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Fed urges banks to show how they're promoting diversity

Yahoo Finance’s Brian Cheung joins Zack Guzman to discuss the latest comments from Sheila Clark, program director of the Fed’s Office of Diversity and Inclusion, on how banks are promoting diversity.

Video Transcript

ZACK GUZMAN: Welcome back to live market coverage here on "The Ticker." We've been talking a lot about diversity and the way that communities of color have been impacted by the pandemic and wealth inequality as well. It's been something we've heard from Fed Chair Jerome Powell, and some pressuring the Federal Reserve to do more on policing that front. And now the Fed also wants the banks that it oversees to provide a little bit more data about what they're doing to close some of those gaps as well. And here to discuss that with us is Yahoo Finance's Fed reporter Brian Cheung, who has more details on that push. Brian?

BRIAN CHEUNG: Well, Zack, all this coming from a Federal Reserve official that we usually don't hear from. That's Sheila Clark. She's the program director of the Federal Reserve's Office of Diversity and Inclusion. She provided this written testimony last week, but she's actually testifying in front of the House Financial Services Committee. That hearing is still ongoing as we speak right now.

And Sheila Clark saying, at least in her prepared testimony, that she is encouraging regulated financial institutions-- which, remember, the Federal Reserve is one of the primary bank regulators here in the United States-- wants those institutions to provide information on their diversity policies, practices, and also self-assessments. Clark said in her testimony that she said this practice has, indeed, increased over the last two years, but said, quote, "we are not satisfied with the level of responsiveness so far." It's saying that the Fed is going to explore ways for, quote, "greater participation." What that means, not so sure, but kind of a warning to those regulated institutions that they should be watching out for this.

One thing that's worth mentioning is the Fed might want to start looking within its own ranks for diversity as well. Keep in mind, only 8 of its 296 senior policy staff members-- that's less than 3%-- are Black, for example. So this is coming from research from Chris Brummer of Georgetown Law. We've had him on this program before, who has emphasized the banking system needs to better represent the communities that the industry serves. And that includes the Fed itself. Zack?

ZACK GUZMAN: Yeah, and interesting to follow some of those calls we've heard from Democrats here to also call on the Fed to close the economic and racial disparities we've seen in the country as well. A tall order, but diversity becoming increasingly looked at at the Fed. Brian Cheung, appreciate that.