banks, committee
The U.S. House Committee on Financial Services issued a report on the diversity and inclusion practices of some of the U.S.'s largest banks. The root of the issue, the report says, is with lack of data. (Photo: Jer123)

Committee on Financial Services Finds Need for Transparency, Improvement in Large Banks’ Diversity Practices

The U.S. House Committee on Financial Services under congresswoman Maxine Waters issued a report this month that summarizes the Committee’s review of the diversity and inclusion practices in the U.S.’s largest banks. It found that although banks and other financial services firms tout their diversity and inclusion policies, the sector as a whole falls short — especially when it comes to achieving diversity in executive positions, board seats and suppliers.

This study was necessary to gather data because banks are not otherwise required to share data regarding their workforce diversity. The Committee report says although the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) created the Offices of Minority and Women Inclusion (OMWI) to hold the industry accountable for diversity and inclusion, sharing this data is voluntary. Bank regulators including  the Federal Reserve Board of Governors, Federal Deposit Insurance Corporation (FDIC), and Office of the Comptroller of the Currency (OCC) issued the Joint Standards, which made it optional for banks to comply with OMWI’s requests for data.

Waters and Diversity and Inclusion Subcommittee Chair Joyce Beatty asked 44 of America’s largest banks — all of which have at least $50 billion in assets — to disclose this data to the Committee. The report says all 44 banks responded the the request, but not all answered each question fully.

At nearly all banks, the Committee reports, the male, female and different racial demographics of banks’ employees overall roughly mirror those of the U.S. population. Most have even achieved pay parity between men and women. The biggest gaps occur further up the corporate ladder. The responses broadly show that while some banks are on target with recruiting diverse talent, offering employee resource groups and linking diversity and inclusion results with performance, most are lacking diversity in executive positions, boards of directors and suppliers.

Wells Fargo (No. 13 on 2019 Top 50 Companies for Diversity) reported that in its executive/senior levels and first mid officials and managers, men and women are represented equally and 33.3% of employees at these levels are minorities. Wells Fargo is the country’s fourth largest bank by asset size, worth almost $2 billion. Just over 23% of directors are women and minorities, respectively. TD Group US Holdings LLC (TD Bank is No. 19 on 2019 Top 50 list) is worth nearly $400 million. Just over 18% of TD’s directors are women and minorities, respectively. Almost 39% of TIAA (No. 15 on 2019 Top 50 list) directors are women and 32.3% are minorities. For KeyBank (No. 39 on 2019 Top 50 list), 35.7% of directors are women and 14.3% are minorities. Just over a quarter of HSBC (No. 40 on 2019 Top 50 list) executive and senior management positions are held by women and almost 24% are held by minorities. A quarter of directors are women and 8.3% are minorities.

Not all banks surveyed reported all of their diversity-related data. JP Morgan & Chase Co. which is worth over 2 and a half billion dollars, did not report its gender and ethnic diversity numbers to the Committee. It did, however, report its pay equity numbers, while HSBC and TIAA did not. Based on the data, the Committee found that large and mega banks have both achieved about 99% pay equity for men and women.

When it comes to diverse suppliers, KeyBank, JP Morgan & Chase Bank and others did not provide data. For those who responded, less than 9% are invested with diverse suppliers.

All banks disclosed in some way that they need to improve their diversity and inclusion practices, but according to the report, almost half did not specify the areas in which they needed improvement. Of those who did, the most common issues were in the competition for diverse talent, the lack of a consistent definition of diversity and inclusion, and issues with data collection and self-identification.

Of the practices that help champion diversity and inclusion, 43 of the 44 reported having practices in recruiting diverse talent. Thirty-six reported linking diversity and inclusion results to performance, but only 10 reported collecting data on diversity results.

To remedy the issues with diversity and inclusion in this massive industry, the Committee suggests measurement and transparency.

It recommends requiring banks to share their diversity and inclusion data with regulators and the public; to track and make efforts to increase spending with diverse suppliers; and to publicly disclose the diversity of their boards.

“A review of bank responses by the Committee confirmed that banks and other financial services companies must be more transparent with diversity data so that regulators, Congress and the American people can hold them accountable for real and intentional diversity and inclusion outcomes,” Beatty says in the report.

Measuring and reporting diversity metrics is a crucial first step in working toward diversity, and because these in-depth reports to OMWI are only voluntary, it’s difficult to accurately analyze where the work is needed — let alone make the changes.

It’s becoming increasingly well-known that diversity and inclusion have positive business results. A recent study showed investors saw tech and finance companies with gender diversity were more likely to see stock prices rise, which made them more likely to invest in these companies.

Related Story: Research Roundup: Study Finds Investors Predict Tech and Finance Companies With More Gender Diversity Will See Stock Prices Rise

A 2015 MSCI report also found companies that have women on corporate boards achieve more profitability, fewer controversies and better decision-making than those without female leadership.

Overall, more diverse employees and leaders allow for more diverse ideas and problem-solving.

“Banks and other organizations that continue to move too slowly on diversity and inclusion initiatives may find themselves losing competitive advantage and profitability,” Congressman Emanuel Cleaver said in the Committee report. “Employees may move out of a company if they don’t see a pathway to move up.”

Latest News

Today’s Roundup: Justice for Breonna not served; The essential rule of politics; Teen serves two months in jail for not doing homework; and more

Justice for Breonna not served as grand jury indicted officer who shot her with wanton endangerment — but not murder. “Outrageous and offensive.” Those were  by attorney to the family, Ben Crump to describe the grand jury’s decision in the March 13 fatal police shooting of 26-year-old Breonna Taylor. While…

IBM, EEOC, age

EEOC Unearths Years of Intentional Age Discrimination within IBM

After a long investigation, the Equal Employment Opportunity Commission (EEOC) has revealed that IBM leaders had directed managers to replace older workers with younger ones. Between 2013 and 2018, nearly 86% of those considered for layoffs within the organization were older employees over the age of 40. The investigation showed…

Breathe March in Globe Park, New York, USA - 12 Sep 2020

Today’s Roundup: Cities under attack from the Justice Department; Louisville bracing for the Breonna Taylor murder charge; Twitter reveals its racist side; and more

Justice department attacks three U.S. cities, declaring them anarchist zones — despite most of the protests that took place in each city being peaceful marches in support of the Black Lives Matter movement. In a move designed to pull federal funding from New York City, Seattle and Portland, OR, the…

ginsburg, supreme, court

The Lasting Legacy of Supreme Court Justice Ruth Bader Ginsburg — Plus the Four Biggest Issues Currently at Stake Following Her Death

Supreme Court Justice Ruth Bader Ginsburg, who served on the nation’s highest court for 27 years, passed away Friday, Sept. 18 at the age 87. “As the second woman ever to sit on the highest court in the land, she was a warrior for gender equality — someone who believed…

Abbott Receives CE Mark for Next-Generation Mitraclip Heart Valve Repair Device to Treat Mitral

Originally posted on Abbott.com – CE Mark for MitraClip G4 offers physicians an innovative next-generation system with more options for mitral valve repair using proven clip-based technology – MitraClip is a first-of-its-kind transcatheter mitral valve therapy, now on its fourth generation, improving further on MitraClip’s history as a safe and…

Cox Crews Mobilized to Reconnect Gulf Coast

Originally published on Cox.com Cox has mobilized its employees with support from outside of the Gulf Coast area to begin assessing damage and restoring service outages caused by Hurricane Sally. In times like this, we understand it is important to stay connected and we want our services to help you…

BASF Invests Into Pyrum as Part of its ChemCyclingTM Project

Originally published on BASF.com  Pyrolysis oil from waste tires as additional raw material source next to oil from mixed plastic waste Investment will support construction of additional production capacities for pyrolysis oil Milestone in establishing a circular economy for post-consumer plastic waste Pyrolysis oil will partly replace fossil feedstock and…