The long awaited interagency policy statement of diversity policies and practices for banks (and other entities regulated by the federal banking regulators) has been issued. There were more than 200 comments on the October 25, 2013, proposal that assisted the agencies in achieving clarity in the final statement.
Here are some of the big picture take-aways from the statement:
- The standards are joint, so there will be no difference in the standards applied to an entity depending upon the regulator.
- The standards create a “general statement of policy” rather than hard and fast rules and, importantly, do not create any new legal obligations.
- Compliance is voluntary.
- The entity will conduct the assessment of its progress; there will not be a per se examination process conducted by regulators.
- Flexibility is the word of the day. Each standard starts with the statement:“In a manner reflective of the individual entity’s size and other characteristics…” So, there is no “one size fits all” approach being taken by regulators.
The guidance does, however, provide a clear roadmap for diversity programs. Here are some specific thoughts about the final document.
"Diversity" is defined to refer to minorities (namely "Black Americans, Native Americans, Hispanic Americans, and Asian Americans" specifically) and women.
"Inclusion" is defined to mean a “process to create and maintain a positive work environment that values individual similarities and differences, so that all can reach their potential and maximize their contributions to an organization.”
Culture of Compliance is a concept that is used throughout the guidance. Boards and senior management are admonished to “embrace” diversity and “value” the contributions of all employees.
Suppliers and subcontractors should include minority-owned and women-owned businesses. However, it does not appear that banks must require their suppliers to have their own diversity policies.
Strategies to achieve diversity should include outreach to minority and women organizations and to educational institutions serving significant minority and women student populations as well as participation in conferences, workshops and other events to attract minorities and women.