PURPOSE AND SUMMARY

House Concurrent Resolution 140, the `Financial Services Diversity Initiative,' provides statistics on the low representation of women and minorities employed within the financial services industry, particularly in senior-level positions. The resolution also expresses the sense of Congress that active measures should be taken to increase the demographic diversity of the financial services industry and that a diverse workforce is important to be able to achieve a fair and just economy.

BACKGROUND AND NEED FOR LEGISLATION

On July 15, 2004, the Oversight and Investigations (O&I;) Subcommittee of the Financial Services Committee (Committee) held a hearing entitled, `Diversity in the Financial Services Industry and Access to Capital for Minority-Owned Businesses: Challenges and Opportunities,' on diversifying the senior corporate ranks of the financial services industry, and improving access to capital for women- and minority-owned businesses. During this hearing, Ana Maria Fernandez Haar, who testified on behalf of the New America Alliance, recommended in response to a question from Representative David Scott (GA) that the Committee request a Government Accountability Office (GAO) report to review the extent of workforce diversity within the financial services industry. After the hearing, Committee Chairman Oxley, Ranking Member Frank, O&I; Chair Kelly, O&I; Ranking Member Gutierrez, and Representative Scott (GA) sent a joint letter to GAO requesting a report.

GAO completed the report entitled, `FINANCIAL SERVICES INDUSTRY: Overall Trends in Management-Level Diversity and Diversity Initiatives, 1993-2004,' in June 2006. The O&I; Subcommittee held a hearing entitled, `Diversity: The GAO Perspective,' to review this report on July 12, 2006.

In the report, GAO concluded that overall diversity at the management level in the financial services industry did not change substantially from 1993 through 2004. GAO also found that workforce diversity varied among the different sectors of the financial services industry. Commercial banks and insurance companies, for example, were generally more diverse at the management level than securities firms. Diversity at the management level within the accounting industry was lower than in other sectors of the financial services industry.

In completing the report, GAO relied on the Equal Employment Opportunity Commission (EEOC) Employer Information Report (EEO-1) data for financial services industry for employers with 100 or more employees for the years 1993, 1998, 2000, and 2004. The EEO-1 data provide information on the racial, ethnic, and gender composition of various job categories within a broad range of industries, including financial services. While EEO-1 data are important, because of the broad scope of the job categories, GAO noted that EEO-1 data may be slightly misleading as an accurate measurement of the representation of women and minorities in senior management and board positions within the financial services industry. GAO stated that `existing EEO-1 data may actually overstate representation levels for minorities and white women in the most senior-level positions because the `officials and managers' category includes lower- and mid-level management positions that may have higher representations of minorities and white women.' (GAO Report, page 9). The `officials and managers' category could, for example, cover a wide range of job positions within the industry, capturing both a chief executive officer of a large commercial bank and an assistant branch manager at a small bank branch.

HEARINGS

In the 109th Congress, the O&I; Subcommittee held a hearing on July 12, 2006, entitled, `Diversity: The GAO Perspective,' to review a report issued by GAO in June 2006 entitled, `FINANCIAL SERVICES INDUSTRY: Overall Trends in Management-Level Diversity and Diversity Initiatives, 1993-2004.' The following witnesses testified at the hearing: Ms. Orice Williams, Director of the Financial Markets and Community Investment of the U.S. Government Accountability Office; Mr. Marc Lackritz, President of the Securities Industry Association; Ms. Donna Sims Wilson, Member of the Board of Directors and Chair of the National Legislative Committee of the National Association of Securities Professionals; Mr. Carlos Loumiet, Co-Chair of the Capital Advocacy Committee of the New America Alliance; and Mr. Manuel `Manny' Fernandez, National Managing Partner-Campus Recruiting of KPMG, LLP.

In the 108th Congress, the O&I; Subcommittee also held a hearing on July 15, 2004, entitled, `Diversity in the Financial Services Industry and Access to Capital for Minority-Owned Businesses: Challenges and Opportunities.' This hearing focused on two topics: diversifying the senior corporate ranks of the financial services industry and improving access to capital for women- and minority-owned businesses. The following witnesses testified at the hearing: Ms. Ana Maria Fernandez Haar, Chair of the Board of New America Alliance; Dr. Theresa Hammond, Associate Professor of Accounting at Boston College; Mr. Michael Kennedy, Manager of Diversity Program and Financial Services Sector Executive with Korn/Ferry International; Mr. Marc Lackritz, President of Securities Industry Association; Ms. Joanne Hanley, President of Women in Housing and Finance, Inc.; and The Honorable Lorenzo Padron, State of Illinois Commissioner of the Office of Banks and Real Estate. The National Gay & Lesbian Chamber of Commerce submitted a written statement for the record.