The CFPB’s Office of Minority and Women Inclusion (OMWI) has issued its second annual report to Congress covering the OMWI’s activities in 2013. The Dodd-Frank Act required the CFPB and various other federal agencies including the Fed, Treasury, OCC, FDIC, NCUA, SEC and FHFA, to establish an OMWI, and also required each OMWI to submit an annual report to Congress.
From industry’s perspective, the most noteworthy task Dodd-Frank assigned to each OMWI was the development of standards to assess the diversity policies and practices relating to employment and third party contracting of the institutions regulated by the OMWI’s agency. As the report indicates, in October 2013, the CFPB and the agencies listed above other than the FHFA issued a proposed policy statement establishing joint standards for assessing the diversity policies and practices of their regulated entities. Comments on the proposal were due by February 7 and the report states that the agencies are “in the process of reviewing the comments and working towards the development of a final policy statement.”
In a section entitled “Challenges,” the report references the CFPB’s recently released internal report which showed a pattern of racial disparities in CFPB staff evaluations and has led to Congressional scrutiny of the CFPB’s employment practices. Referring to the results of the internal report as “growing pains,” the OMWI report discusses the steps the CFPB is taking to address its employee ratings. Based on remarks made by Director Cordray in his speech last week at the Greenlining Institute’s Economic Summit, it appears those steps will also include a more active role for the CFPB’s OMWI. More specifically, Director Cordray stated that the CFPB had “recently changed [its] internal structure to elevate the role of [its] OMWI in addressing issues of diversity and inclusion throughout the Bureau.”
In what appears to be an implicit acknowledgement of the reportedly high employee turnover rates the CFPB has experienced, the report notes that while many of its early staff remains, “others have moved on to opportunities in the public, private, non-profit, and academic sectors.” The report further states that “[t]his continuous influx of new employees can make it difficult to establish an organizational culture.”
Another task of an OMWI is to develop standards for creating diversity in an agency’s own workforce. According to the report, as of year-end 2013, the CFPB had 1,354 employees, representing an increase of 283 employees from year-end 2012. Of the 1,354 employees, 46% were female and 54% were male. (The percentage of women represents a 2% decrease from 2012's percentage.) In addition, of those employees, 69% self-identified as White, 17% as Black/African-American, 10% as Asian American, and 4% as another racial group or belonging to two or more racial groups. The report notes that minorities and women hold about 47% of the CFPB’s executive level positions, and that among the areas that need improvement, diversity of senior leadership is a “particular focus.”
With regard to procurement, the report indicates that in FY 2013, the CFPB entered into 922 “contract actions,” totaling approximately $111.0 million. Of the total contract dollars awarded in FY 2013, the report states that 9% went to women-owned businesses and 15% went to minority-owned businesses (consisting of businesses owned by Hispanic Americans, African-Americans, Asian/Pacific Islander Americans and American Indians/Alaskan Natives and “Others”).
As noted above, the diversity assessment standards proposed by the CFPB and other regulators cover not only cover a regulated entity’s diversity policies and practices relating to employment but also cover such policies and practices relating to contracting with third parties. The OMWI’s report thus serves as a reminder of the need for banks and other regulated entities to include consideration of vendor diversity in their vendor management policies.