WASHINGTON, D.C. (Oct. 24, 2013) — Proposed joint standards just released by six federal agencies for assessing the diversity practices of the financial institutions they regulate contain solid language regarding best practices, but are disappointingly short on specifics, policy experts at The Greenlining Institute said today.
The standards, proposed by the Office of the Comptroller of the Currency, Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, Securities and Exchange Commission, National Credit Union Administration and the Consumer Financial Protection Bureau, were required by section 342 of the Dodd-Frank financial reform act. The law created Offices of Minority and Women Inclusion in 20 financial regulatory agencies and tasked them with “assessing the diversity policies and practices of entities regulated” by the agencies.
“If we learned anything from the financial crisis, it’s that communities of color are the proverbial canaries in the coal mine of the financial system, and we are glad to see regulators beginning to tackle diversity issues,” said Greenlining Institute Economic Equity Director Sasha Werblin. “But while this document contains a lot of positive language, it’s very general, with no real standards or metrics to assess progress.”
The draft standards allow financial institutions to do a self-assessment of diversity practices, but do not require any reporting to the public or to the OMWIs.
Werblin noted that effective models for promoting diversity among regulated businesses, without coercion or quotas, already exist. In California, for example, both the Public Utilities Commission and Department of Insurance have programs under which regulated firms report the degree to which they contract with firms owned by women, minorities or disabled veterans.
“It’s amazing what can be accomplished simply with a bit of sunlight and public reporting of information,” Werblin said. Greenlining will be filing detailed comments with specific suggestions for bolstering these standards, and plans to discuss the proposal with regulators and members of Congress in a series of meetings in Washington in mid-November.
“Voluntary actions have been the status quo for a century, and they’ve gotten us a financial sector that’s overwhelmingly white and male,” commented Greenlining Executive Director Orson Aguilar.