In comments filed with federal financial regulators, The Greenlining Institute urges a number of changes designed to strengthen and clarify proposed joint standards for assessing the diversity practices of more than 70,000 financial institutions.
“We know from sad experience that communities of color are the first affected by troubles in our financial system,” said Greenlining Institute Economic Equity Director Sasha Werblin. “A financial system that truly reflects America’s diversity will be stronger and safer, and these standards can help make that happen.”
The draft standards were proposed last October by the Offices of Minority and Women Inclusion (OMWIs) in the Office of the Comptroller of the Currency, Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, Securities and Exchange Commission, National Credit Union Administration and the Consumer Financial Protection Bureau, pursuant to section 342 of the Dodd-Frank financial reform act. The law created OMWIs in 20 financial regulatory agencies and tasked them with “assessing the diversity policies and practices of entities regulated” by the agencies.
While applauding the general intent of the proposed standards, Greenlining urges the agencies to make them more specific and measurable. Noting the remarkable results achieved by the California Public Utilities Commission through the simple act of requiring regulated companies to clearly report their level of contracting with diverse-owned businesses, Greenlining’s comment letter encourages a similarly clear, measurable approach, stating, “Regardless of the actual cost, some members of industry will push back against any policy…In short, diversity will remain a ‘nice to do’ until it is a ‘must do.’”
Werblin also noted that the public comment process for the standards revealed that some have serious misunderstandings regarding the intention of the OMWIs. “Some have mistaken ‘diversity’ for a quota system, which completely misses the point,” Werblin said. “Greenlining’s comment letter sets the record straight and provides recommendations on how to create more inclusion for all and build a financial system that works for everyone.”
Greenlining specifically urges the OMWIs to:
Standardize assessments of regulated entities.
Tighten and clarify the language of the standards and establish clear next steps in data collection.
Create an advisory committee of stakeholders knowledgeable in diversity issues, including representatives from the nonprofit, private, and academic sectors, to assist in crafting data requests and reporting standards.
Increase public access to data on regulated entities to achieve true transparency.