CFPB to Collect Data on Firms' Diversity Policies
The banking industry is getting more scrutiny. That scrutiny can and should include a look at who is in charge.June 20
WASHINGTON — The Consumer Financial Protection Bureau Monday outlined how the bank regulators plan to implement a mandate in the Dodd-Frank Act to promote diversity in the workplace at financial institutions.
Like the other agencies, the bureau was required by the 2010 reform law to establish an Office of Minority and Women Inclusion. Dodd-Frank also called on the regulators to jointly develop standards for assessing diversity policies at the institutions that each regulator oversees.
At a press conference introducing Stuart Ishimaru as the head of the CFPB's diversity office, bureau officials said the banking regulators may soon collect from banks information about their diversity practices as part of the process for developing best practices.
"Obtaining diversity data from regulated entities will facilitate appropriate changes to the financial services industry," Ishimaru, the former chairman of the U.S. Equal Employment Opportunity Commission, said at the press conference. "The CFPB, in tandem with other federal OMWI offices, will develop the best ways to carry out our statutory requirements and collect this data without imposing an undue regulatory burden."
None of the diversity offices within the regulatory agencies have authority to write rules or require bank or nonbanks to change their hiring practices or other diversity-related policies. But Richard Cordray, the CFPB's director, said shining a light on institutions' existing policies can foster more diversity in the industry
"Presented before us is a tremendous opportunity for the bureau to encourage diversity through a financial services industry that has not always traditionally reflected all of its customers," Cordray said. "It would be good to have a more diverse financial services industry, and we want to help the industry get there."
The CFPB plans to work with banks and nonbanks, as well as other regulators with similar office — including the Office of the Comptroller of the Currency, Federal Deposit Insurance Corp., Federal Reserve Board and Federal Housing Finance Agency — to develop the standards over time. Cordray said the agency may look at banks' internal workplace policies on promoting diversity, as well as how diversity practices affect women and minority customers.
Asked whether the standards will focus on the diversity of institutions' customer base, their personnel, or both, Cordray said, "I think it could be all of those things."
"Again, this is new," he said. "We will be fleshing it out over time. I think the outlines are clear, but the details of it will have to be worked out."
He added that the significance of diversity policies in today's private sector is not lost on industry.
"Institutions are well aware that this is something that affects their base of talent, both for employment at the institution, it affects their customer base, and therefore business opportunities," Cordray said.
The CFPB established its Office of Minority and Women Inclusion in January, and created a working group to begin coordinating with the other banking regulators to develop a uniform framework for assessing policies.
"It's important to get this right," Ishimaru said. "We need an accurate baseline to help us assess where we are and where we need to go."
Ishimaru, who has spent decades overseeing federal policies geared toward fostering diversity in the workplace, said putting out best practices that actual businesses use can serve as a template for other companies to help them incorporate the practices themselves and make it work for their own business models.
"It isn't forcing people to do it, but it lets them know how to do it," he said. "I think that can serve as a model."
The office is also responsible for developing similar standards for the diversity of the CFPB's workforce, including senior management, and increasing participation of minority- and women-owned businesses in the agency's programs and contracts.