Report text available as:

  • TXT
  • PDF   (PDF provides a complete and accurate display of this text.) Tip ?

110th Congress                                            Rept. 110-278
                        HOUSE OF REPRESENTATIVES
 1st Session                                                     Part 1

======================================================================



 
                FINANCIAL SERVICES DIVERSITY INITIATIVE

                                _______
                                

 July 30, 2007.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

 Mr. Frank of Massachusetts, from the Committee on Financial Services, 
                        submitted the following

                              R E P O R T

                     [To accompany H. Con Res. 140]

    The Committee on Financial Services, to whom was referred 
the concurrent resolution (H. Con. Res. 140) recognizing the 
low presence of minorities in the financial services industry 
and minorities and women in upper level positions of 
management, and expressing the sense of the Congress that 
active measures should be taken to increase the demographic 
diversity of the financial services industry, having considered 
the same, report favorably thereon with an amendment and 
recommend that the concurrent resolution be agreed to.

                                CONTENTS

                                                                   Page
Amendment........................................................     2
Purpose and Summary..............................................     2
Background and Need for Legislation..............................     3
Hearings.........................................................     3
Committee Consideration..........................................     4
Committee Votes..................................................     4
Committee Oversight Findings.....................................     4
Performance Goals and Objectives.................................     5
New Budget Authority, Entitlement Authority, and Tax Expenditures     5
Committee Cost Estimate..........................................     5
Congressional Budget Office Estimate.............................     5
Federal Mandates Statement.......................................     5
Advisory Committee Statement.....................................     5
Constitutional Authority Statement...............................     5
Applicability to Legislative Branch..............................     5
Earmark Identification...........................................     5
Exchange of Committee Correspondence.............................     6
Section-by-Section Analysis of the Legislation...................     8

                               AMENDMENT

  The amendment is as follows:
  Amend the preamble to read as follows:

Whereas the financial services industry is vitally important to the United 
States economy;

Whereas in 2005, employment in the financial services industry was about 7 
percent of total employment in the United States, with over 10,000,000 
employees;

Whereas since 1995, the average hourly earnings of non-supervisory workers 
in financial activities was above the private industry and increased from 
approximately $13 in 1997 to $18.80 in 2006;

Whereas minorities and women face various challenges in obtaining and 
maintaining positions, especially upper-level positions, within the 
financial services industry;

Whereas minorities and women often cite the lack of mentors and leadership 
training as barriers to their advancement;

Whereas in 2005, about 14.9 percent of the board seats at the Fortune 100 
companies were held by minorities, and women comprised about 16.9 percent 
of Fortune 100 company board seats in 2005;

Whereas in the financial services industry, the percentage of black 
employees has slowly decreased from about 10.5 percent to 9.8 percent 
between 2000 to 2005;

Whereas in 2005, blacks were approximately 9.8 percent of those employed in 
the financial services industry and about 7.4 percent of financial 
managers;

Whereas from 2000 to 2005, Hispanics have been an increasing percentage of 
the United States workforce and the financial services industry;

Whereas in 2005, Hispanics comprised about 9.7 percent of those employed in 
the financial services industry, just 6 percent of financial managers, and 
less than 2 percent of the directors of Fortune 1,000 companies;

Whereas in 2004, Asians represented about 5.5 percent of the employees in 
the financial services industry and about 6.3 percent of all financial 
managers;

Whereas in 2004, the financial services industry ranked third in the 
percentage of women employed in the workforce behind healthcare and 
education;

Whereas approximately half of financial managers are women and the 
percentage of women financial managers was approximately 51.7 in 2005;

Whereas in a 2001 survey of 2,200 senior and pipeline level women and men 
representing approximately 60 securities firms, 65 percent of women 
reported that women have to work harder than men to get the same rewards, 
and 51 percent of women report that women are paid less than men for doing 
similar work;

Whereas a minority of women (32 percent) and men (43 percent) believe that 
promotion decisions are made fairly in their firm;

Whereas the House-approved Financial Services Regulatory Relief Act of 2005 
directed each Federal banking agency to submit biennial reports to Congress 
on the status of the employment by the agency of women and minorities;

Whereas the Government Accountability Office found in its report 
``Financial Services Industry: Overall Trends in Management-Level Diversity 
and Diversity Initiatives, 1993-2003'', issued in June 2006, that overall 
diversity at the management level in the financial services industry did 
not change substantially from 1993 to 2004; and

Whereas, although the Government Accountability Office acknowledged that 
financial services firms have initiated programs to increase workforce 
diversity, the Office found that these initiatives face challenges: Now, 
therefore, be it

                          PURPOSE AND SUMMARY

    House Concurrent Resolution 140, the ``Financial Services 
Diversity Initiative,'' provides statistics on the low 
representation of women and minorities employed within the 
financial services industry, particularly in senior-level 
positions. The resolution also expresses the sense of Congress 
that active measures should be taken to increase the 
demographic diversity of the financial services industry and 
that a diverse workforce is important to be able to achieve a 
fair and just economy.

                  BACKGROUND AND NEED FOR LEGISLATION

    On July 15, 2004, the Oversight and Investigations (O&I;) 
Subcommittee of the Financial Services Committee (Committee) 
held a hearing entitled, ``Diversity in the Financial Services 
Industry and Access to Capital for Minority-Owned Businesses: 
Challenges and Opportunities,'' on diversifying the senior 
corporate ranks of the financial services industry, and 
improving access to capital for women- and minority-owned 
businesses. During this hearing, Ana Maria Fernandez Haar, who 
testified on behalf of the New America Alliance, recommended in 
response to a question from Representative David Scott (GA) 
that the Committee request a Government Accountability Office 
(GAO) report to review the extent of workforce diversity within 
the financial services industry. After the hearing, Committee 
Chairman Oxley, Ranking Member Frank, O&I; Chair Kelly, O&I; 
Ranking Member Gutierrez, and Representative Scott (GA) sent a 
joint letter to GAO requesting a report.
    GAO completed the report entitled, ``FINANCIAL SERVICES 
INDUSTRY: Overall Trends in Management-Level Diversity and 
Diversity Initiatives, 1993-2004,'' in June 2006. The O&I; 
Subcommittee held a hearing entitled, ``Diversity: The GAO 
Perspective,'' to review this report on July 12, 2006.
    In the report, GAO concluded that overall diversity at the 
management level in the financial services industry did not 
change substantially from 1993 through 2004. GAO also found 
that workforce diversity varied among the different sectors of 
the financial services industry. Commercial banks and insurance 
companies, for example, were generally more diverse at the 
management level than securities firms. Diversity at the 
management level within the accounting industry was lower than 
in other sectors of the financial services industry.
    In completing the report, GAO relied on the Equal 
Employment Opportunity Commission (EEOC) Employer Information 
Report (EEO-1) data for financial services industry for 
employers with 100 or more employees for the years 1993, 1998, 
2000, and 2004. The EEO-1 data provide information on the 
racial, ethnic, and gender composition of various job 
categories within a broad range of industries, including 
financial services. While EEO-1 data are important, because of 
the broad scope of the job categories, GAO noted that EEO-1 
data may be slightly misleading as an accurate measurement of 
the representation of women and minorities in senior management 
and board positions within the financial services industry. GAO 
stated that ``existing EEO-1 data may actually overstate 
representation levels for minorities and white women in the 
most senior-level positions because the `officials and 
managers' category includes lower- and mid-level management 
positions that may have higher representations of minorities 
and white women.'' (GAO Report, page 9). The ``officials and 
managers'' category could, for example, cover a wide range of 
job positions within the industry, capturing both a chief 
executive officer of a large commercial bank and an assistant 
branch manager at a small bank branch.

                                HEARINGS

    In the 109th Congress, the O&I; Subcommittee held a hearing 
on July 12, 2006, entitled, ``Diversity: The GAO Perspective,'' 
to review a report issued by GAO in June 2006 entitled, 
``FINANCIAL SERVICES INDUSTRY: Overall Trends in Management-
Level Diversity and Diversity Initiatives, 1993-2004.'' The 
following witnesses testified at the hearing: Ms. Orice 
Williams, Director of the Financial Markets and Community 
Investment of the U.S. Government Accountability Office; Mr. 
Marc Lackritz, President of the Securities Industry 
Association; Ms. Donna Sims Wilson, Member of the Board of 
Directors and Chair of the National Legislative Committee of 
the National Association of Securities Professionals; Mr. 
Carlos Loumiet, Co-Chair of the Capital Advocacy Committee of 
the New America Alliance; and Mr. Manuel ``Manny'' Fernandez, 
National Managing Partner-Campus Recruiting of KPMG, LLP.
    In the 108th Congress, the O&I; Subcommittee also held a 
hearing on July 15, 2004, entitled, ``Diversity in the 
Financial Services Industry and Access to Capital for Minority-
Owned Businesses: Challenges and Opportunities.'' This hearing 
focused on two topics: diversifying the senior corporate ranks 
of the financial services industry and improving access to 
capital for women- and minority-owned businesses. The following 
witnesses testified at the hearing: Ms. Ana Maria Fernandez 
Haar, Chair of the Board of New America Alliance; Dr. Theresa 
Hammond, Associate Professor of Accounting at Boston College; 
Mr. Michael Kennedy, Manager of Diversity Program and Financial 
Services Sector Executive with Korn/Ferry International; Mr. 
Marc Lackritz, President of Securities Industry Association; 
Ms. Joanne Hanley, President of Women in Housing and Finance, 
Inc.; and The Honorable Lorenzo Padron, State of Illinois 
Commissioner of the Office of Banks and Real Estate. The 
National Gay & Lesbian Chamber of Commerce submitted a written 
statement for the record.

                        COMMITTEE CONSIDERATION

    The Committee on Financial Services met in open session on 
June 26, 2007, and ordered reported House Concurrent Resolution 
140, the Financial Services Diversity Initiative, as amended, 
with a favorable recommendation by a voice vote.

                            COMMITTEE VOTES

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. No 
record votes were taken with in conjunction with the 
consideration of this legislation. A motion by Mr. Frank to 
report the concurrent resolution, as amended, to the House with 
a favorable recommendation was agreed to by a voice vote.
    During the consideration of the concurrent resolution, the 
following amendment was considered:
    An amendment by Mr. Meeks, No. 1, a substitute for the 
preamble, was agreed to, as modified, by a voice vote.

                      COMMITTEE OVERSIGHT FINDINGS

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee has held hearings and 
made findings that are reflected in this report.

                    PERFORMANCE GOALS AND OBJECTIVES

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, the Committee advises the concurrent 
resolution does not authorize funding, so a statement of 
general performance goals and objectives is not required.

   NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX EXPENDITURES

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee finds that this 
concurrent resolution expresses the sense of the Congress and 
therefore does not have the force of law. As such, it would not 
result in new budget authority, entitlement authority, or tax 
expenditures or revenues.

                        COMMITTEE COST ESTIMATE

    The Committee finds that this concurrent resolution 
expresses the sense of the Congress and therefore does not have 
the force of law. As such, there is no cost associated with 
this legislation for the current fiscal year or for any fiscal 
year thereafter.

                  CONGRESSIONAL BUDGET OFFICE ESTIMATE

    Being a concurrent resolution and without the force of law, 
the cost estimate provided by the Congressional Budget Office 
pursuant to section 402 of the Congressional Budget Act of 1974 
is not required.

                       FEDERAL MANDATES STATEMENT

    The concurrent resolution contains no Federal mandates.

                      ADVISORY COMMITTEE STATEMENT

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                   CONSTITUTIONAL AUTHORITY STATEMENT

    Consistent with clause 3(d)(1) of rule XIII of the Rules of 
the House of Representatives, the Committee finds that the 
Constitutional Authority of Congress to adopt this legislation 
is provided by Article 1, section 8, clause 1 (relating to the 
general welfare of the United States) and clause 3 (relating to 
the power to regulate interstate commerce).

                  APPLICABILITY TO LEGISLATIVE BRANCH

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

                         EARMARK IDENTIFICATION

    House Concurrent Resolution 140 does not contain any 
congressional earmarks, limited tax benefits, or limited tariff 
benefits as defined in clause 9 of rule XXI. 


             SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

Preamble

    The resolution notes the importance of the financial 
services industry, which comprised about 7 percent of the total 
employment in the United States in 2005, to the American 
economy. The resolution also notes that women and minorities 
face various challenges in obtaining and maintaining positions 
within the financial services industry, particularly in upper-
level positions. The resolution provides data on workforce 
diversity among different sectors of the industry, including 
findings from a June 2006 GAO report entitled, ``FINANCIAL 
SERVICES INDUSTRY: Overall Trends in Management-Level Diversity 
and Diversity Initiatives, 1993-2004,'' using EEO-1 data that 
overall diversity within the financial services industry did 
not change substantially from 1993 to 2004.

Section 1. Short title

    This section establishes the short title of the resolution 
as the ``Financial Services Diversity Initiative.''

Section 2. Financial services diversity initiative

    This section recognizes that women and minorities still 
face unique challenges entering into and obtaining upper level 
positions within the financial services industry and expresses 
a sense of Congress about the importance of workforce 
diversity. The resolution encourages financial institutions to 
engage in a number of activities to try to promote workforce 
diversity, including partnering with organizations that focus 
on developing opportunities for minorities and women to place 
talented youth in internships, summer jobs, and full-time 
positions within the industry and partnering with inner-city 
high schools and girls' high schools to establish financial 
literacy programs and provide mentoring. The resolution also 
encourages financial institutions and federal and state 
financial institution regulatory agencies to attract and retain 
a diverse workforce by providing financial support for women 
and minorities undergraduate and graduate business programs; 
recruiting at women's colleges, historically Black colleges and 
universities, and Hispanic serving institutions; sponsoring and 
recruiting at job fairs in urban communities; and placing 
employment ads in media outlets oriented to people of color. 
The resolution also encourages financial institutions and 
public and private pension funds to seek qualified women- and 
minority-owned firms as investment managers, underwriters, and 
other business relationships and to appoint more women and 
minorities as Board members.
    This section also expresses the sense of Congress that 
active measures should be taken by employers and educational 
institutions to increase the demographic diversity of the 
financial services industry. In addition, the section expresses 
the sense of Congress that diversity within the financial 
services industry is vitally important to promoting innovation 
and creativity in the industry and to developing a more 
inclusive workforce to achieve a fair and just economy.