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FIA, Chicago Fed host discussion on diversity in US financial sector

Data shows stark lack of representation for blacks among federal regulators and corporate executives

2 November 2020

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FIA held a joint webinar with The US Federal Reserve Bank of Chicago  to explore issues of diversity and inclusion in financial markets. Moderated by Sharon Bowen, a former commissioner on the US Commodity Futures Trading Commission, the event covered hard statistics about current and past representation of black leaders in the public and private financial services sector as well as personal experiences from panelists.

"Everyone has a stake in this," said Bowen at the 29 October event. "Don't assume that it's someone else's job to make our industry, our economy, our future much more inclusive. That means taking intentional proactive steps, and being part of the solution."

Historically, US financial regulatory agencies have included black individuals very rarely. Chris Brummer, a professor at the Georgetown University Law Center, noted that out of the last 327 individuals appointed to financial regulatory agencies only 10 have been black -- and that some agencies, like the Federal Deposit Insurance Corporation or the Office of the Comptroller of the Currency, have never had a single black regulator.

Brummer noted that his research, much of which was published in September via a working paper entitled "What do the data reveal about (the absence of Black) financial regulators?", also digs into the qualifications of applicants to these positions. He found that black candidates as a group actually held more advanced degrees than their peers and similar work experiences overall, indicating that "the argument against their qualifications doesn't hold up empirically at all." Instead, he credits cognitive bias against black candidates as a key reason they are not considered for top posts at financial regulators.

Doug Harris, managing director at Promontory Financial, noted that while private sector data is not as readily available, "all indications are that the absence of blacks at the highest levels of financial regulatory agencies is mirrored in almost every major segment of the financial industry." He cited recent reports from the Wall Street Journal, Bloomberg and McKinsey to support this view.

Understanding the hard data that shows a lack of representation for blacks is an important exercise, but actively pushing for change is the big challenge for the US financial industry, said De'Ana Dow, a partner at Capitol Counsel. That includes not just hiring candidates to fill a job, but also "creating a culture of inclusion" where "an organization provides a comfortable work environment where black employees can be themselves, for example wear natural hairstyles and do not feel pressure to assimilate and fit in."

Jackie Mesa, FIA's Chief Operating Officer, offered closing remarks for the panel where she noted that events like this webinar shows FIA's commitment to a public-private partnership to address issues of diversity in the financial sector through practical solutions. These include sponsorships of young minority employees to help them succeed, mandatory efforts such as ensuring there is a minimum number of minority candidates considered for a job, and putting real energy into creating a culture of inclusion in the workplace.

"FIA has been committed to focusing on diversity at the board level for over a year now," she said. "We have a lot more to do, but one of our efforts is to encourage more discussions like this one to help build a more inclusive future for our industry."

FIA will host another panel discussion specifically about diversity challenges in the derivatives industry at its Expo 2020 event on 11 November.

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