On March 6, American Banker published a controversial piece on Consumer Financial Protection Bureau internal data pointing to racial disparities in employee performance evaluations and satisfaction surveys. The leaked data reportedly found people of color at the CFPB are less likely to receive high rankings on employee performance evaluations.

The findings give real cause for concern, but they also present an historic opportunity for the whole financial services sector – not just CFPB and other federal regulatory agencies – to have a broad, healthy dialogue about the role of people of color in the financial sector and the need for diversity initiatives that work in the real world.

Because of this leaked data, we’re already seeing diversity enter into mainstream conversation and draw in some unlikely participants. GOP leaders like House Financial Services Committee Chairman Jeb Hensarling – who has not previously made diversity a primary focal point – are now starting to ask questions about these issues. 

Of course, this is Washington and motives aren’t always pure. Some of the sudden interest is coming from members of Congress who never wanted a strong watchdog protecting financial consumers and who have now found a convenient weapon with which to attack an agency they never much liked.

No matter. The discussion that’s been sparked can be productive. While sometimes painful, bringing these issues to light is a good thing. Racial disparities have long existed throughout the entire financial services sector. At The Greenlining Institute, we have been working on this exact issue for years, and have put a lot of thought into how organizations can infuse equity into their diversity policies and practices. We’ve created resources like the Racial Equity Framework to help agencies think proactively and creatively about race and ethnicity in order to produce equitable outcomes and prevent the sort of disparities just reported.

It’s not enough to think just in terms of compliance with antidiscrimination laws and reaction to problems. The financial services sector must start thinking proactively about diversity – what it means in the real world and how it can strengthen both banks and the agencies that regulate them.

Luckily, in the Dodd-Frank Act, Congress wisely created Offices of Minority and Women Inclusion for this specific purpose. The OMWIs, housed in the nation’s most powerful financial regulatory agencies, including the CFPB, are the natural agents to carry out this vision.

Financial regulatory agencies and Congress should take the following steps right away:

  1. All agencies should conduct racial/ethnic impact studies of their employees, including: performance, satisfaction, retention, promotion, pay and placement within the agency. Transparency and granular reporting can identify agency blind spots to understanding issues within their workforce, and allow strategic planning to rectify any disparities.
  2. Agency heads must lead the way in making diversity a priority. What gets measured gets done. When leaders care about diversity, it goes from being a “fringe topic” to one that all employees will buy into, becoming part of the organizational culture. Creating a culture of diversity and inclusion requires clear, consistent and visible commitment from agency leadership. Without this commitment, staffers have less of an incentive to devote the extra time and resources necessary to making the workforce culture more inclusive. Leadership commitment also ensures that diversity policies are incorporated into all divisions and that these policies will actually be effective and enforced.
  3. The OMWIs must lead the charge for diversity and inclusion, and Congress must support them. Every year the OMWIs release annual reports to Congress on the nature of diversity within the financial sector, but we haven’t seen much interest from Congress until now. In the past, Greenlining has called for key stakeholders to more substantively support the OMWIs and engage when they report to Congress. If Congress cares, the OMWIs will be better resourced to carry out their mission and promote inclusion for all.
  4. Congress should establish a Joint Committee on Diversity. The Senate Banking Committee, House Financial Services Committee and members of the tri-ethnic caucuses should create a joint committee on diversity to track and hold financial agencies and companies accountable to workforce and supplier diversity standards.

Our whole economy will be stronger if the financial industry and the agencies that regulate it reflect the full strength and diversity of American society. Everyone involved has just been handed an historic opportunity to get it done. We look forward to working with the CFPB leadership and all other financial regulatory agencies to ensure that this happens.
Orson Aguilar is executive director of The Greenlining Institute.