Financial Reform Bill Section 342

Posted on: 2010-08-27

Office of Minority and Women Inclusion Financial Reform Bill Section 342

As recruiters and human resources consultants in the financial services business, many of us have been following the financial reform bill as it relates to diversity hiring specifically section 342: The Office of Minority and Women Inclusion.

Here is what we know: Buried deep within the financial reform bill is section 342 “The Office of Minority and Women Inclusion.” According to the law, the Federal Government will set up 20 new offices of Minority and Women Inclusion. These offices will mandate “fair inclusion” of minorities and women within their hiring practices. According to a Politico article released on July 28th 2010, “Congress gives the federal government authority to terminate contracts with any financial firm that fails to ensure the “fair inclusion” of women and minorities, forcing every kind of company from a Wall Street giant to a mom-and-pop law office to account for the composition of its work force.” The Office of Minority and Women Inclusion's regulations will affect financial institutions, investment banking firms, mortgage banking firms, asset management firms, brokers, dealers, financial services entities, underwriters, accountants, investment consultants and providers of legal services.

Here is what we don’t know: The issue to date is that the government has yet to write rules defining what “fair inclusion” means. Supporters of the Office of Minority and Women Inclusion argue that the new office is a positive because it ensures everyone has access to Wall Street employment opportunities. Opponents of the Office of Minority and Women Inclusion argue that the office will establish hiring quotas and open up a Pandora’s box when it comes to potential lawsuits. The other gray area is that each individual running the twenty different Offices of Minority and Women Inclusion will have the subjective discretion to determine what “fair inclusion” means. How far will the Office of Minority and Women Inclusion will push these “fair inclusion” incentives, no one really knows? The implications of this are substantial because the Director of the Office of Minority and Women Inclusion can terminate the contract of a firm that does not adequately comply with their standards.

I have spoken to several human resources executives at several large firms (Pacific Life, John Hancock, American Century Investments) who are confused about the potential requirements the Office of Minority and Women Inclusion will impose. Most are taking a wait and see approach. What seems clear is that the Office of Minority and Women Inclusion is going to demand that financial services firms document and prove the steps they are taking when it comes to recruiting women and minorities.

Fortunately there are outlets for financial services firms to document and prove there recruiting efforts. Although there are few recruiting firms that focus  specifically on targeting women and minorities there are many online job boards that focus solely on minorities and women. Some of the leading sites include Workforcediversity, LatPro, and WomensJobList. Will job boards be the solution that financial services firms use to document and prove their diversity hiring efforts? It will be hard to know exactly what will satisfy the new standards until the rules are written. One thing is for sure, focusing your efforts on targeting women and minorities with any method is a great idea in this political climate.

Brian Kirk is a partner at LC KIRK, a recruiting firm for the financial services industry.