New voluntary diversity guidance issued for financial services firms by the Securities and Exchange Commission and other regulators on Tuesday was attacked as toothless by National Urban League President and CEO Marc Morial.
"These standards reflect an abrogation of the agencies’ responsibility to take the issue of diversity seriously. In the 21st century, (they’ve) dropped back on the first down and punted,” said Morial.
Democratic Commissioner Luis Aguilar was also quick to charge the agencies' new guidelines, which include self-assessment of diversity practices, are weak.
“Voluntary self-assessments are ineffective because, without specific obligations and requirements, few regulated entities will conduct assessments or share assessment information,” said the long-time proponent for more women and minorities in the financial services industry.
In his dissenting statement, Aguilar chided the financial services industry for a long history of failing to promote diversity in its workforce.
He pointed out that although white men constitute only 31 percent of the total workforce in the financial services industry, they account for 64 percent of the executive and senior level positions.
By contrast, he said minorities are 30 percent of all financial services workers but only 10 percent of executives. At the same time, women make up 59 percent of all financial services employees but only 30 percent are in leadership positions. Despite the known benefits, the financial services industry is still nowhere near where it needs to be on diversity and inclusion, Aguilar said.
"Today, in issuing the Final Policy Statement, the commission and the agencies disregard and dismiss the vast majority of comments received from members of Congress, civil rights organizations, community-based organizations, professional associations and consumer advocacy groups," he added.
But not all diversity advocates were disappointed.
Women in Housing & Finance President Anastasia Stull called the regulators’ joint statement on diversity a step in the right direction.
Unlike Morial and Aguilar, Stull, managing director for risk and regulatory compliance at NewOak Capital, said it doesn’t matter to her that the guidance isn’t mandatory.
The agencies were required to write the diversity directives for the organizations they regulate by the five-year-old Dodd-Frank Act. In addition to the SEC, the agencies include the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corporation, the Board of Governors of the Federal Reserve System, the National Credit Union Administration and the Office of Comptroller of the Currency. Dodd-Frank also required them to establish an Office of Women and Inclusion for internal hiring and contracting.
The highest-ranking woman at a financial advisory trade group, Investment Adviser Association President and CEO Karen Barr, was unavailable for comment.