies and practices relating to employment and third party contracting of the institutions regulated by the OMWI’s agency. As the report indicates, in June 2015, the CFPB and the agencies listed above jointly issued a final policy statement establishing such standards (Final Standards). The Final Standards became effective on June 10, 2015.
The Final Standards envision that an entity will conduct an annual “self-assessment” of its diversity policies and practices in four areas: (1) organizational commitment to diversity and inclusion, (2) workforce and employment practices, (3) procurement and business practices, and (4) practices to promote the transparency of organizational diversity and inclusion. The Final Standards provide for “assessment factors” for each of these areas, encouraging entities to allocate time and resources to monitor and evaluate their performance under their diversity policies and practices on an ongoing basis. In its report, the OMWI states that it “has begun work on plans related to the new standards including creating processes and procedures for entities to voluntarily assess and report on their internal diversity and inclusion.”
Another task of an OMWI is to develop standards for creating diversity in an agency’s own workforce and increasing participation of minority-owned and women-owned businesses in the agency’s programs and contracts. According to the report, as of year-end 2015, the CFPB had 1,507 employees, representing an increase of 283 employees from year-end 2014. Of the 1,507 employees, 48% were female and 52% were male. (The percentage of women represents a 2% increase from 2014’s percentage.) In addition, of those employees, 68% self-identified as White, 20% as Black/African-American, 9% as Asian American, and 3% as another racial group or belonging to two or more racial groups. The report notes that as of the end of 2015, minorities and women held, respectively, about 26% and 41% of the CFPB’s executive leadership positions.
With regard to procurement, the report indicates that in FY 2015, the CFPB entered into 1,450 “contract actions,” totaling approximately $244.0 million. Of the total contract dollars awarded in FY 2015, the report states that 5% went to women-owned businesses and 9% went to minority-owned businesses (consisting of businesses owned by Hispanic Americans, African-Americans, Asian/Pacific Islander Americans and American Indians/Alaskan Natives and “Others”).
As noted above, the Final Standards cover not only a regulated entity’s diversity policies and practices relating to employment but also cover its procurement and business practices. Thus, banks and other regulated entities may want to take note of the section of the report describing the CFPB’s efforts to increase vendor diversity.
Ballard Spahr’s Diversity Team advises clients on the design and implementation of diversity and inclusion programs and counsels CFPB-supervised entities on developing and implementing diversity programs.