Wall Street is coming under increasing pressure to hire and promote minorities and women.
The Consumer Financial Protection Bureau (CFPB) recently hired attorney Stuart Ishimaru to head the newly established Office of Minority and Women Inclusion (OMWI) to promote diversity at the agency and at the financial institutions it regulates. Establishing the office was required under the Dodd-Frank Act. It wasn’t clear what Ishimaru has planned because the CFPB didn’t respond to a request for comment.
Assessing diversity policies and practices
He said in a blog post that he will be “developing standards for assessing the diversity policies and practices of CFPB-regulated entities.” The post wasn’t more specific and the agency turned down an interview request.
"You need to know what the parameters are," he recently told NPR. "Where the opportunities are, whether people are getting opportunities, both men and women, people of color as well. A lot of that is a missing element."
According to diversity expert Martin Davidson, a University of Virginia professor who advises the financial services industry, J.P. Morgan, Wells Fargo and Bank of America are among the financial services firms who have done the most work on diversity. Other firms such as Goldman Sachs and Credit Suisse have special programs targeted at women and minorities.
Pressure to have more diversity at all levels
“Firms are under significant pressure to have more diversity at all levels,” said Jane P. Newton, founder of the Wall Street Women Forum, in an interview with eFinancialCareers. “The industry has consolidated in recent years and there are fewer seats for everybody. It underscores the importance of having a network in place.”
Critics of the financial services industry have complained for years, or perhaps even decades, that women and minorities have lagged behind white men in terms of hiring and promotions. These concerns are born out by data despite a plethora of diversity programs and the industry’s stated goals of promoting a more diverse workforce.
Tough industry for minorities to break in
Wall Street has been a tough industry for minorities to break into for many reasons. One is that MBA programs don’t attract a diverse student population. Davidson estimates that minorities account for about 6 percent to 13 percent of the student bodies at elite business schools. Since the supply is limited, demand for minority candidates is high.
“You will be especially sought after, and I argue you should be,” Davidson, also the author of The End of Diversity As We Know It, told eFinancialCareers. “Any company that is not playing ball with diversity is just shooting themselves in the foot."
A report issued last year by the Center for Urban Research (CUR) at the Graduate Center of the City University of New York found that Wall Street is more diverse than it used to be and that the retirement of the Baby Boomers will force it to change even further in the coming years.
Difficulty recognizing talent
Wall Street firms still have difficulty “recognizing talent when it doesn’t come in white male form,” according to Richard Alba, a distinguished professor of sociology who helped oversee the study. “It’s clear that the diversity has increased. It’s not clear that (these candidates) have had access to the top leadership positions. We don’t see changes on the salary differential.”
The study found that white men take home the lion’s share of Wall Street earnings, especially among workers 30 and older. Their earnings exceed those of other groups by 2-to-1 or higher. Wall Street’s demographics, however, are changing. While white men made up two-thirds of older workers (45 and up) in 2000, they were only 46 percent of younger workers (30 and younger) between 2005 to 2009.