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Racial Disparities Present at Most Bank Regulators, Democrats Allege

By Lalita Clozel, American Banker

The Consumer Financial Protection Bureau is not alone in having racial disparities in its performance reviews, according to a report issued Thursday by the Democrats on the House Financial Services Committee.

The report found that all seven bank, credit union and market regulators displayed significant disparities in employee evaluations, particularly among African-Americans who received lower-than-average scores at statistically significant levels at most of the agencies.

Democrats requested the report after American Banker revealed last year that an internal CFPB report found white employees were significantly more likely to receive a higher performance review.

The article generated several hearings by the House Financial Services Committee, but Democrats argued Thursday that the Republicans who led the committee were more interested in attacking the CFPB than rooting out discrimination.

"They were claiming interest in investigating discrimination complaints from the bureau," said Rep. Maxine Waters, the lead Democrat on the panel. "But their true motivation is simply hatred for the Consumer Financial Protection Bureau, which is the centerpiece of the Dodd-Frank Act which they are trying so hard to dismantle."

The report assembled data collected at the request of Waters by inspectors general at the CFPB, Federal Deposit Insurance Corporation, Federal Reserve Board, Office of the Comptroller of the Currency, Federal Housing Finance Agency, National Credit Union Administration and Securities and Exchange Commission.

It shows that between fiscal years 2011 and 2013, African-Americans "consistently received lower" performance review scores than "their white colleagues," the report said.

"African-American employees also received scores below the agencies' average" performance score, the report said. "In more than half of the agencies, this difference was statistically significant. Lower scores were also observed with respect to Hispanic employees in four out of the seven of the agencies."

The difference between African-American and white ratings was statistically significant at the SEC, NCUA, OCC, and Fed, the report said.

The report said that women were also underrepresented in the agencies' workforces. All had less than 59% women employees, which was the proportion in the private financial services sector. At the lower range, the FDIC had 43% of women in its workforce, while, on the other end, the CFPB had 48%.

But though women were underrepresented in senior-level management level positions in all seven agencies, they fared better there than in the private sector. Every financial regulatory agency surveyed had higher proportions of women in higher echelon positions than the overall workforce average of 29%.

There were also unequal degrees of racial diversity among the agencies. Only 3% of FHFA employees were Hispanics, and only 5% of NCUA, FDIC and CFPB workers were Asians. But, overall, the report found that five out of seven agencies were more diverse than the overall workforce.

And all seven agencies had lower proportions of whites in senior management than the national workforce, with 90%. The CFPB and FHFA had the lowest rates, at 77%, and the SEC the highest, at 88%.

The agencies have already taken certain steps to address some of the report's findings, they said.

At the NCUA, racial diversity and gender parity numbers in new hires improved in 2015, according to John Fairbanks, a spokesman for the agency. He added that the NCUA took "very seriously" the disparity in performance review scores between African-Americans and whites, but that an internal analysis had found that "the gap between scores narrows considerably" when comparing employees at similar experience levels.

An FHFA spokesperson said in a statement that it had restructured its Office of Minority and Women Inclusion to "embed diversity and inclusion in every aspect of FHFA's mission and operations." The FHFA declined to comment on the diversity numbers contained in the report.

As for the SEC, it is "actively working on initiatives to enhance diversity," including formalized policies and procedures to ensure diversity, a spokesperson said in a statement. The spokesperson added that the count of minorities and women at high-level positions in the agency was growing.

The CFPB, Fed and FDIC declined to comment. The OCC did not respond in time to requests for comment.

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