House Financial Services Committee finds megabanks need to improve their diversity
Following hearings this past spring, Representative Maxine Waters (D-CA), Chair of the House Financial Services Committee, released a statement that the Committee finds more work is needed to improve diversity at megabanks. The statement, released on August 13, included data gathered from eight of the nation’s largest banks in response to letters to those institutions from Chairwoman Waters and Representative Joyce Beatty (D-OH).
The Committee concluded that senior leadership among large U.S. banks still is mostly white and male, with no megabank having a female or minority CEO. The statement questioned whether diversity is really a priority for megabanks given that no chief diversity officer reports directly to the CEO. And it noted that boards of the largest banks are 29% female and 17% minority, falling below the overall levels among the U.S. population of 50% female and 40% minority.
The Committee also examined supplier diversity and similarly found a lack of meaningful progress. With average spend on diverse suppliers of $1.4 billion, less than 1% of megabank spending is devoted to diverse asset managers and suppliers, and only 4% of externally managed assets go to diverse-owned firms.
From a policy perspective, the Committee reported that only 1 out of 25,000 employees on average is dedicated to diversity; diversity metrics are not tied to compensation; and only half of megabanks tie it to performance.
As a result of these findings, the Committee’s overall conclusion was that megabanks are making some progress in diversity but much more is needed. Specific recommendations include an increased focus on recruiting through affinity groups and minority institutions of higher education; closing the pay equity gap; and increasing investment in leadership and development programs to build a diverse talent pipeline.