New Diversity and Inclusion Subcommittee of House Financial Services Committee holds inaugural hearing

Ballard Spahr LLP

One of the first actions taken by Democratic Congresswoman Maxine Waters upon becoming Chairwoman of the House Financial Services Committee was to announce the creation of a new Subcommittee on Diversity and Inclusion (D&I).

According to Politico, the new subcommittee held its inaugural hearing earlier this week at which the focus was a review of diversity trends in the finance industry, specifically a GAO report that found the representation of African-Americans and women in management roles had lagged in recent years.  Democratic Subcommittee Chairwoman Joyce Beatty is reported to have indicated that she plans to analyze diversity trends and data, exercise oversight of businesses and regulators, and consider legislation to “change the culture in government and industry.”  Republican Congresswoman Ann Wagner, who serves as the new subcommittee’s ranking member, is reported to have sent letters to regulatory agencies inquiring about their D&I efforts.

Chairwoman Waters was among the chief architects of Section 342 of the Dodd-Frank Act which created Offices of Minority and Women Inclusion (OMWI) at all federal financial regulatory agencies, including at the CFPB.  OMWIs are responsible for developing standards to assess the D&I policies and practices relating to employment and third party contracting of their own agencies and of the financial entities they regulate.   In June 2015, the CFPB and the other federal financial regulatory agencies jointly issued a final policy statement establishing such standards (Final Standards).  The Final Standards became effective in June 2015 and envision that an entity will conduct an annual “self-assessment” of its D&I policies and practices and submit them to the Director of the OMWI of their primary federal financial regulator.

With the creation of the new D&I Subcommittee, financial institutions are likely to find their D&I policies the subject of greater attention and scrutiny.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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