Many big changes are coming from the newly instated Wall Street reform law. President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act on July 21, finalizing the most industry-changing financial reform bill since the 1930s. The bill was mainly created to look out for “the people” by upping consumer protection and awareness, but now a small section buried in the massive bill is garnering attention.
In an attempt to promote diversity among Wall Street employees, Congress has granted the Federal government the ability to terminate contracts with any financial business that does not ensure “fair inclusion” of female and minority employees. Every financial firm, big or small, now will be held responsible for who it hires, as well as the organization of its staff.
Here are some bullet points from the bill:
- Section (a): Each agency involved must “establish an Office of Minority and Women Inclusion.”
- Section (b): The directors of these offices are required to “develop standards” for “equal employment opportunity and the racial, ethnic, and gender diversity” of employees and management, as well as “increased participation of minority-owned and women-owned businesses in the programs and contracts of the agency.” They must also “assess the diversity policies and practices of entities regulated by the agency.”
- Section (c): Each direct must also “develop and implement standards and procedures to ensure, to the maximum extent possible, the fair inclusion and utilization of minorities, women, and minority-owned and women-owned businesses in all business and activities of the agency at all levels.” There also will be a written statement in which “a contractor shall ensure, to the maximum extent possible, the fair inclusion of women and minorities in the workforce of the contractor and, as applicable, subcontractors.” If the director feels the agency has not met these requirements, the director “shall make a recommendation to the agency administrator that the contract be terminated.”
One important part of this section is that it sets up at least 20 Offices of Minority and Women Inclusion in ten Departmental Offices of the Department of the Treasury, The Federal Deposit Insurance Corp., The Federal Housing Finance Agency, the 12 Federal Reserve regional banks, The Board of Governors of the Federal Reserve, The National Credit Union Administration, The Office of the Comptroller of the Currency, The Securities and Exchange Commission, and the new Consumer Financial Protection Bureau.
Read more on Section 342 here.
Not everyone in agrees on the outcome of these provisions. Some are worried that this will lead organizations to hire based on meeting quotas while advocates point out the the law does not set quotas, ratios or goals for hiring. The bill’s requirements can be interpreted differently by readers, making the termination procedure and the minority ratio requirements issues of hot debate.
The government has not yet written rules for new diversity standards, leaving room for it to clarify and specify guidelines. It can be guaranteed that Republicans and Democrats alike will be weighing in with their opinions. Those who do not agree with the bill, who worry it will cause de facto hiring ask: What if there aren’t minorities eligible to fill the needed slots? Advocates of the act, meanwhile, believe the focus on improving the diversity of the financial workforce is long overdue.
As for now, the act encourages the industry professionals to pay attention to the changes to proposed regulations and makes sure they are adjusting to follow the legislation.