A first-of-its-kind House subcommittee will assess whether legislation is needed to boost diversity in the financial industry, according to the panel’s chair.
“Numerous studies have proven empirically that diversity increases productivity and the bottom line,” Rep. Joyce Beatty (D-Ohio), chairwoman of the House Financial Services Subcommittee on Diversity and Inclusion, said during its first hearing on Feb. 27. “Yet the data on diversity and inclusion efforts in our nation’s industries and government are not aligned.”
The panel centered its hearing around a recent trend report showing that women and minorities remain underrepresented as managers at banks, insurers, and other financial firms.
Barriers to boosting diversity in the finance industry include unconscious bias in promotions and a reluctance to recruit from more than a handful of elite universities, according to the report. The hearing touched on ways that financial firms are trying to tackle these obstacles, such as linking the management team’s pay to workforce diversity goals to hold them accountable.
“Leadership commitment to diversity is essential,” the report’s author Daniel Garcia-Diaz said at the hearing. Garcia-Diaz directs financial markets and community investment at the U.S. Government Accountability Office, which acts as a research agency for Congress.
Beatty has said that her initial steps would be to collect data and hear “success stories” on diversity. The subcommittee was formed earlier this year as investors and organizations that advocate on behalf of women and minorities ramp up their calls for firms on Wall Street and elsewhere to diversify their highest ranks.
Data on Diversity
Minority representation in financial industry management rose from 17 percent in 2007 to 21 percent in 2015, according to the GAO’s report. The gains were led by Asians and Hispanics while African Americans lost some ground.
Women held about 45 percent of all management positions in the finance industry in 2015, a figure that’s stayed flat since 2007.
Less than 30 percent of senior-level managers were women and only 12 percent were minorities in 2015.
—With assistance from Lydia Beyoud