House Financial Services Committee Hits Big Banks’ Lack of Diversity

The House Financial Services Committee said there is a lack of diversity among the nation's largest banks, despite the population being composed of 50% women and 40% minorities.

Chairwoman Maxine Waters, D.-Calif., and Rep. Joyce Beatty, D.-Ohio, sent requests to JPMorgan Chase & Co., Bank of America Corp., Citigroup Inc., Wells Fargo & Co., Goldman Sachs Group Inc., Morgan Stanley, Bank of New York Mellon Corp. and State Street Corp. to disclose their diversity and inclusion data and policies from 2015 to present. Waters and Beatty said the data shows that not one of the companies has a female or minority CEO, that only about 25% of senior leadership is composed of women or minorities, and that the big banks are devoting less than 1% of spending to diverse asset managers and suppliers. Waters and Beatty also noted there is no chief diversity officer in any of these banks and that only 1 out of 25,000 employees at these banks on average are dedicated to diversity causes.

The two congresswomen called on the big banks to increase recruitment of minorities, close the pay equity gap for women and minorities, and increase representation of minorities at the top levels.

The Financial Services Forum, which represents the eight U.S.-based global systemically important banks, said members are focused on diversity at all levels and actively promote an inclusive environment for all employees, regardless of their backgrounds.

Wall Street has faced increasing calls to diversify its employee base, particularly at senior leadership levels, as part of the increasing popularity of the environmental, social and governance movement in recent years. Rep. Carolyn Maloney, D.-N.Y., in June filed a bill that would require companies to disclose the composition of their boards in annual proxy statements and would have the Securities and Exchange Commission create a group to recommend strategies to increase the diversity of corporate boards. Some asset managers have also lobbied for Congress to pass a law that will require companies to interview at least one minority candidate for senior positions.

Some of the big banks have also faced activist investor pressure to disclose the median pay gap between their male and female employees. Arjuna Capital LLC filed a proposal at JPMorgan's, Bank of America's and BNY Mellon's annual meetings, but shareholders from the three companies voted down the proposals. Many companies have argued that the median pay gap is misleading, as it does not take into account factors such as work roles, performance, work experience and geographical locations.

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