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Report Documents Lack of Diversity in the Federal Reserve Banks

A report by the Greenlining Institute, entitled “Government That Looks Like America? Racial and Ethnic Diversity in Financial Regulatory Institutions,” is being released first on DiversityInc.com. It examines the demographics of the organizations regulating the financial-services industry, and they come up short—especially at the top.

The Greenlining Institute, a nonprofit organization that works for equality in lending, studied racial/ethnic diversity in the workforce and management at federal financial regulatory agencies. While several of the organizations had workforce diversity, especially Blacks in agencies located in Washington, D.C., or cities, the lack of Latinos throughout the workforce and lack of all racial/ethnic diversity in the top levels of management was significant.

Greenlining feels that without an adequate understanding of these communities from senior leadership, regulatory agencies cannot effectively prevent marketplace discrimination. Other studies have documented the increasing race-based wealth gap.

“A glaring piece of data in the report is the huge lack of representation of Latinos,” says Orson Aguilar, executive director of Greenlining. “If their management more mirrored the workforce, it could have prevented the mortgage fiasco.”

Methodology

The Greenlining Institute initiated this study after the Dodds-Frank Wall Street Reform and Consumer Protection Act created Offices of Minority and Women Inclusion in 20 regulatory agencies. The agencies surveyed were the Federal Reserve’s Board of Governors, Federal Reserve Banks in Atlanta, Boston, Chicago, Cleveland, Dallas, Kansas City, Minneapolis, New York, Philadelphia, Richmond, San Francisco and St. Louis, as well as the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration, the Office of the Comptroller of the Currency, the Federal Housing Finance Agency and the U.S. Department of the Treasury. One agency, the Securities and Exchange Commission, did not respond, and another, the Consumer Financial Protection Bureau, was in the process of organizing and wasn’t ready to participate.

Greenlining requested workforce, management and senior-management demographic data from each of the agencies. Initially, Greenlining also requested supplier-diversity direct-contractor dollar spend for minority-owned business enterprises, women-owned business enterprises and suppliers owned by veterans with disabilities. However, the responses were limited and aren’t included in this report.

It took about five months to collect the workforce/management data, says Divya Sundar, community reinvestment fellow.  

Key Data Findings

* For the workforce, the most racially diverse agencies were the Board of Governors and the Federal Reserve Banks in Atlanta, New York, Dallas and San Francisco.  

* The least diverse in the workforce were the Federal Reserve Banks of Cleveland, Kansas City and Minneapolis.

* Latino representation in the workforce ranged from a low of 0.9 percent at the Cleveland Federal Reserve Bank and averaged 3.8 percent nationwide. By contrast, the DiversityInc Top 50 average 8.9 percent of their U.S. workforces as Latino.

* The federal agencies have a ratio of 1:2 when comparing Black senior managers to all Black managers, while the DiversityInc Top 50 have a ratio of 2:1 for the same variables. Senior management is defined as the top three levels of the organization.

* The DiversityInc Top 50 companies are comparable for Blacks in management but have 50 percent more Latinos in management than the federal agencies and double the percentages of Asians in management.

* The DiversityInc Top 50 companies have twice the percentages of Latinos and Asians in senior management as the federal agencies. Of the 15 agencies that submitted data, only 11 had any Blacks in senior management; only eight had any Latinos in senior management; and only six had any Asians in senior management.

* Three agencies, the Federal Reserve Banks of St. Louis, Boston and Cleveland, had only whites in the senior-management category.

Recommendations

The Greenlining Institute has created a community-based advisory board to ascertain next steps. Board members, including the National Council of La Raza, the National Association of Asian American Professionals, the Center for Responsible Lending, the Los Angeles chapter of the National Urban League of Young Professionals, the National Community Reinvestment Coalition and the U.S. Hispanic Chamber of Commerce, will meet in Washington, D.C., on Feb. 24 to begin to draft more formal recommendations for action. In the interim, Greenlining suggests:

* Transparency: Requiring all financial regulatory organizations to publish diversity data online

* Analysis: A study of recruitment and retention policies in the financial regulatory sector be undertaken

* Accountability: Establishing benchmarks, including region-specific benchmarks for the Federal Reserve Bank

See also: Did the Fed’s Stunning Lack of Diversity Cause the Housing Crisis?

 

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1 Comment

  • Charity Dell

    Corporations–including anything involved with finance–are only interested in maintaining their “old boy networks.” That’s because they are essentially run exclusively for members of the tribe–those upper-class white men who developed and staffed the institution. The “tribalism” extends to most white women; they are also seen as “superfluous” staff who need not be taken seriously. Remember the white woman who testified to Congress, warning them about the dangers of the “derivatives” scheme? She was mocked and told to shut up, because after all, Alan Greenspan and his ilk “knew better” and were the Current Gods of Finance. White women–no matter how educated/experienced/savvy they are–are not allowed to
    penetrate many “glass ceilings” to break into the top echelons of management; so ANY OTHER minority populations are automatically excluded from middle and senior management. Most minority students –including white women–are never informed about the range of finance career options or the training necessary to qualify for these careers. Those minority students who do major in accounting, business or finance fields are not going to be mentored by the “old boy networks”; not going to be informed about or chosen for internships; will not be encouraged to learn foreign languages or go overseas for study or internships; will not be invited to key leadership, strategy or decision-making meetings or consultations.
    “Diversity training” must begin in PreK through graduate school–or we will still be run by the same old corporate “tribe” one hundred years from now!

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