Following hearings this past spring, Representative Maxine Waters (D-CA), Chair of the House Financial Services Committee, released a statement that the Committee finds more work is needed to improve diversity at megabanks. The statement, released on August 13, included data gathered from eight of the nation’s largest banks in response to letters to those institutions from Chairwoman Waters and Representative Joyce Beatty (D-OH).
The Committee concluded that senior leadership among large U.S. banks still is mostly white and male, with no megabank having a female or minority CEO. The statement questioned whether diversity is really a priority for megabanks given that no chief diversity officer reports directly to the CEO. And it noted that boards of the largest banks are 29% female and 17% minority, falling below the overall levels among the U.S. population of 50% female and 40% minority.
The Committee also examined supplier diversity and similarly found a lack of meaningful progress. With average spend on diverse suppliers of $1.4 billion, less than 1% of megabank spending is devoted to diverse asset managers and suppliers, and only 4% of externally managed assets go to diverse-owned firms.
From a policy perspective, the Committee reported that only 1 out of 25,000 employees on average is dedicated to diversity; diversity metrics are not tied to compensation; and only half of megabanks tie it to performance.
As a result of these findings, the Committee’s overall conclusion was that megabanks are making some progress in diversity but much more is needed. Specific recommendations include an increased focus on recruiting through affinity groups and minority institutions of higher education; closing the pay equity gap; and increasing investment in leadership and development programs to build a diverse talent pipeline.
Ballard Spahr’s Diversity & Inclusion Legal Team advises clients on the design and implementation of diversity and inclusion programs and is counseling regulated entities on developing and implementing diversity programs. The team consists of Ballard Spahr lawyers from several practice groups who regularly advise financial institutions and publicly traded companies on regulatory compliance issues, including those under consumer financial services laws.
The firm’s weekly podcast includes an episode in which we review the four key focus areas of the 2015 diversity and inclusion standards adopted by the Offices of Minority and Women Inclusion at the CFPB and other federal financial regulators, identify the issues regulated entities should consider in addressing those areas and deciding whether to conduct D&I self-assessments, and discuss the evolving Congressional and regulatory D&I landscape since 2015. Click here to listen to the episode.