Responding to a little-noticed provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act, federal agencies have begun establishing Offices of Minority and Women Inclusion.

Each agency’s Inclusion Office must develop standards for: equal employment opportunity and the racial, ethnic, and gender diversity of the agency’s workforce and senior management; and increased participation of minority- and women-owned businesses in the agency’s programs and contracts. More important to financial institutions, however, is that Directors of the Inclusion Offices must develop standards to assess the diversity policies and practices of the entities their agencies regulate.

Required to establish an Inclusion Office by January 21, 2011, were the Federal Reserve Board, 12 Federal Reserve Banks, Office of the Comptroller of the Currency, Department of the Treasury, Federal Deposit Insurance Corporation, Federal Housing Finance Agency, National Credit Union Administration, and Securities and Exchange Commission. The Bureau of Consumer Financial Protection (CFPB) has until January 21, 2012, to meet the requirement of Section 342 of the Dodd-Frank Act.

Should an Inclusion Office find violations of any “statutes, regulations or executive orders pertaining to civil rights,” Section 342 directs it to coordinate with the agency’s administrator “regarding the design and implementation of any remedies resulting from [such violations].” Under Section 342, the requirement for an Inclusion Office to assess the entities its agency regulates is not to “be construed to mandate any requirement on or otherwise affect the lending policies and practices of any regulated entity, or to require any specific action based on the findings of the assessment.”

However, Section 342 is silent as to the actions an Inclusion Office can take if it finds an institution’s diversity policies and practices to be unsatisfactory. An Inclusion Office might take the position that it has discretion to take whatever action it deems appropriate, including, perhaps, recommending that its agency or the CFPB conduct a more rigorous fair lending examination. Notably, the federal banking agencies cautioned in their 1994 interagency “Policy Statement on Discrimination in Lending” that “employment of few members of protected classes in lending positions can contribute to a climate in which lending discrimination could occur by affecting the delivery of services.”

Ballard Spahr’s Consumer Financial Services Group is nationally recognized for its guidance in structuring and documenting new consumer financial services products, its experience with the full range of federal and state consumer credit laws throughout the country, and its skill in litigation defense and avoidance (including pioneering work in pre-dispute arbitration programs). For more information, please contact group Chair Alan S. Kaplinsky, 215.864.8544 or kaplinsky@ballardspahr.com; Vice Chair Jeremy T. Rosenblum, 215.864.8505 or rosenblum@ballardspahr.com; John L. Culhane, Jr., 215.864.8535 or culhane@ballardspahr.com; Barbara S. Mishkin, 215.864.8528 or mishkinb@ballardspahr.com; or Mark J. Furletti, 215.864.8138 or furlettim@ballardspahr.com.

 


 

 

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