Are You Ready For Your Self-Assessment?
By Henry Meier
One of the little chestnuts tucked away in the Congressional wish list that is Dodd-Frank is a requirement that financial institutions promulgate guidelines for assessing how good a job financial institutions do at fostering diversity in their workplace. Specifically, section 342 requires each financial agency’s Office of Minority and Women Inclusion to develop standards for “assessing the diversity policies and practices of entities regulated by the agency.” Crucially, the statute stipulates that these assessments should not be construed to mandate any requirement regarding an institution’s lending policies.
While I am tempted to point out that financial institutions are already among the most highly regulated businesses in the country when it comes to issues involving Race and minority advancement, the law is the law, so the question is how can this regulation be shaped in a way that does not needlessly burden credit unions while providing a benefit.
These seem to be the questions still vexing regulators, including the NCUA. Recently the major bank regulators came out with proposed guidance to implement Dodd-Frank’s mandate and they seem more than willing to consider unique approaches to assessing how lending institutions of all shapes and sizes are doing when it comes to hiring minorities. The regulation actually calls on financial institutions to make a “self-assessment” of a range of hiring and contracting practices. The preamble stresses that the “assessment envisioned by the agencies is not one of a traditional examination. . .Agencies will not use the examination or supervision process in connection with these proposed standards.” In addition, institutions would be encouraged but not required to make these assessments available to their regulators and the public through their websites.
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