Waters Growing 'Impatient' with Implementation of Dodd-Frank Diversity Standards
The Consumer Financial Protection Bureau said Monday it has hired a new assistant director for its Office of Minority and Women Inclusion, which will work with other regulators to assess diversity policies and practices at banks and nonbanks.April 30
WASHINGTON — The senior Democrat on the House Financial Services Committee called for quicker action Tuesday on implementing standards to encourage workplace diversity at financial institutions and the banking regulators.
Rep. Maxine Waters said "some … agencies have made more progress than others" implementing a Dodd-Frank Act provision requiring special offices "of minority and women inclusion" within several of the federal financial agencies. The provision, known as section 342, mandated that the offices recommend diversity standards, submit annual reports on each agency's diversity-related activities and conduct outreach efforts for the recruitment of minorities and women.
"I hope that section 342 puts the entire financial services industry on notice that Congress values work-force and supplier diversity, and possibly even more important that Congress is closely monitoring both the public and private sector's efforts in these areas," Waters told a Washington meeting of the Greenlining Institute, a California-based advocacy group focused on expanding the economic opportunities for minorities.
Waters, a California Democrat, said the heads of each respective Office of Minority and Women Inclusion are in the process of developing a joint draft proposal "for assessing diversity within regulated entities." But even though she said she recognizes the administrative hoops some agencies have to jump through to craft standards, Waters said she and other members of her committee, as well as lawmakers in the Congressional Black Caucus, are eager to see results.
"Because of the different organization structures of the agencies, some OMWI's have to go through a more elaborate time-consuming process to vet any draft proposals within their agencies. I understand these different organizational hurdles, and recognize the need to carefully proceed with implementing section 342," Waters said.
"But after more than a year since most of the OMWI's have been in existence, I and other committee and CBC members who fought for section 342 are growing a little bit impatient. If it takes very much longer for the OMWI's to issue a draft proposal on these standards, for example, I and my colleagues may need to prod the agencies a bit to get them to move faster."
Yet agencies have made some progress, both to comply with and independent of the Dodd-Frank mandate.
In an afternoon speech to the Greenlining conference, Federal Deposit Insurance Corp. Chairman Martin Gruenberg highlighted his agency's efforts — which he said predated the law — to improve diversity in the FDIC's work force as well as in the hiring of outside lawyers and contractors for bank-failure-related work.
Last year, nearly 30% of all contract dollars awarded by the FDIC were awarded to minority- and women-owned businesses, and although the FDIC's overall work force has declined since 2011, the ratio of minorities and women to overall personnel has risen, Gruenberg said.
"We're far from perfect at the FDIC. But I think it's fair to say we're making an honest effort to focus our senior leadership on this issue and to integrate OMWI into the overall operations of the FDIC," he said. "In the long run, the key is to sustain that commitment over time."
Meanwhile, Federal Reserve Board Chairman Ben Bernanke told members of the House committee at a recent hearing that the agencies are focused on appropriate steps taken by financial institutions.
"We are working collectively, as we have been told to do, with the other agencies to develop some criteria for assessment of diversity practices in regulated institutions," Bernanke said.
Waters said agencies are at varying stages of instituting special clauses in their contractor agreements saying that contractors have made a good faith effort to include women and minorities in their work force. (Under Dodd-Frank, OMWI's are required for the Office of the Comptroller of the Currency, FDIC, Federal Housing Finance Agency, Fed board, each of the regional Fed banks, National Credit Union Administration, Securities and Exchange Commission, Consumer Financial Protection Bureau and within several offices of the Treasury Department.)
For example, such "good faith clauses" were begun by the Fed last year, Waters said, though she added that the central bank is "still considering how [to]…monitor or review compliance with that provision." She also noted that the CFPB has been "slower" in finishing certain section 342 requirements since the new consumer bureau was not fully operating until a year after Dodd-Frank's enactment.