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Sylvia Garcia
Congresswoman Sylvia Garcia (D), from Texas. Photo from Facebook.

Diversity discussed in House Financial Services Committee

The financial industry still lags behind when it comes to diversity.

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May 27th, 2022

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Diversity in the financial industry continues to be fleeting.

The House Financial Services Committee has created a new sub-committee for this session.

The new Sub-committee on Diversity and Inclusion is chaired by Congresswoman Joyce Beatty, a Democrat from Ohio.

The sub-committee held its first hearing in February entitled “An Overview of Diversity Trends in the Financial Services Industry.”

The only witness was Daniel Garcia-Diaz, the Director of Financial Markets and Community Investment at the Government Accountability Office (GAO), based in Washington D.C.

“Unfortunately, the trends are clear. Management level representation of minorities and women showed marginal to no increase from 2007 to 2015. The situation is more worrying when we look at representation at the senior level. Specifically, minority representation increased from 11 to 12 percent in this period,” Diaz noted in his opening remarks. “Among first and mid-level managers -- that is right below the senior level -- minority representation increased from 19 to 22 percent during this same period.”

When looking at specific sectors, Garcia-Diaz said, “banks and lenders had greater representation of minorities than the other sectors such as insurance and securities.”

Garcia-Diaz said increased diversity required a comprehensive solution.

“Many firms recognize that an inclusive workforce can help attract the best and the brightest and can contribute to innovation in products and services, but simple aspiration toward achieving diversity in the  workforce is not enough. Diversity management requires intentional and strategic action that is sustained over the long haul.”

He continued, “We consistently heard from experts that firms should engage in broad based recruitment. In other words, firms need to cast their nets wider and not limit themselves to the same schools and the same academic disciplines. In addition, establishing mechanisms to hold managers accountable can help firms move toward their workforce diversity goals. As we have noted in our past work, leadership commitment to diversity is essential but experts tell us that middle managers may not be as committed as leadership.”

Garcia-Diaz said accountability goals must be aligned to make sure middle managers are on board with diversity goals.

“One firm representative stated that linking managers’ compensation to diversity goals has been an effective practice for retaining women and minorities.” Garcia-Diaz said.

The GAO has completed eight reports on diversity in the financial sector, Garcia-Diaz noted.

Congresswoman Beatty laid out what she hoped the sub-committee would accomplish.

“Under the leadership of Chairman Waters, the financial services committee created this sub-committee to institutionalize the consideration of diversity and inclusion issues,” Beatty said, “(to) create a forum for discussing diversity data and trends, raising awareness and reviewing and assessing how the financial services industry maintains and grows their inclusiveness of people of color, women, rural and urban persons, persons of disability, LGBTQ, millennials, Native Americans, active duty servicemen, and our nation’s veterans.”

Creating more diversity in the financial industry is a bi-partisan goal.

Ann Wagner is a Republican from the State of Georgia and she is the ranking member -- or leader of the minority -- on this sub-committee.

“Women and minorities are growing their numbers and securing leadership positions on Main Street, Wall Street and as elected officials, however there is still much work to be done to ensure the financial industry along with many other sectors of our economy is reaping the benefits of inclusion” Wagner said.

Congresswoman Sylvia Garcia, a Democrat from Texas, said she experienced a lack of diversity in the financial world first hand.

She was the Comptroller in the City of Houston from 1998 to 2003.

“One of the most disheartening things for me was dealing with the financial world. Not because I couldn’t handle the work, but because of who I faced sometimes.” Garcia said. “It seems like any meeting that I went to, whether it was to negotiate a depository contract for a banking contract, or to select investment bankers for a bond deal, or anything that I did. It really was a man’s world and it was also very white.”

When she was taken to a trading floor, Garcia said, “I didn’t see anything but quite frankly blond, blue-eyed, white shirt and ties.”

She noted, however, that things have since improved.

“The last time I spoke to a public finance group it’s changed but we still have not done enough [on diversity.]” said Garcia.

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