In the wake of widespread reports of predatory lending in communities of color during the run-up to the financial crisis, Congress added language to the Dodd-Frank financial reform law creating OMWIs in 20 federal financial regulatory agencies. Their goal is to assure “the fair inclusion and utilization of minorities, women, and minority-owned and women-owned businesses in activities of their agency.” In so doing, Congress recognized that these communities are often the proverbial canaries in the coal mine when it comes to problems with our financial system.
This matters. The Greenlining Institute’s report, “Financial Regulators Should Reflect the Racial Diversity of the Nation,” found that while people of color made up just over one third of America’s workforce in 2010, they are not represented at anywhere near that level at the decision-making levels of financial regulatory agencies. Now we have the OMWIs’ own assessments.
These reports cover a lot of ground, but all examined the challenges each agency faces in hiring qualified minority and women employees. Our review of the reports from the OMWIs within the major Washington, D.C.-based regulatory agencies (excluding the new Consumer Financial Protection Bureau, which wasn’t required to file a report for 2011) found many agencies taking steps that others would do well to copy, if they haven’t already.
It was particularly encouraging, for example, that Treasury Secretary Timothy Geithner introduced the Treasury OMWI’s report with a personal statement of support, writing, “It is our aim that Treasury’s organizational culture, workforce, and business practices continue to reflect the important values of diversity and inclusion.” Such clear backing from the head of any agency has great symbolic impact.
Several agencies have also begun to incorporate the values of diversity and inclusion into their ongoing planning. The Federal Housing Finance Agency, for example, added such language to the Values Statement in its Strategic Plan for 2012-2015, while the National Credit Union Administration incorporated diversity and inclusion goals and initiatives into its Strategic Plan and Annual Performance Budget. This may sound minor, but experience shows that agencies are more likely to follow through on something if they set it down in writing as a goal.
More concretely, a number of agencies are working to improve their ability to recruit a diverse staff — for example, by initiating partnerships with minority business associations and educational organizations like the Hispanic Association of Colleges and Universities. That’s an important beginning, but it’s not a complete strategy. In particular, specific efforts are needed to create recruitment and hiring pipelines for Native Americans and Asian/Pacific Islander Americans.
Information is key to making all of these efforts work. What factors are limiting the number of diverse candidates who apply? Are viable candidates from different communities learning about career opportunities in financial regulatory agencies? Are there barriers — real or perceived — that prevent diverse candidates from applying successfully? What programs or efforts succeed in broadening the applicant pool and creating both a reality and a perception of open doors?
Some agencies have made notable starts. Treasury, for example, is surveying its own diverse employees to understand what they perceive as barriers to employment within the department. And the Securities and Exchange Commission’s OMWI is partnering with the commission’s human resources department to create a system to track candidates who submitted resumes to the agency at outreach events and through referrals. The Federal Reserve Board and NCUA are also both looking at employment barriers.
This represents an encouraging beginning, but it is just a start. All 20 OMWIs should undertake these sorts of assessment efforts. As OMWI directors begin to understand the barriers to employment, they should make their findings public, since these barriers likely exist in other agencies. OMWI directors should also make their tracking and assessment mechanisms public, inviting constructive feedback and suggestions regarding best practices from both other federal agencies and outside groups.
America’s financial system — and our whole nation — will be better off if our financial regulators start to look more like America, and bring to their work a wide variety of backgrounds and experiences. This first batch of OMWI reports shows that this goal is attainable, but that it will take plenty of work to get there.
Divya Sundar is Community Reinvestment Fellow at The Greenlining Institute.