Banking and Finance Law Daily Wrap Up, BANKING OPERATIONS—Agency Reports to Congress Discuss Diversity and Inclusion Initiatives, (Apr 1, 2013)

By Andrew A. Turner, J.D.

The Consumer Financial Protection Bureau annual report and the Federal Reserve Board annual report on diversity and inclusion efforts, as required by the Dodd-Frank Act, have been submitted to Congress. Both the CFPB and the Fed reported their participation in an interagency working group of federal regulators for financial services and banking to explore the possibility of creating a common standard for assessing the diversity policies and practices of regulated entities.

Draft standards for public comment and feedback are anticipated during spring 2013. The standards would address leading industry diversity practices in four key areas: organizational commitment, workforce profile and employment practices, supplier diversity in procurement and business practices, and transparency of organizational diversity and inclusion policies.

CFPB. CFPB Director Richard Cordray included a message noting that "diversity management capability helps us to access underrepresented segments of the marketplace that have been adversely affected by the financial crisis." Stuart Ishimaru, director of the Office of Minority and Women Inclusion at the CFPB, wrote that a framework has been established for meeting the OMWI’s mission of helping the CFPB achieve equal employment opportunity and diversity, facilitate increased participation of women- and minority-owned businesses in bureau procurement, and develop standards for assessing the diversity policies and practices of regulated entities.

While the CFPB has made good initial progress to address diversity and inclusion in its workforce, according to the report, there are areas that require further analysis and inquiry. The OMWI notes the CFPB faces the following primary challenges in operating minority and women outreach programs, hiring qualified minority and women employees, and contracting with qualified minority-owned and women-owned business: (1) underrepresentation of Hispanics in its workforce, (2) the impact of being a recently created agency with a new infrastructure that is being built out at the same time the agency begins addressing substantive work challenges, and (3) the lack of awareness of the CFPB and its mission.

Fed. The Fed will seek continued improvement in its acquisition process to enhance the ability of minority-owned and women-owned firms to successfully compete. Among its strategies are comprehensive training programs for all employees, supplier diversity performance plans for procurement staff, targeted outreach programs, revised procurement policies, and the adoption of online tools and resources. The Fed is finalizing a draft Supplier Diversity Policy to help increase the number of contracts awarded to minority-owned and women-owned businesses.

To maximize the impact on minority-owned and women-owned firms, the Fed will focus on increasing the participation of small business enterprises in its acquisition process. In addition, the Fed plans to host networking meetings for vendors in specific markets such as economic research/data and legal services to expand opportunities for the Fed to contract with minority-owned and women-owned firms in these industries.

RegulatoryActivity: BankingOperations