DIVERSITY IN THE

FINANCIAL SERVICES SECTOR

HEARING

BEFORE THE

SUBCOMMITTEE ON 

OVERSIGHT AND INVESTIGATIONS

OF THE

COMMITTEE ON FINANCIAL SERVICES

U.S. HOUSE OF REPRESENTATIVES

ONE HUNDRED TENTH CONGRESS

SECOND SESSION

FEBRUARY 7, 2008

Printed for the use of the Committee on Financial Services

Serial No. 110–86

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DIVERSITY IN THE FINANCIAL SERVICES SECTOR

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41–177 PDF 2008

DIVERSITY IN THE

FINANCIAL SERVICES SECTOR

HEARING

BEFORE THE

SUBCOMMITTEE ON 

OVERSIGHT AND INVESTIGATIONS

OF THE

COMMITTEE ON FINANCIAL SERVICES

U.S. HOUSE OF REPRESENTATIVES

ONE HUNDRED TENTH CONGRESS

SECOND SESSION

FEBRUARY 7, 2008

Printed for the use of the Committee on Financial Services

Serial No. 110–86

(

(II)

HOUSE COMMITTEE ON FINANCIAL SERVICES 

BARNEY FRANK, Massachusetts, Chairman

PAUL E. KANJORSKI, Pennsylvania 

MAXINE WATERS, California 

CAROLYN B. MALONEY, New York 

LUIS V. GUTIERREZ, Illinois 

NYDIA M. VELA ́ ZQUEZ, New York 

MELVIN L. WATT, North Carolina 

GARY L. ACKERMAN, New York 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

DENNIS MOORE, Kansas 

MICHAEL E. CAPUANO, Massachusetts 

RUBE ́ N HINOJOSA, Texas 

WM. LACY CLAY, Missouri 

CAROLYN MCCARTHY, New York 

JOE BACA, California 

STEPHEN F. LYNCH, Massachusetts 

BRAD MILLER, North Carolina 

DAVID SCOTT, Georgia 

AL GREEN, Texas 

EMANUEL CLEAVER, Missouri 

MELISSA L. BEAN, Illinois 

GWEN MOORE, Wisconsin, 

LINCOLN DAVIS, Tennessee 

PAUL W. HODES, New Hampshire 

KEITH ELLISON, Minnesota 

RON KLEIN, Florida 

TIM MAHONEY, Florida 

CHARLES A. WILSON, Ohio 

ED PERLMUTTER, Colorado 

CHRISTOPHER S. MURPHY, Connecticut 

JOE DONNELLY, Indiana 

ROBERT WEXLER, Florida 

JIM MARSHALL, Georgia 

DAN BOREN, Oklahoma 

SPENCER BACHUS, Alabama 

DEBORAH PRYCE, Ohio 

MICHAEL N. CASTLE, Delaware 

PETER T. KING, New York 

EDWARD R. ROYCE, California 

FRANK D. LUCAS, Oklahoma 

RON PAUL, Texas 

STEVEN C. LATOURETTE, Ohio 

DONALD A. MANZULLO, Illinois 

WALTER B. JONES, JR., North Carolina 

JUDY BIGGERT, Illinois 

CHRISTOPHER SHAYS, Connecticut 

GARY G. MILLER, California 

SHELLEY MOORE CAPITO, West Virginia 

TOM FEENEY, Florida 

JEB HENSARLING, Texas 

SCOTT GARRETT, New Jersey 

GINNY BROWN-WAITE, Florida 

J. GRESHAM BARRETT, South Carolina 

JIM GERLACH, Pennsylvania 

STEVAN PEARCE, New Mexico 

RANDY NEUGEBAUER, Texas 

TOM PRICE, Georgia 

GEOFF DAVIS, Kentucky 

PATRICK T. MCHENRY, North Carolina 

JOHN CAMPBELL, California 

ADAM PUTNAM, Florida 

MICHELE BACHMANN, Minnesota 

PETER J. ROSKAM, Illinois 

KENNY MARCHANT, Texas 

THADDEUS G. McCOTTER, Michigan 

KEVIN McCARTHY, California 

DEAN HELLER, Nevada

JEANNE M. ROSLANOWICK, Staff Director and Chief Counsel 

(III)

SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

MELVIN L. WATT, North Carolina, Chairman

LUIS V. GUTIERREZ, Illinois 

MAXINE WATERS, California 

STEPHEN F. LYNCH, Massachusetts 

NYDIA M. VELA ́ ZQUEZ, New York 

MICHAEL E. CAPUANO, Massachusetts 

CAROLYN MCCARTHY, New York 

RON KLEIN, Florida 

TIM MAHONEY, Florida 

ROBERT WEXLER, Florida 

GARY G. MILLER, California 

PATRICK T. MCHENRY, North Carolina 

EDWARD R. ROYCE, California 

RON PAUL, Texas 

STEVEN C. LATOURETTE, Ohio 

J. GRESHAM BARRETT, South Carolina 

MICHELE BACHMANN, Minnesota 

PETER J. ROSKAM, Illinois 

KEVIN McCARTHY, California 

(V)

C O N T E N T S 

Page 

Hearing held on: 

February 7, 2008 .............................................................................................. 1

Appendix: 

February 7, 2008 .............................................................................................. 45

WITNESSES 

THURSDAY, FEBRUARY 7, 2008

Abdul-Aleem, Zaid, Vice President, Piedmont Investment Advisors, on behalf 

of the National Association of Securities Professionals .................................... 33

Booker, Marilyn F., Managing Director, Global Head of Diversity, Morgan 

Stanley .................................................................................................................. 31

Corey, Walter E., Director, The Phoenix Foundation ........................................... 27

Edwards, Ronald, Director, Program Research and Surveys Division, Office 

of Research, Information and Planning, U.S. Equal Employment Opportunity Commission ............................................................................................... 9

Graves, Don Jr., Graves & Horton, LLC ............................................................... 35

Sims, Nancy A., President, The Robert Toigo Foundation ................................... 26

Thomas, Geraldine, Human Resources and Global Diversity and Inclusion 

Executive, Bank of America ................................................................................ 29

Visconti, Luke, Partner and Co-Founder, DiversityInc ........................................ 23

Williams, Orice M., Director, Financial Markets and Community Investment, 

U.S. Government Accountability Office .............................................................. 7

APPENDIX 

Prepared statements: 

Watt, Hon. Melvin L. ....................................................................................... 46

Waters, Hon. Maxine ........................................................................................ 53

Abdul-Aleem, Zaid ............................................................................................ 56

Booker, Marilyn F. ........................................................................................... 81

Corey, Walter E. ............................................................................................... 90

Edwards, Ronald ............................................................................................... 97

Graves, Don Jr. ................................................................................................. 100

Sims, Nancy A. ................................................................................................. 108

Thomas, Geraldine ........................................................................................... 144

Visconti, Luke ................................................................................................... 151

Williams, Orice M. ............................................................................................ 162

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Watt, Hon. Melvin L.: 

Written responses to questions submitted to Marilyn F. Booker ................. 179

Written responses to questions submitted to Ronald Edwards .................... 183

Written responses to questions submitted to Orice M. Williams ................. 184

Written responses to questions submitted to Nancy A. Sims ....................... 185

Letter from Hon. Michael Oxley, et al., to Hon. David M. Walker, dated 

February 9, 2005 ........................................................................................... 197

GAO report entitled, ‘‘Financial Services Industry, Overall Trends in 

Management-Level Diversity and Diversity Initiatives, 1993–2004,’’ 

dated June 2006 ............................................................................................ 199

The DiversityInc Top 50 Companies for Diversity list .................................. 247

European Commission study entitled, ‘‘The Business Case for Diversity, 

Good Practices in the Workplace’’ ............................................................... 251

Page

VI

Watt, Hon. Melvin L.—Continued

Washington Post article entitled, ‘‘Most Diversity Training Ineffective, 

Study Finds,’’ dated January 20, 2008 ........................................................ 314

Summaries of credentials of witnesses ........................................................... 317

(1)

DIVERSITY IN THE 

FINANCIAL SERVICES SECTOR 

Thursday, February 7, 2008

U.S. HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON OVERSIGHT

AND INVESTIGATIONS, COMMITTEE ON FINANCIAL SERVICES, Washington, D.C. 

The subcommittee met, pursuant to notice, at 2:33 p.m., in room 

2128, Rayburn House Office Building, Hon. Melvin L. Watt [chairman of the subcommittee] presiding. 

Members present: Representatives Watt, Waters, McCarthy; and 

Miller. 

Also present: Representatives Scott, Meeks, and Allen. 

Chairman WATT. This hearing of the Subcommittee on Oversight 

and Investigations will come to order. 

Let me thank everybody who is here with us and apologize in advance that we might get a call for votes at some point, but we’ll 

try to move as expeditiously and with as few interruptions as we 

can. 

I want to start by welcoming back my ranking member, who has 

been out with some adversity, and we’re delighted to see you back. 

Since he left, I cut my moustache off and he grew something on his 

face. 

[Laughter] 

Chairman WATT. So I was joking with him that I was trying to 

grow up to be like him and he was joking with me that he was trying to grow up to be like me, so we passed in the night, as we often 

do here in the political world. But it is great to see him back, and 

I know some of the adversities that he has been through and our 

hearts and minds have been with him throughout the ordeal, so 

welcome back. 

I am going to recognize myself for an opening statement, and 

then I will recognize the ranking member for his opening statement. 

This is the second in a series of hearings by this subcommittee 

as we’re currently constituted about diversity issues in the financial services sector. Our first hearing held last October explored the 

role that minority-owned financial institutions play in our economy 

and the role that Federal banking regulators play in preserving 

and promoting those institutions. 

Today’s hearing is also a follow-up to hearings held in 2004 and 

2006 by the subcommittee when my Republican colleagues were in 

the majority, which focused on workplace diversity and especially 

2

on the recruitment, retention, and promotion of minorities and 

women to mid- and senior-level management positions in the financial services sector. 

We continue the subcommittee’s review of diversity issues in the 

financial services sector because we believe that being proactive on 

diversity is legally required and necessary, and because there is 

growing evidence that diversity is critically important to our global 

competitive advantage in the financial sector as well as in other 

business sectors. 

In June 2006, the U.S. Government Accountability Office issued 

a report entitled, ‘‘Overall Trends in Management Level Diversity 

and Diversity Initiatives 1993–2004.’’ And the subcommittee held 

a hearing to review that report on July 12, 2006. The report was 

requested after a July 15, 2004, subcommittee hearing that reviewed challenges faced by the financial services industry in obtaining and maintaining a diverse work force and challenges faced 

in getting access to capital by minority-owned businesses. 

The 2006 GAO report examined workplace diversity trends for 

various sectors of the financial services industry and found that 

overall diversity at the management level did not change substantially from 1993 to 2004, and that the marginal improvements that 

had been made were not uniform across various parts of financial 

services sector or across racial and ethnic minority groups. 

Sadly, the GAO’s follow-up data for 2006 shows that diversity at 

the management level in the financial services industry has remained about the same as reflected in its 1993–2004 report. The 

GAO report suggests that depository institutions such as commercial banks and insurance companies have generally been more diverse at the management level over the years than the securities 

sector and the holdings and trust sector, which includes investment 

trust, investment companies, and holding companies. 

There is some suggestion, as some witnesses testified at the subcommittee’s 2006 hearing, that even the modest growth reported in 

senior management level diversity may have been overstated due 

to the fact that the officials and managers category used in the 

Equal Employment Commission’s EEO–1 form included lower and 

mid-level management positions that may have higher representations of minorities and white women. 

The Equal Employment Opportunity Commission uses the EEO–

1 form to collect demographic data annually from private employers with 100 or more employees and from Federal contractors who 

have 50 or more employees and are prime or subcontractors on a 

government contract over $50,000. 

Effective with the 2007 reporting year, a revised EEO–1 form 

now divides the category officials and managers into two subcategories: The first is the executive senior-level officials and managers; and the second is the first mid-level officials. I’m happy to 

have Mr. Ronald Edwards representing the EEOC today to discuss 

this revised EEO–1 form, and to give a preliminary assessment of 

the utility of the new form in making a better assessment of diversity in the management ranks. 

We are fortunate that several groups and foundations in the private sector have also been conducting studies and research about 

diversity in corporate America and about diversity in the financial 

3

services sector in particular. DiversityInc, one such company, is 

perhaps best known for its annual DiversityInc top 50 list of companies. DiversityInc grades companies on CEO commitment, 

human capital, corporate communications, and supplier diversity. 

In addition to the top 50 list, there are top 10 lists for specific 

racial and ethnic groups, women and people with disability, and 

other categories. In 2007, over 300 companies submitted questionnaires and other data to be considered for DiversityInc’s list. I am 

proud that Bank of America, a financial institution headquartered 

in my congressional district, was rated number one on the 

DiversityInc top 50 for 2007, and I look forward to hearing from 

our witness today, Ms. Geri Thomas, Global Head of Diversity at 

Bank of America, about how they achieved that ranking. 

Also testifying at today’s hearing is a representative of the Robert Toigo Foundation. Toigo conducts research into specific topics 

concerning diversity within the financial services industry. It completed a valuable study in November 2006 entitled, ‘‘Retention Returns: Insights for More Effective Diversity Initiatives.’’ That study 

focused on retention of minority finance professionals. The study 

concluded that retention is increased if minority professionals receive visible significant assignments that are valued at the firm, if 

they have genuine mentors and receive objective performance 

standards that are applied fairly and consistently, and if they see 

visible commitment to diversity from the top, which translates 

down to middle management. 

Fostering a diverse workforce is critically important, not only for 

minorities and women, but for U.S. firms seeking to compete in the 

21st Century global market. With increased globalization, international firms with diverse workforces are competing vigorously 

with U.S. companies for revenues, profits, and talent. Indeed, the 

European Commission issued a comprehensive study in September 

of 2005 on the diversity efforts of leading financial and manufacturing firms in Europe. The European Commission study provides 

many important examples of innovative best practices in the areas 

of recruitment and retention of diverse staff and management. 

It is noteworthy that in the European Commission study, 83 percent of the respondents believe that effective diversity initiatives 

positively impacted the bottom line. Among the most important 

benefits they reported were enhanced employee recruitment and retention from a wider pool of high-quality workers, improved corporate image and reputation, greater innovation, and enhanced opportunities. 

Similarly, the DiversityInc representative will testify that the 

DiversityInc top 50 regularly outperform the S&P 500 in terms of 

return on investment. In the final analysis, if we can’t make the 

legal, ethical, and moral case for U.S. companies to pursue diversity aggressively, perhaps they’ll take note of the impact of diversity on the bottom line. 

I have referenced a number of things, and before I yield to you, 

let me just ask your unanimous consent to insert the following documents into the record: 

A letter dated February 9, 2005, from our former House Financial Services Chairman, Mike Oxley; our former Ranking Member 

and our current Chair of the Full Committee, Barney Frank; the 

4

Oversight and Investigations Subcommittee Chairwoman, Sue 

Kelly; the Oversight and Investigations Subcommittee Ranking 

Member, Luis Gutierrez; and Oversight and Investigations Subcommittee member, David Scott, to the GAO, which requested a report on racial, ethnic, and gender diversity in the financial services 

industry, including professional accounting services firms, and access to capital. 

Second is the July 12, 2006, GAO report, entitled ‘‘Overall 

Trends in Management Level Diversity and Diversity Initiatives 

1993–2004’’. 

Third, the DiversityInc top 50 list for each year 2001–2007. 

Fourth, the September 2005 European Commission study entitled, ‘‘The Business Case for Diversity Good Practices in the Workplace’’. 

Fifth, the January 20, 2008, Washington Post article entitled, 

‘‘Most Diversity Training Ineffective, Study Finds,’’ just to make 

sure we are giving equal time to all points of view here. 

And I would reference, without submitting into the record, House 

Report 110–278, ‘‘Financial Services Diversity Initiative,’’ that accompanies H. Con. Res. 140, which was a resolution that we passed 

in the House encouraging diversity in the financial services sector. 

And finally I will submit, with unanimous consent, summaries of 

the credentials of each of our witnesses today, and I hope they will 

forgive me for not reading their entire vitae, resumes—whatever 

they are called—CVs. That’s what they’re called? Curriculum vitae. 

Okay. Whatever they are called, you know what I mean. 

I’m going to put them in the record rather than reading them. 

That’s the bottom line, so we can spend most of our time talking 

about the issues here today. 

With that, I appreciate my ranking member’s indulgence, and I 

yield to him for an opening statement in such matters as he may 

have to say. 

Mr. MILLER. Thank you. You sound the same, although you do 

look different. But the women are keeping you straight on your 

side, I see, with your language on this, so keep it up, women. 

I want to thank you, Mr. Chairman, for holding this hearing 

today. It’s important to discuss diversity in the financial services 

sector, and this is an appropriate venue to have that happen. 

I can only imagine that with the global economy we live in today, 

it would only benefit a company to diversify their workforce in an 

effort to meet the financial needs of their clients, customers, and 

community. As we will shortly hear in testimony from some of our 

witnesses, there is a clear economic advantage to diversifying companies. Today’s white collar work pool is dramatically different 

than in the past. Educated men and women from a vast array of 

backgrounds are changing the face of the business world today. 

In 2004, however, concerns were raised in this committee that 

the financial services sector was lacking a diverse workforce. And 

members had requested at that point in time—I was one of them—

that the Government Accountability Office, the GAO, provide the 

overview of diversity in this industry. 

The following year, the GAO reported that during the period 

from 1993 to 2004, the U.S. Equal Employment Opportunity Commission, the EEOC, data actually showed that management level 

5

representation by minority men and women increased overall from 

11.1 percent to 15.5 percent. 

While I understand that there is some concern with this data, 

and with the overall recruiting and retention rate of minorities in 

the industry, I believe that these numbers actually indicate a positive trend toward greater diversity in the financial services sector. 

The GAO reported that between 1993 and 2004, the representation of African Americans and Hispanics increased by a percentage, 

and then Asian representation increased by 2 percentage points in 

management level positions across the financial services industry. 

Their report also shows that representation by white women remained constant, and representation by white men declined by 5 

percent. 

While the stated percentages may not seem extremely significant, I think we need to take into consideration the overall growth 

of management level positions in the financial services industry. 

According to the information I received from the GAO this morning, there was an 18 percent growth rate in total management level 

positions in this industry from 1993 to 2004. The minority growth 

rate during this time period was about 65 percent, which is much 

faster growth rate than the overall development of these positions. 

It also seems to me that we need to take into consideration the 

total population of the United States and take into account that 

these numbers may actually reflect the minority and non-minority 

ratios of populations across the country. 

In addition to exploring these issues today, I am looking forward 

to hearing from the industry regarding their important programs 

and further increased diversity within the workforce. Private-sector 

initiatives are the crucial component for diversifying the industry. 

I also look forward to hearing from Mr. Don Graves, CEO of 

Progress to Business, about his organization’s crucial work to help 

minorities in the workforce. Mr. Graves is a former director of public policy for the Business Roundtable. In his capacity at the 

Roundtable, he also served as the executive director of Business 

Link, a public-private partnership created to encourage businessto-business relationships between large corporations and small 

businesses, especially minority and women-owned businesses and 

those located in economically distressed areas. 

I am pleased to have Mr. Graves here today in addition to the 

other witnesses. I look forward to hearing from all of you from the 

private sector efforts to monitor and increase diversity within the 

financial services sector. 

And I guess, Mel, it’s like two people reading the Bible. Both of 

them come back with a different opinion. I thought it was pretty 

good and you had some problems with it, so I guess we’re going to 

have some witnesses here that are going to try to tell both of us 

that we’re wrong and point some light on what we’re doing that’s 

good and beneficial. I yield back. 

Chairman WATT. I’m so happy to have you back. We’re going to 

be a lot more cordial and congenial even than we usually are. So 

we’re just joking, you all; we have a wonderful relationship. 

I neglected to welcome one of my Charlotte constituents, Dr. 

James Daniel, who is a minister and a business person who has 

done a lot of work in the area of diversity, who found out about 

6

this hearing and flew in today just to be here to hear what we were 

doing, and to keep track of—check on his Member of Congress too, 

no doubt. 

We have been joined by the gentlelady from New York, Mrs. 

McCarthy, who is a member of the subcommittee. Do you care to 

make an opening statement? She is an avowed opponent of opening 

statements. We are delighted that you are here and I hope you 

won’t object to the next unanimous consent request that I am getting ready to make. 

Since we talked about my good friend—Mr. David Scott from 

Georgia—before he arrived, he started this process by joining in 

the request of the GAO that they do this report, and he is here 

with us. He is not a member of our subcommittee, but he is a member of the Full Committee on Financial Services, and I would ask 

unanimous consent, if Mrs. McCarthy won’t be too offended, that 

we allow him to make an opening statement since he got us off to 

the start on this when he was on the subcommittee. 

I will recognize the gentleman for 5 minutes. 

Mr. SCOTT. Well, thank you very much, Chairman Watt, first of 

all for the hearing and for your graciousness in allowing me to be 

a part of this subcommittee. 

As America and as this Nation, our strength is our diversity. 

That has been the hallmark of our advancement. There’s no greater 

need for that diversity than in the financial sector. That is especially true today as we are witnessing one of the most significant 

downturns in our economy. And at the core of it is the financial 

services industry, and at the core of that is some failures within 

that industry that certainly have diversity in terms of the problem. 

If you look at so much of the problems that we are now incurring 

in our financial services industry, a lot of it has to do with some 

failures on our parts to really look at inequities in our financial 

system, and how we structure loans, how we structure mortgages, 

predatory lending, the ‘‘targetness’’ of it. And needless to say, I 

have long felt that sometimes you can avoid some of these problems if you have a rich diversity of thought and opinion, and people 

of different cultures and races within the decision-making capacity. 

So this is an important hearing to address diversity in the workplace, or the lack thereof. And this hearing’s topic of diversity in 

the financial services industry, of course, has been of particular interest to me for several reasons, the most important reason being 

the need to open up access to capital in minority communities. As 

Mr. Watt has said, I have been on this track for a long, long time, 

as an entrepreneur, as one who is a graduate and received my 

MBA from probably, I say the top school of finance and business 

in the world, which is the Wharton School of Finance at the University of Pennsylvania. 

But my thesis work was done in this area, and my title that Mr. 

Watt—my title of my thesis was, ‘‘A Light Out of the Darkness,’’ 

which was to bring some greater diversity at every level in terms 

of the workplace. 

As I said, America’s strength is that it has always been a place 

of diversity, and we are proud of this fact, and this should be reflected in the workplace, especially in the financial services sector. 

7

I understand the unique challenges facing minorities, being one 

myself and having gone through this. In the financial services businesses, I know the need. We do not have enough diversity in key 

decision-making positions within the financial services industry, 

which is the heart and soul of our free enterprise capitalistic system. 

And I hope that this hearing will shed more light and give us a 

renewed commitment to really make sure diversity is really taking 

place, and I’m hoping for some new ideas and solutions today, addressing this issue. More must be done to open the doors of opportunity for the rest of America to include all of America, and this 

is a fight that this committee under the leadership of Chairman 

Watt and our subcommittee as well the leadership of the chairman 

of our Full Committee, Chairman Frank, in terms of this fight. 

I am pleased, Mr. Chairman, that you have chosen to hold this 

important hearing. I appreciate the opportunity to participate, and 

I do look forward to the testimony of our distinguished witnesses. 

Thank you. 

Chairman WATT. I thank the gentleman for his continuing interest and commitment in this area. I wasn’t aware of his thesis, but 

I learn something new about the gentleman every day, which is 

good. So perhaps we’ll look at putting that in the record too, if the 

gentleman—I know he’s too modest to suggest such a thing, but 

we’ll talk about that later, and maybe if it fits—we won’t force it, 

but if it fits, that might be a good thing to do. 

I am pleased now to introduce our first panel of witnesses. We 

have two panels, the government witnesses and the private sector 

witnesses. 

The first witness—and again you all forgive me for the abbreviated introduction, but I don’t want us to run out of time this 

afternoon—our first witness is Orice Williams, who has been with 

us before. She is the Director of Financial Markets and Community 

Investment at the U.S. Government Accountability Office, and we 

welcome her. 

And our second witness on this panel will be Mr. Ronald Edwards, Director of the Program Research and Surveys Division 

with the Office of Research, Information and Planning at the Equal 

Employment Opportunity Commission. 

Welcome, both of you. And we will start with Ms. Williams. Before you do that, let me do my protocol stuff here. Without objection, your written statements will be made a part of the record. 

Each of you will be recognized for a 5-minute summary of your testimony, and your full statement will be in the record, and of course 

if you spill over a little beyond the 5 minutes, we’ll count that from 

the time we saved from the introductions. 

So you are recognized for 5 minutes, Ms. Williams. 

STATEMENT OF ORICE M. WILLIAMS, DIRECTOR, FINANCIAL 

MARKETS AND COMMUNITY INVESTMENT, U.S. GOVERNMENT ACCOUNTABILITY OFFICE 

Ms. WILLIAMS. Thank you. 

Chairman Watt, Ranking Member Miller, and members of the 

subcommittee, I am pleased to be here this afternoon to discuss 

8

GAO’s 2006 report on diversity in the financial services industry, 

and provide some updated statistics. 

In particular, I would like to highlight trends in management 

level diversity and discuss diversity initiatives, and some of the 

challenges companies face. 

First, our analysis of EEOC’s data on workforce demographics revealed that between 1993 and 2004 overall management level representation by minorities and women in the financial services sector had not changed substantially, although there was some variation by racial and ethnic group. In updating similar statistics for 

2006, we found that little has changed. 

For example, all minorities at the management level had increased from about 11 percent in 1993 to 15.5 percent in 2004. This 

number had increased to 16.1 percent in 2006. While changes in 

some of the job categories limits our ability to trend this data directly, the 2006 data are still generally comparable. 

Across racial and ethnic groups, African Americans, Asian Americans, Hispanic Americans, and American Indians experienced 

varying levels of change over this period. The trend for white 

woman has remained relatively constant at slightly more than onethird. However, it is important to keep in mind that management 

is defined very broadly and includes everyone from the assistant 

manager of a small bank branch in Charlotte to the CEO of a Fortune 500 company. 

Therefore, these statistics may actually overstate the amount of 

diversity among senior managers in the financial services industry. 

However, in 2007 EEOC began to collect this information in such 

a way that we hope will allow for a more focused analysis on senior 

management in the future. 

In addition to evaluating the industry as a whole, we also looked 

across sectors and found that certain sectors such as depository institutions and insurance within this industry were more diverse at 

the management level than others. 

Now let me turn briefly to corporate diversity initiatives and programs. We spoke with dozens of firms and trade associations to obtain their views and perspectives about diversity. We found that 

many had programs or initiatives to increase workforce diversity 

and that they face a variety of challenges. 

For example, we heard from several firms that diversity initiatives cannot be treated as programs. Instead they have to be 

viewed as long-term commitments that may start at the top, but 

must permeate the entire organization. We found that many firms 

had programs that focused on attracting, recruiting, and retaining 

a diverse workforce. This included offering scholarships and internships to students to attract them to the financial services industry, 

recruiting from a diverse pipeline and fostering a working environment of inclusion that allowed all employees to thrive. 

We found that some firms are trying to develop performance 

measures to gauge the effectiveness of their diversity efforts, which 

can be challenging. 

Some common measures identified were tracking employee satisfaction survey results, and the representation of women and minorities in key positions. 

9

These measures become more important as some companies are 

beginning to hold senior managers accountable for fostering a more 

diverse workforce, including linking managers’ compensation to 

their performance in promoting diversity. 

However, we found that financial institutions face a variety of 

challenges that may provide insights into the statistics I mentioned 

earlier. In particular, we heard that maintaining a critical mass of 

minority employees needed to establish a visible presence, effective 

networks, and mentors for minority and women candidates has 

been an ongoing challenge. 

Finally, firms noted that building a pipeline of diverse talent was 

also a challenge. Specifically, the financial services industry requires that many senior officials possess certain skills and credentials and the possible pool of candidates may be constrained by this 

requirement. For example, of accredited business schools, about 19 

percent of graduates, one potential talent pool for the industry, are 

minorities. 

This concludes my oral statement, and I would be happy to answer any questions at this time. Thank you. 

[The prepared statement of Ms. Williams can be found on page 

162 of the appendix.] 

Chairman WATT. We thank you very much for your testimony, 

and we’ll first hear the testimony of Mr. Edwards and then we’ll 

open it up for questions. 

Mr. Edwards, you are recognized for 5 minutes. 

Mr. EDWARDS. Thank you very much. Good afternoon, Mr. Chairman, and members of the subcommittee. 

Chairman WATT. We need to either have you turn that on or pull 

it a lot closer to you. 

Mr. EDWARDS. Is this better? 

Chairman WATT. Yes. 

STATEMENT OF RONALD EDWARDS, DIRECTOR, PROGRAM RESEARCH AND SURVEYS DIVISION, OFFICE OF RESEARCH, INFORMATION AND PLANNING, U.S. EQUAL EMPLOYMENT OPPORTUNITY COMMISSION 

Mr. EDWARDS. My name is Ron Edwards, and I am the Director 

of the Program Research and Surveys Division of the Office of Information and Planning at the Equal Employment Opportunity 

Commission. Among our Division’s responsibilities is the implementation of the Equal Opportunity Survey Program, that collects 

workforce data from employers in various sectors of the economy. 

Key among these efforts is our collection of data from the private 

sector in the EEO–1 report. We appreciate the opportunity to address the subcommittee today. 

The EEO–1 report, as the chairman had pointed out earlier, requires private employers to provide account of their employees by 

job category, race, ethnicity, and gender. EEO–1 employment data 

are collected annually by the EEOC for its own programs and for 

those of the Office of Federal Contract Compliance Programs, 

OFCCP, at the Department of Labor. 

Private employers are required to file the EEO–1 report when 

they have 100 or more employees or when they are Federal contractors or subcontractors with 50 or more employees and contracts 

10

totalling $50,000 or more. Data are collected for each employer who 

meets these criteria; an employer who has multiple establishments 

is required to file a separate report for each establishment where 

they have 50 or more employees. 

The workforce data are reported on a matrix that captures employee counts by job category, race and ethnicity, and gender. The 

EEO–1 report must be filed annually. It is filed every year by September 30th; that is the deadline. The employment data comes 

from a payroll period in the months of July, August, or September. 

The Commission is required by law to maintain this data confidentially, and they can only be released under very limited circumstances. In 2006, we collected data from about 50,000 employers that covered about 55 million employees. 

Both the EEOC and the OFCCP have used this data since 1966. 

Our EEO–1 data are used for a variety of purposes. EEOC uses the 

data to support its enforcement program. We also use the data to 

analyze employment patterns such as the representation of minorities and non-whites in various industries or regions of the country. 

A number of the studies that we have published using the EEO–

1 data recently are posted on our Web site, EEOC.gov. It is our understanding that the OFCCP uses EEO–1 data to determine which 

contractors’ or subcontractors’ establishments to select for contractor evaluations. 

The EEOC also encourages employers to use our EEO–1 data for 

self-assessment. We post aggregate EEO–1 data on our Web site, 

and upon request we will provide customized tables to employers 

so they can compare their own EEO–1 reports and workforce data 

to data aggregated for their competitors in the labor market. 

Finally, a wide range of academic researchers use our EEO–1 

data for various research purposes, and the areas come from economics, sociology, public policy, public administration, and they use 

the data to publish research as a result of that. 

Prior to 2007, we collected data using nine job categories, and 

those job categories were: Officials and managers; professionals; 

technicians; sales workers; office and clerical workers; craft workers; operatives; service workers; and laborers. And beginning with 

the 2007 survey, we then divided one of the job categories, officials 

and managers, into two separate job categories. 

Those two job categories are defined as being executive or seniorlevel officials and managers, and the second category is first or 

mid-level officials and managers. 

Executive or senior-level officials and managers are those individuals who plan, direct, formulate policies, set strategy, or provide 

overall direction in developing and delivering products, with guidance from a board of directors or some similar governing body. 

The job titles that we might expect that come from that job category are things like chief executive officers, chief operating officers, chief financial officers, presidents, executive vice presidents, 

chief human resources officers, and chief information officers. 

In the securities industry, we recognize that these job titles may 

not be prevalent, and so we might expect to see things like managing directors or job titles like that in this job group. 

11

But the key fact is what is the function of the job. If the job is 

to provide overall direction for the entire corporation, then we expect these individuals to be classified here. 

It’s easy to think of the first or mid-level officials and managers 

as being everyone who is left out of the first category. But more 

precisely, they are the individuals who oversee and direct the production and delivery of products, services, or functions at a group, 

regional, or divisional levels in organizations. 

This category would include first-line managers, production managers, store branch managers, and in the finance industry, they 

might even include a job category like vice presidents. 

We also made some other more technical changes to the 2007 

EEO–1 categorization of jobs by adjusting some of these categories. 

For example, we took the job title of purchasing agent and moved 

it into the professional category from the official and manager’s category because it is more reflective of the duties there, and we also 

more clearly defined things like financial analyst and personal financial analyst as being a professional job rather than an official’s 

and manager’s job. 

However, the key thing to remember is for all these jobs it’s the 

function that defines whether or not they were being included. If 

they are providing overall direction for the corporation, again they 

would be in the first category of the executive director, and in the 

second category it would be those that are providing more local direction. 

Thank you for this opportunity to testify today. I look forward to 

any questions that you may have. 

[The prepared statement of Mr. Edwards can be found on page 

97 of the appendix.] 

Chairman WATT. Thank you so much for your testimony and we 

will now recognize the members of the committee for questions, 

and as her reward for not making an opening statement, I will recognize the gentlelady from New York, Mrs. McCarthy, first. 

Mrs. MCCARTHY. Thank you, Mr. Chairman. Just to clarify, I 

don’t have anything against opening statements; I just think that 

they should be reserved for the chairman and the ranking member. 

Sometimes we sit here for an hour-and-a-half listening to opening 

statements, and most of us come to actually hear the witnesses so 

we can learn. So let me clarify that. 

Ms. Williams, with your study, did you see any models that were 

actually working where you saw larger corporations with a better 

diversity because they made a commitment as far as bringing diversity into their corporation? 

Ms. WILLIAMS. Our approach to the work really divided those two 

issues. We relied on the EEOC for the statistics about the diversity 

within industry as a whole. We did not drill down to specific company level data. So when we collected information about what companies were actually doing, we gauged those practices against best 

practices based on work that the GAO had done more broadly on 

diversity management. We didn’t actually do any type of correlation comparison. But there have been other studies that have attempted to do that. 

Mrs. MCCARTHY. Well, I’m just wondering because if there are 

models out there or corporations that are out there that actually 

12

have good programs that have been working to bring diversity into 

the place, that might be something that we could look at and figure 

out, ‘‘Okay, what are they doing and how can we help other corporations bring that onto line?’’ A lot of times, they probably don’t 

know where to start. I can’t answer for them. 

When you were talking, Mr. Edwards, about government contracting and trying to bring diversity into the government contracting, when I was on the small education—on one of the investigating panels that we had, we found that a lot of these government contracting that were out there, they had ‘‘minority’’ but actually the minority was a front person for someone else who was actually putting money or getting the contract because they said they 

had a minority. Did you find out in your research, or do you do 

that, as far as to see if that’s improved since probably about 2/04? 

Mr. EDWARDS. Well, I think probably you’re alluding to something that the Office of Federal Contract Compliance would do in 

their review of a Federal contractor as part of their compliance reviews and examining their affirmative action plans and things like 

that. 

Mrs. MCCARTHY. Okay. When you started to look at changing 

how you set up your—to finding the professional on the different 

levels, did you find that a difference in the diversity as far as the 

training programs going back up? You know, you went to a lower 

level and then you went to the higher level. Being here in Congress, we meet a lot of CEOs, and I noticed that with a lot of the 

CEOs who come in to see us, there is no diversity whatsoever. 

So I am just curious what programs possibly they have, because 

you do see a lot of minorities in mid level, but no one seems to really make it to the top. And by separating, since you did the examination, were you able to see that more diversity was coming into 

the top? 

Mr. EDWARDS. Well, we haven’t had an opportunity to actually 

examine the data yet; we are still collecting and processing that 

data. But certainly that is one of the things that we hope to do by 

having those distinct job categories. In the past, we would have to 

do a comparison to a lower-level job group like professionals, and 

now we think we’ll be able to be much more precise in our analysis. 

Mrs. MCCARTHY. How long do you think that will take? 

Mr. EDWARDS. We hope to have the data prepared by late spring. 

Mrs. MCCARTHY. This spring? 

Mr. EDWARDS. Yes. 

Mrs. MCCARTHY. Thank you, Mr. Chairman. 

Chairman WATT. I thank the gentlelady, and recognize the ranking member for 5 minutes. 

Mr. MILLER. Thank you. We enjoyed both of your testimonies, 

and I think, Mr. Edwards, you have a near-photographic memory 

based on watching you review your notes there, and you seem to 

go page by page. 

Ms. Williams, diversity can be very difficult, and based on what 

your statements were, you have proven that. Are there limits to 

what Congress and the regulators can do to increase diversity? 

Ms. WILLIAMS. I think based on the body of work that we did, 

we laid out the current situation and in terms of whether or not 

it is able to be legislated, we really view that as a public policy deVerDate 0ct 09 2002 11:27 Apr 17, 2008 Jkt 041177 PO 00000 Frm 00020 Fmt 6633 Sfmt 6633 K:\DOCS\41177.TXT TERRIE
13

cision. So our purpose was to provide baseline information for Congress. 

Mr. MILLER. I have a personal belief. It’s like everybody in my 

family is union except me, and unions don’t like me because I’m a 

Republican. 

[Laughter] 

Mr. MILLER. But I have always believed that the best thing I 

could do to help working people was to create the best business environment we can create to produce more jobs— 

Ms. WILLIAMS. Yes. 

Mr. MILLER. And more competition for labor. When you look at 

this, would maybe our efforts be more appropriately applied to creating an extremely robust financial services sector, and would that 

not create the demand for diversity in and of itself? Or do you have 

an opinion on that? 

Ms. WILLIAMS. I really don’t have an opinion on that. 

Mr. MILLER. Okay. You have stated here that the diversity initiatives launched by the private sector have faced challenges— 

Ms. WILLIAMS. Yes. 

Mr. MILLER. Did you get into what those challenges are, and how 

many of those can be dealt with? 

Ms. WILLIAMS. We basically collected information based on challenges that were articulated, and we broke them out into specific 

categories. We did not then go on to address how they could be best 

addressed, but laid out what they are based on the information we 

collected from companies in the financial services sector. 

Mr. MILLER. Okay. But you stated in the report that in 2004, the 

diversity increased to about 15.4 percent for minorities, and in 

2006, it increased to 16.1 percent. Is that accurate? 

Ms. WILLIAMS. The 15.5 percent is basically what the percentage 

of the total workforce was at the time for minorities. 

Mr. MILLER. And so, it is actually increasing. By 2006, it increased to 16.1 percent. 

Ms. WILLIAMS. Correct. 

Mr. MILLER. So it seems like we’re going in a good direction. I 

guess we need to better define what these challenges are and how 

some of these challenges can be met. 

Mr. Edwards, included in the GAO report, there is a finite pool 

with a limited pipeline, as the GAO puts it, of minority women candidates for senior management positions. Given the limited pipeline, is the focus on raw numbers limited to what’s being used in 

this area? Is that what we’re dealing with? 

Let’s see, your EEO–1 form that you’re using, it breaks it down 

into different categories, but we end up looking at a raw number 

equivalent at the end. 

Mr. EDWARDS. That’s right. So that form is basically, you can 

think of as being like a tally. And as far as the EEOC is concerned 

on some of these issues, we certainly use that as an important 

screening device, but we look at things like pipelines and movement within companies and things like that in our investigative 

process, we then go beyond that and get much more detailed data 

about, you know, more specific job titles and qualifications and 

things like that when we are conducting an investigation. 

14

Mr. MILLER. Do you think that focusing on counting, measuring, 

filling out forms gets you to the best way of achieving diversity, or 

do we impose a burden on organizations by requiring this? Or are 

there other ways that might better achieve diversity in the marketplace, in your opinion? 

Mr. EDWARDS. Well, I am trying to stress the fact that we only 

use this as sort of an opening or a screening mechanism that gives 

us an idea about what is going on within an industry or within an 

employer’s workforce. And we then seek much more detailed information, when moving along. 

I do think it has a real value for employers in terms of being able 

to compare their workforce and what’s going on with their employees to, you know, other people who are like them and that they 

compete with for workers in the labor force to see how well they 

are doing. 

Mr. MILLER. It seems like, based on Ms. Williams’ numbers, that 

the numbers are increasing, but we need to get to the bottom of 

what the challenges are and how to better deal with those if the 

system is going to continue in that fashion. But it seems like the 

challenges are the obstacle right now that the sector is dealing 

with, trying to increase the numbers, but the numbers have increased from the 1990’s, when it started at 11.1 percent, to 16.1 

percent in 2006. That is a pretty significant increase on their part. 

Thank you, Ron. Time has run out. 

Chairman WATT. I thank the ranking member for his participation, and I will give myself 5 minutes for questions at this point. 

Mr. Edwards, were you involved in the decision to separate the 

top management category in the two different areas, or was that 

decision made elsewhere? 

Mr. EDWARDS. Well, it was certainly made within the Commission, and our office was involved in participating in that and in the 

regulatory process of getting comments on that. 

Chairman WATT. Can you kind of give us a snapshot of the reasons that was important? 

Mr. EDWARDS. Well, mainly for a lot of the reasons that you all 

have already stated here today, that we felt that the job category 

was just very broad; it wasn’t as probative as we had hoped that 

it would be, and that we realized that with certain issues, as people 

are making progress within the workforce that this movement 

within the officials’ and managers’ category was very important to 

deal with issues like glass ceilings that different groups were confronting and those types of issues, and we just felt that it would 

provide us a much better analytic tool if we could just divide that 

job group into a move reasonable and workable group. 

Chairman WATT. And Ms. Williams, the tool that the GAO used 

in making its assessment was primarily the EEO–1 reports? 

Ms. WILLIAMS. Yes, totally. 

Chairman WATT. Totally the EEO–1 reports. Okay. 

You have looked at the new categories, I presume? 

Ms. WILLIAMS. Yes. 

Chairman WATT. Are they sufficiently descriptive, in your estimation, to give us going forward a better picture of diversity, or do 

we need to look at those? Does the EEOC need to look at those further, and divide them into even more categories? 

15

Ms. WILLIAMS. Well, I think it is definitely a movement in the 

right direction in terms of narrowing the range for the definition 

of management. Whether there needs to be additional breakout is 

unclear at this point because basically the EEOC just started collecting this information in 2007. It will be interesting to see what 

the statistics show this summer. 

Chairman WATT. Did the EEOC consult with the GAO in trying 

to figure out what the categories ought to be? 

Ms. WILLIAMS. No, not to my knowledge. 

Chairman WATT. Okay. And Mr. Edwards, has the EEOC had 

enough time to make even a preliminary assessment of whether 

this is going to be more effective than the prior mechanism that 

the EEO–1 forms were using? 

Mr. EDWARDS. I’d have to say not. Again, we haven’t really finalized the file yet and we won’t get that until late spring, probably. 

Chairman WATT. And what kinds of things will you look at to assess whether even more differentiation needs to take place? 

Mr. EDWARDS. Well, I think we’re going to first of all start to look 

at, to make sure there is some differentiation, what is the distribution of employees among those job groups where those differences 

occur. 

I mean there is an assumption, perhaps, that all of the higherlevel executive officials and managers will just be at our headquarters facilities. So we want to check that out and see if that’s 

the case or if it’s more widely distributed. Are there variations 

among industries, so that there’s a big cluster in some industries 

and not in others? 

So we want to look at the distribution of employees not only 

within a firm, but also across industries and perhaps even with different types of establishments. 

Chairman WATT. Ms. Williams, you looked initially, I guess, at 

the EEO–1 reports, but it sounded to me like you had some discussions with the industry participants because you talked about challenges that they are facing. The Securities Industry and Financial 

Markets Association has suggested that diversity decreases the 

more senior the level of management. In your discussions with industry participants, were you able to identify any of the reasons 

that is the case? 

Ms. WILLIAMS. This was an issue that came up in conversation 

because we did rely on SIFMA, the Securities Industry and Financial Markets Association’s survey. They did a survey in 2005. They 

have done one in 2007, and it shows a similar trend that the higher you go in the organization, the smaller the number becomes in 

terms of minorities. 

Anecdotally, we did hear that this was an issue. Some of the reasons offered range from while they may be able to attract minorities and women into the organization, there comes a time that 

those hires will look around and they won’t see people who look 

like them at the highest levels in the organization. They feel that 

they don’t have a future, and they will leave. 

I also mentioned the critical mass issue. So one of the things we 

heard is that there needs to be a critical mass of minorities in the 

organization to create a sense of network and connection in order 

16

for people to feel that they actually have a future at the organization. 

Chairman WATT. Okay. My time has expired. I guess we will be 

getting into more of these kind of issues with the second panel. I 

am pleased to welcome to the hearing a member of our subcommittee, Ms. Waters from California, and I know she has had an 

active interest in this area for years and years, although she is 

younger than I’m making it sound like. Very much younger, she 

says. 

So I’ll recognize the gentlelady for 5 minutes for questioning. 

Ms. WATERS. Thank you very much, Mr. Chairman, and I do appreciate that your subcommittee under your leadership is delving 

into this issue. I must admit, it’s one of the most frustrating parts 

of our work. To constantly have to try and not only seek the information relative to diversity in financial services sector, but to have 

to do all of the other work that goes along with public policy making. 

As I have reviewed the report, and some of the testimony, I think 

I understand the limits of the research. However, I’m not sure, and 

I want to ask a couple of questions. 

Ms. Williams, it appears that some of the challenges that—well, 

some of the initiatives that have been taken by some of the firms, 

such as initiatives in recruitment, partnering with other groups 

and organizations, given incentives, pay incentives—you reference 

all of that, but do you have any documentation for any of that? 

For example, in your research, if somebody said, ‘‘We partnered 

with these organizations in order to help us do recruitment, to find 

professionals, etc.’’, can you identify the organizations that they say 

they partnered with? 

Ms. WILLIAMS. Yes. Well, in conversations that we had with the 

companies, we generally asked who they partnered with, and then 

we would follow up with those organizations to get the perspective— 

Ms. WATERS. Give me some examples of that. 

Ms. WILLIAMS. Some of the organizations partnered with Toigo, 

for example. If you would like other examples of where there were 

relationships or connections established, I would be happy to provide that for the record. 

When we speak with the private sector, we generally keep a lot 

of the information confidential because we can’t compel them to 

speak with us. So in order to encourage an open dialogue, we agree 

to keep the information that we obtain from them confidential. 

Ms. WATERS. All of the information that you obtain from them 

is confidential information? 

Ms. WILLIAMS. We find that we are able to collect a lot more information if we collect the information, we assemble it, and we provide it in the aggregate, so that’s how we generally provide our information. 

Ms. WATERS. What about our GSEs, for example, Fannie Mae 

and Freddie Mac? 

Ms. WILLIAMS. Yes. 

Ms. WATERS. You tell them you will keep that information—they 

are semi-public— 

17

Ms. WILLIAMS. They are slightly different, but the organizations 

that we met with for this job were private companies. 

Ms. WATERS. In the financial services industry? 

Ms. WILLIAMS. Right. 

Ms. WATERS. All private? 

Ms. WILLIAMS. Yes. 

Ms. WATERS. And they were able to give you the names of groups 

and organizations they had partnered with, schools they have done 

recruitment at, all of that kind of information? 

Ms. WILLIAMS. Generally, when we talk to them, we specifically 

ask—if they said they had partnered with an organization, we 

would ask who they had partnered with. We often found that it 

was also an organization that we had contacted during the course 

of this audit, so we were able to get the information from both perspectives. 

Ms. WATERS. If they tell you they recruited at certain schools, for 

example, they recruited at Spelman and Morehouse, you would 

know that? 

Ms. WILLIAMS. Well, what we could do in that situation if they 

told us that they recruited at Spelman and we wanted to verify 

that, we would go to Spelman— 

Ms. WATERS. Have you ever done that? Have you ever gone to 

Spelman or Morehouse to see if they had been contacted by any of 

these Wall Street firms, for example, and whether or not they had 

relationships with them, and they give you the number of people 

who have been hired in the industry from the colleges or universities? Do you have concrete information? 

Ms. WILLIAMS. At that particular level, no. Generally at the relationship level, yes. 

Ms. WATERS. What does that mean, at the relationship level? 

Ms. WILLIAMS. That means if they told us that they had 

partnered with Toigo, for example, we would know that they had 

partnered with Toigo when we had a conversation with Toigo about 

the— 

Ms. WATERS. Can you tell us, give me the names of three firms 

they have partnered with, or nonprofit organizations, without telling me which financial services firm is connected to the organization? I’d just like to get idea of who they are partnering with. 

Ms. WILLIAMS. Sure. I would be happy to provide that information for the record. 

Ms. WATERS. I want it now. 

Ms. WILLIAMS. I am not in a position to give it to you now. 

Ms. WATERS. Okay. All right. What can you tell me—and the reason I’m questioning in this manner is that we get a lot of information similar to what you have in your reports that talked about 

companies using compensation as an incentive to do better in diversity, but we have no examples of it. We don’t know what that 

means. We don’t know whether or not a company has a program 

where they’re compensating their mid-level managers in a specific 

way or given bonuses. I just don’t know what any of this stuff 

means. 

Ms. WILLIAMS. Yes. 

Ms. WATERS. Can you tell me? Have you found companies that 

actually use compensation as a way of providing an incentive for 

18

their managers or executives, or the CEO, or anybody, to increase 

its diversity and employment of minorities? 

Ms. WILLIAMS. We did find companies that told us they do use 

compensation as a way to— 

Ms. WATERS. Did you have any way of verifying it? 

Ms. WILLIAMS. Did we have any of them provide documentation 

on that issue, specifically? 

I’m not in a position right now to say that we actually got specific documentation from them. 

Ms. WATERS. You probably didn’t, did you? 

Ms. WILLIAMS. We were able to collect some documentation, but 

I am not sure if it is specific to particular companies. What we 

were told was consistent with what SIFMA reported in its most recent survey, that there has been an increase in the number of companies that are using compensation. 

Ms. WATERS. Thank you for your generosity of time, Mr. Chairman. If I display a little bit of impatience, it is because I have been 

here too long; I’ve heard too much; and I hear too little. 

Chairman WATT. Well, we thank the gentlelady for her persistence and her patience over the years on this issue. 

We have two members who are not members of the subcommittee 

with us. Mr. Scott has been recognized for an opening statement, 

and I would like the benefit of, since both of them have been longterm involved in diversity issues, if I could ask unanimous consent 

to allow them to ask questions of these witnesses. 

[Laughter] 

Chairman WATT. In that case, I will recognize Mr. Scott first, for 

5 minutes. 

Mr. SCOTT. Certainly, but before I ask my questions, I certainly 

want to give recognition to the beard that now accompanies my 

good friend from California. It is very becoming, and go for it, my 

friend. 

[Conversation off microphone] 

Chairman WATT. You all missed the classic role reversal before 

you got here. I became a Republican and he became a Democrat. 

Mr. SCOTT. I got it. 

Mr. MILLER. And we both did a very poor job at it. 

[Laughter] 

Mr. SCOTT. Who says bipartisanship doesn’t work in this committee? 

Let me start by asking you this question, Ms. Williams. What 

does your research reveal about the relatively flat increase? I mean 

no increase basically during what, from 1993 up until now? What, 

and very briefly, what do you say accounts for no increase? I mean 

that’s a long time not to see an increase. Why so? 

Ms. WILLIAMS. We basically collected descriptive statistics, so I 

can’t tell you why that number hasn’t changed. 

Mr. SCOTT. Were you able to get into any defining moment where 

you could define attitudinal issues, racism, discrimination, prejudice, gender bias? Is there anyway that you could say that is a reason? 

Ms. WILLIAMS. In conversations with companies that have been 

dealing with this issue, the closest we would come anecdotally 

would be an observation that middle managers are key in bringing 

19

about more diverse organizations and the buy-in of middle managers are key because they tend to be the group that has the greatest direct impact on the day-to-day lives of employees who are 

being brought into organizations. 

You can have a CEO who is committed to diversity, and if his 

middle managers haven’t bought into it totally and aren’t committed to it, then it makes implementing a diversity program in an 

organization more challenging. That’s one of the things we have 

heard. 

Mr. SCOTT. Okay. I’m glad we have put our finger on one of the 

problem areas. 

Now can you tell me the difference between the categories of officials and managers, senior executives, and first middle level? I 

mean, these are—what are these? I would think that, you know, 

what’s the difference here? Why this compartmentalization of what 

looks like to be the same people, but yet, you know— 

Ms. WILLIAMS. Actually, I think I’m going to defer to Mr. Edwards on this one— 

Mr. SCOTT. Okay. 

Ms. WILLIAMS. Because we use the EEOC’s categories. 

Mr. EDWARDS. Well, that higher level of group of managers, those 

executive officials and managers, are really the people who are providing direction in their field for the entire corporation. Those are 

the individuals that we expect to be the highest paid in those corporations and really to yield their effect throughout the organization. 

The mid-level, or first-line officials and managers, generally 

speaking, are low-level managers, that although they manage their 

operations, they’re not going to have the corporate-wide influence 

over the organization. 

Mr. SCOTT. Okay. 

Let me go to another set of questions in terms of programmatic 

things where you’re able to discover. For example, are there budgets that have been placed within corporations for diversity, budgets 

that break down, do they advertize their diversity? Do they show 

in publications, in their advertising, women and people of color in 

decision-making positions? Did you find any way of measuring the 

level of which these companies are communicating this out in their 

advertising and marketing approaches? 

Ms. WILLIAMS. That’s not a specific issue that we drilled down 

on. 

Mr. SCOTT. Okay. 

How close were you able to get to the issue of linking pay with 

performance here? Ms. Waters touched upon that, and I just 

couldn’t get a clear answer here. I’m trying to figure, because the 

one thing about the capitalistic system that we know is this: Money 

talks. 

So if, for example, we have no way of being able to determine 

whether these companies or those in the financial services industry 

put their money into budgets to promote diversity, to reward diversity, what good is this report? 

Chairman WATT. The gentleman’s time has expired, and I’m inclined to cut him off because I know that he’s more likely to get 

a cogent answer or response to that question from members of the 

20

second panel of witnesses, because the two people you are asking 

these questions to kind of put the numbers together but haven’t 

really been involved in the implementation of these programs. 

So if the gentleman would yield back, I think he might find more 

fruitful territory with the second panel with some of these questions. 

I will now recognize the gentleman from New York, Mr. Meeks, 

and I thank him for being here and for his interest and commitment in this area. 

Mr. MEEKS. Thank you. I will be brief. 

I want to follow up on something that Congresswoman Waters 

talked about, because in the study—and I want to make sure I understood—you’re saying that there’s no connections to what universities that any recruitment was done in, that the GAO did not talk 

to the company and say, ‘‘Well, what university did you go to recruit people for positions in the office?’’ We don’t know that, what 

schools they went to, in the study? 

Ms. WILLIAMS. We generally had a more general conversation. 

For example, we would have asked questions about historically 

black universities or universities that had a high Hispanic population. In response to an earlier question about three networks that 

companies told us that they partnered with or outreached to from 

both directions, we did include in the report, and I now have that 

information. They were the National Black MBA Association, the 

National Association of Hispanic MBAs, and Toigo. So those were 

three, and this is information that we confirmed from both sides—

not only the companies but also from these organizations as well 

that they did have partnerships with the corporations. 

But in terms of specific universities, I think in some cases we 

may have gotten information that they went to a particular university and also some of the companies publicized that information on 

their Web sites—where they actively recruit. 

Mr. MEEKS. Managers are not probably what he wants to happen, then he has the power to make sure that mid-range manager 

is in place to do a program. What are your results on that? 

Ms. WILLIAMS. Well, just one point of clarification. The statistics 

that we relied on were the statistics from the EEOC, the EEO–1 

data, and all of that information is aggregated in the data that we 

had. So we could only turn to other organizations that had collected 

information that had a greater breakdown, for example, the SIFMA 

survey, where they actually showed more of a pipeline trend. 

Our analysis really covered that very broad range as defined by 

EEO–1 in our statistics, so I’m not in a position based on the analysis that we actually did to discuss the internal pipeline. There we 

relied on other organizations that had done internal pipeline information, and I think EEOC had actually done a study where they 

looked at the internal pipeline issue. 

Chairman WATT. Mr. Edwards? 

Mr. EDWARDS. Well, again, we were limited by the data that we 

had, which was also EEO–1 data, but our study was a little bit different than GAO’s study, and what we were interested in was comparing officials and managers to professionals to see if there was, 

say, equity and the probability that if you looked at women, were 

21

women as equally likely to be officials and managers as white men 

were—those types of analyses. 

And we found that there is a lot of variation among—also we did 

our analysis at the firm level, so we determined that there is a lot 

of variation among firms that this is difficult to treat this industry 

as one holistic body, but that within this there are certainly sectors 

in the industry where non-white groups and women did better than 

other sectors of this industry. 

Mr. MEEKS. So I think that you’re telling me, what I’m hearing 

is that we need a different kind of study then to really evaluate 

what’s going on here. Because if I’m hearing right, the data that 

you’re utilizing is limited. You’re really not focused on what the 

hindrances of hiring is. We may not know whether or not the fruitfulness of recruiting at historically black colleges and universities 

are. 

So there’s a lot lacking here. There’s a lot more to be done or we 

need to rely on some different information to really get at the crux 

of what the problem may be in regards to diversity in the financial 

services industry. Is that what I’m hearing from you? 

Ms. WILLIAMS. I do think data limitations is an issue. 

Mr. EDWARDS. I would just add to that that there are certainly 

a number of researchers who use our EEO–1 data, academic researchers that I mentioned earlier, and these are really, you know, 

the questions that you’re asking are some of the questions they’re 

interested in as well, and they certainly spend—they can spend 

years doing this, collecting data and doing their analyses, and trying to get at some of the issues you’ve raised. 

Mr. MEEKS. Except as I talk to some, you know, it just seems to 

be, some of it seems to me we can get there if we’re focused on it— 

Mr. EDWARDS. Right. 

Mr. MEEKS. And it just doesn’t seem that we’re focused on it. 

Chairman WATT. I thank the gentleman for his questions, and I 

should point out that the staff has advised me that when the 

ground rules were being written for the GAO study, the committee 

sanctioned a level of confidentiality because they thought it would 

yield more openness on the part of the industry, and would enable 

GAO to go outside just the EEO–1 statistics, and actually talk to 

some of the companies, but in all probability we won’t be able to 

get specific—I mean we can get general information like Ms. Williams has already give us, but pairing it to particular companies 

we won’t be able to get out of this GAO study, because of the 

ground rules under which the study was done. 

So anyway, we have run out of time to ask questions of this 

panel. Some members may have additional questions for this panel, 

which they may wish to submit in writing, so without objection, the 

hearing record will remain open for 30 days for members to submit 

written questions to these witnesses and to place their responses 

in the record. 

We thank both of these witnesses for your testimony and your 

openness, and you are excused, and we will call up the second 

panel. 

While this panel is getting seated and assimilated, I wanted the 

members of the committee to know that we do have the capacity 

to ask specific questions to the private sector about their practices, 

22

so that might be something that we want to look into outside the 

GAO study, but the GAO study had some constraints around it 

that were designed to make it easier for them to get information 

that might not otherwise have been available to the GAO. 

So there are still other possibilities that might exist. 

The second panel is seated, and for those of you who were not 

here at the beginning, we made a unanimous consent request and 

submitted their full CVs, curriculum vitae, into the record. So I’m 

going to give an abbreviated introduction of the witnesses so as to 

conserve time. 

Our first witness is Mr. Luke Visconti, who is a partner and cofounder of DiversityInc, a Newark, New Jersey, based multimedia 

company that focuses exclusively on diversity in corporate America. 

Our second witness is Ms. Nancy Sims, president of the Robert 

Toigo Foundation, an Oakland, California, nonprofit organization 

focused on leadership development in the field of finance. 

For our third witness, we are honored to have Representative 

Allen here from Maine, who is the Representative of the Phoenix 

Foundation, and I will recognize Mr. Allen for an appropriately 

short introduction. I don’t want him to do his local politics here, 

but I recognize him for an appropriate introduction. 

Mr. ALLEN. Thank you, Mr. Chairman. Would we ever do local 

politics here? Not at all. Dr. Walter Corey is a friend of many, 

many years, a former tennis partner, and I just wanted to say a 

few things about him. He comes as the director of the Phoenix 

Foundation, which is a nonprofit organization based in my district, 

with a mission to advance progressive social change. Their ethical 

leadership training program uses interactive role-playing situations 

and in-depth group discussions to teach values-based leadership to 

government groups, secondary schools, colleges, and graduate 

schools, and increasingly the private sector. 

In addition to fostering leadership and discussing corporate ethics and financial literacy, the Phoenix Foundation has made a commitment to gender, racial, and multicultural diversity training. 

Walter got me involved in a course that he was teaching to the students at Shephards High School, a Catholic high school in Portland, Maine, and yes, I could see the excitement in the eyes of 

those students. It was really a very dramatic experience. 

He is a graduate of Princeton, and in addition to a law degree 

and master’s degree in economics from Yale University, he also has 

a master’s degree in divinity and a doctorate in ministry from the 

Bangor Theological Seminary, and I just wanted to say to Walter 

Corey, it is a pleasure to have you here, and I know the committee 

will be very interested in what you have to say. 

Thank you, Mr. Chairman. Was that appropriately brief? 

Chairman WATT. It is a pleasure to have you here, Dr. Corey, but 

you have put me the bind here of having put all of these wonderful 

credentials of other people in the record and not having stated 

them publicly. So I’m feeling a little like I owe the other witnesses 

something. 

So anyway, I spoke glowingly of Ms. Thomas, our next witness, 

Ms. Geri Thomas, global diversity and inclusion executive for Bank 

of America, which happens to be headquartered in my district, and 

so I’m exercising some restraint in introducing her too. 

23

Our next witness is Ms. Marilyn Booker, the managing director 

and global head of diversity for Morgan Stanley Company, followed 

by Mr. Zaid Abdul-Aleem, vice president of Piedmont Investment 

Advisors, who is appearing here on behalf of the National Association of Securities Professionals—Piedmont Investment Advisors is 

based in North Carolina also, so we certainly welcome him here. 

And our final witness, Mr. Don Graves, Jr., who is a partner in the 

law firm of—it is a law firm, correct?—Graves and Horton, LLC. 

With those abbreviated introductions, we hope we will get 

through all of this testimony before we get called for votes, and I 

will quickly recognize Mr. Visconti. Under the same protocol as our 

first panel was recognized, your full written statements will be 

made a part of the record, and each witness will be recognized for 

a minimum of 5 minutes. Hopefully, somewhere in that range, you 

can summarize your testimony. 

STATEMENT OF LUKE VISCONTI, PARTNER AND CO-FOUNDER, 

DIVERSITYINC 

Mr. VISCONTI. Chairman Watt, Ranking Member Miller, and 

members of the subcommittee, I thank you for the opportunity to 

testify about the key findings of the GAO report on Workplace Diversity and Financial Services. I’d like to stray a little bit from my 

written comments, because listening to the questions, I think it 

would be good to take a step back. 

There is a business case for diversity. I run a business publication, and we go to corporate America. The business case for diversity, in short, is that in 1950, our country had nine white people 

for every one person of color. Today, for Americans under 40, there 

are less than 21⁄2 white people for every 1 person of color, and for 

children under 10, the ratio is almost 1 to 1. By roughly 2040, 

white people will be less than half of the population of the United 

States. 

Going along with that, with the change in demographics, the increase for African Americans, Latinos, and Asians in getting high 

school, college, and post-graduate degrees is rising much faster 

than their rise in the population, and correspondingly, household 

income for households of color has risen at more than twice than 

that of white households since 1990. 

You could make a good economic case that our consumer economy is borne on the shoulders of the rising income of consumer of 

color and their opening opportunities in our country. 

I think that it is worth noting or asking, ‘‘Exactly how did this 

happen?’’ Because if you think about General Motors in 1960, do 

you think they really cared about black consumers? Well, most 

black people in this country in 1960 couldn’t vote. Most of them 

couldn’t go to college; they weren’t allowed to. And none of them 

had access to capital like white people did. 

In the civil rights era, Dr. King said that there were three things 

that were necessary to make a citizen out of a human being: access 

to the vote of the governmental process; access to education; and 

access to capital. The vote and the access to education was accomplished with the Voting Rights and the Civil Rights Act. 

Access to capital was started with the CRA of 1977. That process 

isn’t done yet. If you look at the business case for diversity, compaVerDate 0ct 09 2002 11:27 Apr 17, 2008 Jkt 041177 PO 00000 Frm 00031 Fmt 6633 Sfmt 6633 K:\DOCS\41177.TXT TERRIE
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nies don’t need to look like their customers when they hire, they 

need to think like them. The difference in building a relationship 

respectfully with a person as they are is the difference between a 

high-margin product and a commodity. 

That in a nutshell is the business case for diversity. Once a year 

my company—and I’m responsible for all editorial functions—and 

one of the two founders of the company, my business partner, handles sales—we have such a strict line between editorial and sales 

in our company, that when we release the top 50 company for diversity, the press gets it before my business partner does, and 

there is absolutely no connection between doing business with my 

company and being on that list. In fact there’s a couple of companies on that list that don’t do business with us whatsoever. 

Once a year we go out with a public announcement and invitations for any company with more than 1,000 employees can apply 

to be in our top-50 survey. There are about 200 questions that 

revolve around four areas: CEO commitment; human capital; supplier diversity; and internal and external communications. 

In 2003, we had 118 companies participate. This year, we will be 

close to 400. So the number keeps going up. There’s no fee to enter, 

and we give each company a report card so they get something out 

of the process. 

We promise not to tell any company that doesn’t make it onto the 

list that does apply, but we don’t promise to not name companies 

that don’t apply. And I have some of those companies in my written report for you. 

The things that we look at to build relationships are three areas: 

Trust; communications; and nurturing. CEO commitment is the 

basis around which you build trust. There are companies, all of the 

companies in our top 50, that bonus direct reports to the CEO, either 10, 15, or 20 percent of those companies in the top 10. Most 

of the companies also bonus layers of management. And I’ll give 

you an example of how that works when it’s an accountable basis. 

The companies that bonus the CEOS to bonus direct reports, 

that’s not a give-me bonus. And for example, Pricewaterhouse Coopers bonuses all of its managers on diversity accomplishment, and 

only 70 percent of those bonuses are given out. 

So there is a direct level of accountability in the companies that 

really mean this. 

There are other things that go on. For example, personal meetings with the Diversity Resource Groups, or the Diversity Council, 

we measure all of these things. Personal association with philanthropies that don’t benefit the CEO’s own group, etc. 

Communications is the second part of this trust, communications, 

and nurturing. Communications includes things like employee resource groups, otherwise known as affinity groups, whereas although it is true that there is more diversity at the bottom of organizations, that is a natural effect of the age groups and the increasing diversity—people. 

Employee resource groups are a way for the top layer to meet 

with the bottom layer and share ideas. Pepsico, for example, is I 

think the most aggressive user of employee resource groups. They 

have gotten their best product launch idea ever from their Latino 

Resource Group, guacamole flavored chips, and they also had an 

25

idea to print the word ‘‘cicerones’’ on the sides of pork rind packages, and they sold $6 million more in pork rinds, in one year, addressing the free market. 

Nurturing is the final step, and companies that are on the top50 list use things like mentoring and supplier diversity to provide 

nurturing. 

The point of this is that the GAO report is too broad. Financial 

services is too wide of a category. You will notice that there are a 

number of banks on our top-50 list, but no brokerage firms except 

for Merrill Lynch. And I think there’s a good reason for that. 

The banks, because of the involvement of the CRA, have become 

involved with the community and are much more, you know to 

overgeneralize probably, much more involved with diversity management. The banks on our list are very aggressive on this. The 

brokerage firms, I see no evidence of any involvement with this, 

and in fact if you look at lawsuits, and we had an interesting article from a woman whose mother is the chief diversity officer of a 

bank, who was heavily recruited by a brokerage firm, and was 

treated so horribly that she left corporate America and is now in 

Princeton Seminary. 

There’s an issue here that her mom, knowing what a company 

should be run like, was horrified as well. This wasn’t one person 

who maybe had stars in her eyes. This was terrible treatment that 

was systemic and through that particular company. 

We chose not to name the company, because frankly I couldn’t 

care less about what their side of the story was, and if we were 

going to write an article that named the company, I felt it was fair 

to give them their say, and I didn’t think it would add to the article, so we didn’t do it. 

If you look at the GAO report and the astounding lack of diversity and attention diversity by the brokerage industry, I could 

make three recommendations. First is that the brokerage industry 

should be compelled to release their EEO–1 data publicly. There’s 

no reason to hide this data. There’s no reason for it at all. 

If you look at what has gone wrong in the brokerage industry in 

just the last year, where they paid $39 billion in bonuses they lost 

$80 billion in business because of things like the subprime. 

Chairman WATT. In the interest of time— 

Mr. VISCONTI. I’ll wrap it up— 

Chairman WATT. —and fairness to the other witnesses, wrap up 

as quickly as you can. 

Mr. VISCONTI. Public data. The second step is pipelines. It’s not 

good enough to say you can’t find them. Companies that give out 

$40 billion in bonuses should be expected to build the pipelines for 

the people to become educated to go there. And that’s not just going 

to blue chip HBCUs. That means going to school districts like in 

Newark, New Jersey, and making sure that the facilities are there 

for those talented kids to become educated properly. 

And the final thing is community involvement. I think there 

should be a CRA for the brokerage community, because the lack of 

access to sophisticated finances and financial instruments is hobbling women and minority-owned business who don’t have access 

to this. It gives an unfair advantage to the insiders that are already part of that industry. That’s my statement. Thank you. 

26

[The prepared statement of Mr. Visconti can be found on page 

151 of the appendix.] 

Chairman WATT. Thank you for your testimony and we look forward to the round of questioning with you. 

Ms. Nancy Sims, you are recognized for 5 minutes. 

STATEMENT OF NANCY A. SIMS, PRESIDENT, THE ROBERT 

TOIGO FOUNDATION 

Ms. SIMS. Thank you. Chairman Watt, and members of the committee, I appreciate the opportunity to introduce you to the Toigo 

Foundation and to share the perspective of this nonprofit educational foundation, whose mission is to change the face of finance. 

We support some of the Nation’s best and brightest minority students attending the top business schools through professional development, job access, and ongoing career support, the latter being 

the most important, I think, as we discuss workplace diversity, retention, and advancement. 

Of the nearly 700 young men and women who hold the distinction of Toigo fellow, 92 percent of those individuals are in Finance 

Today. Forty percent of them hold positions of vice president and 

above, and within that senior group, 12 percent are women of color. 

These percentages continue to grow as this population matures and 

excels. 

To accomplish our work, we partner with more than 200 financial services firms across all investment sectors, and work with 

business organizations such as the New America Alliance, the National Association of Securities Professionals, and the National Association of Investment Companies. 

Our ‘‘Retention Returns’’ survey presents a unique perspective of 

the perspectives and viewpoints of individuals for whom these diversity surveys are all about, a perspective that is often overlooked. 

Our survey findings indicate two important take-aways. Tomorrow’s leaders in finance are passionate about the investments that 

they have made in their education and the aspirations that they 

have for successful careers in finance. 

And secondly, they want to see as well as be a part of the change 

that brings about a more level playing field. The ‘‘Retention Returns’’ survey specifically wanted to look at a critical population, 

respondents in the 4-to-8-year post-grad space, which is roughly 40 

to 45 percent of the Toigo alumni. As it is that career marker that 

represents a critical turning point during which many personal and 

professional decisions are made around either staying or leaving an 

organization. 

Key qualitative findings from our survey include what we call a 

cycle of departure, a domino effect that results from experiences 

that continue to occur, principally for professionals of color that result from either limited access to deals, which lead to limited visibility, limited recognition, and ultimately disproportionate rewards. 

We heard clearly from our respondents that these patterns are 

both recognizable and avoidable. The most prevalent concern that 

they had was performance management. A feeling that firms in 

general are doing a very poor job of communicating and defining 

what constitutes a model of success, and as well if constructive 

feedback is warranted, a reluctance to be able to share that inforVerDate 0ct 09 2002 11:27 Apr 17, 2008 Jkt 041177 PO 00000 Frm 00034 Fmt 6633 Sfmt 6633 K:\DOCS\41177.TXT TERRIE
27

mation, so that they know how to turn their performance around, 

stay with their organization, and move ahead. 

Mentoring and leadership support are vital. Certainly one of the 

respondents told us, ‘‘If you are not picked by a senior person, protected and advocated for, then you are, in short, ruined.’’ The challenge remains that as a person of color, you are less likely to be 

picked by a senior leader to be mentored. 

In my time remaining, I would like to leave you with three considerations. Buy-in and accountability at all levels, which I think 

has been touched upon already. But the support or lack thereof of 

direct managers or supervisors who have direct control over the 

lives of our diversity candidates play a profound difference in their 

success within an organization. 

Small day-to-day indignities, inadequate performance dialogue, 

and also the failure to assign key assignments, where one can truly 

demonstrate their abilities, fly well below the radar of any senior 

management mandate, and that must be seriously and continuously examined. 

Secondly, do not develop diversity programs as a quick fix versus 

building thoughtful programs, which can be managed, evaluated, 

and improved upon for sustainable and systematic change. 

And lastly, I would also offer that as we look and talk further 

about the diversity workplace issues, that we go beyond the data 

coming from the GAO report, or the EEOC, as there are growing 

numbers of young professionals who have invested 3 to 5 years in 

larger institutional organizations and have chosen now to work for 

smaller entrepreneurial enterprises. Within my own organization, 

I have four alumni who are managing $2.7 billion, and I am anticipating that population will continue to grow. 

So it is important to look at mid-size and smaller organizations 

who do not report EEO–1 data and to make sure that we’re capturing, because some of that data is a better story to tell. Thank 

you. 

[The prepared statement of Ms. Sims can be found on page 108 

of the appendix.] 

Chairman WATT. Thank you very much for your testimony. 

Dr. Corey, you are recognized for 5 minutes. 

STATEMENT OF WALTER E. COREY, DIRECTOR, THE PHOENIX 

FOUNDATION 

Mr. COREY. Thank you. Chairman Watt, Ranking Member Miller, 

members of the subcommittee, and distinguished Members of the 

House, Congressmen Meeks and Scott, thank you for the opportunity to be here today. 

For the past 5 years, we at the Phoenix Foundation have been 

on the front lines of ethical leadership training in New England. 

This 5-year hands-on experience has given us a perspective on the 

attitudes and values of young, multicultural adults who more and 

more define a major challenge of 21st Century leadership; and that 

is how to manage lead teams of diversity, diverse as the culture, 

race, gender, sexual orientation, and experience. 

It is difficult to pick up a business school publication these days 

that does not somewhere in its pages refer to this modern challenge of managing and leading such teams. Five years of experiVerDate 0ct 09 2002 11:27 Apr 17, 2008 Jkt 041177 PO 00000 Frm 00035 Fmt 6633 Sfmt 6633 K:\DOCS\41177.TXT TERRIE
28

ence with our colleagues teaches us that this cohort of young adults 

is a pivotal change agent in our society, and especially in work 

places where an outworn culture confronts them. 

In our travels with this cohort, we have learned quite a lot about 

who they are and how they perceive their needs in a modern workplace, for we encounter them at three critical areas: First, in college and university before they embark on their careers; second, in 

graduate school as they are embarking on their careers; and third, 

in seminar sessions after they begin to settle into their careers. 

Regardless of the venues in which we find them, these young 

adults share a similarity of needs, attitudes, and values that set 

them apart as Gen Yers. As they move from school to workplace, 

they prize opportunities to do interesting work in environments 

that welcome them. And they want to stay connected to their values, to each other, and where possible to the values of their employer. Simply stated, that is why they want to fit in, to be members of a team they respect and eventually they come to trust. 

What they frequently encounter in run-of-the-mill workplaces, 

that is a workplace saddled with an outworn culture, is a coercive 

environment, where employee tastes, values, and attitudes, especially if they are minority employees, are out of step with corporate 

norms. These cultures often lack a willingness to accommodate 

them, frequently because most such cultures are without the capacity for training and building teams of diversity, the critical scaffolding in modern organizations. 

We are now learning that businesses that lack transparency 

about corporate values and their consistent application in the 

workplace are challenged to retain the Generation Yers that they 

have recruited, often at considerable expense. It cannot be said 

often enough that the young adults we encounter esteem workplace 

cultures that value diversity; in fact, in many parts of the country, 

robust diversity policies have become a critical litmus test to determine the health of corporate life. 

We see it in Maine and we hear about it from colleagues elsewhere. This month I heard about it from Michelle Landis Dauber, 

a professor at the Stanford University Law School and a faculty adviser to a group called BBLP, Building a Better Legal Profession. 

Though formed on the west coast just last year, BBLP is already 

a national movement of hundreds of law students at schools around 

the country, students who are now surveying law firms that recruit 

on campus, polling them on a broad range of quality-of-life issues, 

alerted by the fact that associates leave law firms at astonishingly 

high rates. Does this sound familiar? Forty percent leave by the 

end of their third year, 62 percent by the end of their fourth. 

BBLP ranks over 200 firms and financial centers like New York, 

California, Massachusetts, Illinois, and Washington on a number of 

issues, of which the most prominent is diversity hiring among partners and associates. For their purposes, diversity embraces gender, 

race, and sexual orientation. A low ranking forebodes hiring difficulties for the firm, simply because today’s graduate wants to 

work in a firm that honors diversity on its own account and is a 

proxy for enlightened lifestyle policies within. It is of such importance in the modern organization today that many graduates are 

29

willing to trade dollars in return for an inclusive workplace, one 

that welcomes them and is willing to accommodate their values. 

Plainly put, law students are now connecting with their peers 

across the country in networks that are calculated to reform the 

culture of the large law firm. Student activism will not end there, 

however. What is spreading among law school campuses throughout the country is beginning to shift quietly to business schools as 

well, first on the west coast and then we have reason to believe 

eastward. And of course it is from these graduate schools, law and 

business, that the financial services industry draw their major recruitment. 

Like it or not, change is on the way. Where, you ask, does that 

leave values-based team leadership training? Where we left it last 

month at Bowdoin College and elsewhere in New England. That is 

to say, very much in the service of our colleagues, students, and 

professors alike, who are intent on learning the skills of valuesbased team leadership that embrace diversity and enable them and 

their employers to flourish in what is fast becoming the new American workplace. 

That is part of the story described in my written testimony, 

which I share with you today. This concludes my oral testimony. 

Again, thank you for the opportunity to testify. 

[The prepared statement of Dr. Corey can be found on page 90 

of the appendix.] 

Chairman WATT. Thank you so much for your testimony, and I 

now recognize Ms. Thomas for 5 minutes. 

STATEMENT OF GERALDINE THOMAS, HUMAN RESOURCES 

AND GLOBAL DIVERSITY AND INCLUSION EXECUTIVE, BANK 

OF AMERICA 

Ms. THOMAS. Good afternoon, Chairman Watt, Ranking Member 

Miller, and members of the subcommittee. My name is Geri Thomas, and I am the global diversity and inclusion executive at Bank 

of America. 

I’m glad to have the opportunity today to talk about our commitment to diversity and inclusion, and to providing a workplace in 

which all associates can reach their full potential and feel valued. 

I have submitted for the record a much more detailed description 

of all that we’re doing at the bank in regards to diversity and inclusion, as well as our top-down leadership and engagement on these 

issues. 

I am pleased to summarize them for you now. I am also pleased 

to be here because of personal commitment to diversity and inclusion, not just in the workplace but in every facet of our society. As 

an Atlanta native, I was involved in the early civil rights movement. I know from my own experience that diversity is about inclusiveness, not exclusiveness. 

As the global diversity and inclusion executive at the Bank, I 

oversee company-wide diversity initiatives and serve as a diversity 

resource to our senior leaders, business lines, and associates. As 

you may be aware, Bank of America is one of the world’s largest 

global financial institutions. We have offices in 31 States, in Washington, D.C., and in more than 20 countries. We have clients in 

30

over 175 countries, and relationships with 99 percent of the U.S. 

Fortune 500, and 80 percent of the Global Fortune 500 countries. 

We have 59 million consumer and small-business relationships, 

24 million online banking users, over 6,100 retail banking centers, 

19,000 ATMs, and we are the number one Small Business Administration lender to minority-owned small businesses. We have more 

than 200,000 employees globally. In short, our customer and employee base is very diverse. 

So why is diversity important at Bank of America? Because in 

order for us to meet our diverse customer needs and be responsive 

to global business demands, diversity in people, their experience, 

working styles, and business acumen is critical to our success and 

growth of all of our businesses. 

This diversity also helps us understand and meet the development needs of our associates, and by having a diverse associate 

base, developing products and services for our equally diverse global customers, we grow as an organization and deliver shareholder 

value. 

Diversity and inclusion is not something that just happens. It 

takes a deliberate effort and dedicated commitment to make it 

work. It requires having strong leadership commitment from the 

top of the organization and having diversity and inclusion integrated into every business practice. At Bank of America we have 

a strategic organized and formal structure for managing diversity 

and inclusion. 

It starts with our chairman and CEO, Ken Lewis, and expands 

throughout the organization in a variety of ways, and is an integral 

part of our core values that guide us as a business. 

We approach diversity first through a formal management structure, encompassing a cross-section of senior leaders. Our global diversity and inclusion council members are directly appointed by 

our chairman, and charged with developing and implementing diversity initiatives that support a work environment in which all associates are welcomed, respected, and empowered to do their best 

work, and are rewarded for their contributions. 

This means ensuring qualified more diverse candidate pools, 

management accountability in metrics, personal commitment, promoting associate growth, engagement, recognition, and career development through diversity training and other related programs. 

It means expanding diversity focus beyond race and gender, and 

helping associates better understand other working cultures and 

traditions as we continue to grow our global enterprise. 

We have diversity business councils that integrate diversity practices in their respective lines of business, and employee networks 

that bring associates together to network and share cultures internally and in the communities we serve. 

At Bank of America, we value each person for what he or she can 

contribute. We’re not really concerned about family backgrounds or 

what school they attended. It is with this wealth of perspective 

that we will always be able to take advantage of new opportunities, 

develop innovative products, and help people find ways to live productive lives. 

As mentioned in my written testimony, the Bank of America 

Charitable Foundation and its community development activities 

31

support diverse communities across the country in a variety of 

ways. In 2007, our charitable foundation invested more than $200 

million in communities across the country, making the Bank the 

more generous financial institution in the world, and the second 

largest donor of all U.S. corporations in cash contributions. 

The Bank supplier to diversity program seeks and provides diverse suppliers an opportunity to do business with our company. 

Since that program began in 1990, we have increased spending 

with diverse suppliers each year, reaching $1.3 billion in 2006. In 

order for us to meet the needs of our diverse customer base, we 

must develop products and services that address their unique requirements. 

The bank actively hires bilingual associates to help us design and 

deliver services to our diverse customer base around the globe. Our 

ATMs and banking center materials are translated into multiple 

languages to better meet the needs of the communities we serve. 

Our accessible banking program empowers disabled customers to 

access our banking products and over 11,000 talking ATMs. In addition, our credit card division offers a variety of affinity cards that 

support a wide assortment of diverse groups. 

We have a long history of living our commitment to inclusion, 

and as mentioned throughout this testimony, diversity is part of 

the very fabric of who we are as an organization. 

As I hope you can tell, I am proud of the Bank’s diversity and 

inclusion efforts. At Bank of America, each person is evaluated on 

his or her own merits. I’m proud that we have created an environment where associates of diverse backgrounds, viewpoints, and experiences can succeed, and where all associates have the opportunity to achieve their full potential. 

That said, we still have work to do. Diversity is a journey. We 

have the commitment from our executive leadership as well as the 

right people and the right processes to know that our diversity and 

inclusion efforts are making a positive difference at our organization. We will continue to actively promote and support diversity of 

thought and experience. It makes us a better company, a better 

place to work, and a better corporate citizen in the communities we 

serve. 

Thank you for your attention to this issue, and I’ll be happy to 

take any questions that you might have for me. 

[The prepared statement of Ms. Thomas can be found on page 

144 of the appendix.] 

Chairman WATT. Thank you for your testimony. Ms. Marilyn 

Booker from Morgan Stanley is now recognized for 5 minutes. 

STATEMENT OF MARILYN F. BOOKER, MANAGING DIRECTOR, 

GLOBAL HEAD OF DIVERSITY, MORGAN STANLEY 

Ms. BOOKER. Thank you. Mr. Chairman, Ranking Member Miller, and members of the subcommittee, I sincerely appreciate the 

opportunity to testify before you today on diversity in the financial 

services sector. I appreciate this opportunity because it sends a 

very positive and strong message that your subcommittee is examining an issue that is so important to our industry, so important 

to Morgan Stanley, and so important to those who are choosing to 

make their careers in financial services. 

32

Diversity is something that Morgan Stanley and my colleagues 

in the industry take very seriously, so the opportunity to have an 

open dialogue with you on this topic will go a long way in reinforcing our collective commitment. 

What I would like to accomplish during the next few minutes is 

to share a few of my thoughts relative to the key statistical finding 

of the GAO report that from 1993 to 2004, overall diversity at the 

management level in financial services did not change substantially. 

My first observation is that the financial services industry is facing challenges in recruiting minority and women candidates. Several years ago, the primary industries we competed against for talent were other financial services firms and a few companies within 

corporate America. The competition today now includes hedge 

funds, private equity firms, technology shops, and consulting firms, 

just to name a few. All of these industries typically require a high 

degree of specialization. Therefore, minority and women candidates 

with the requisite skill sets are highly sought after and often receive multiple job offers. 

Further, given that the number of women and minorities entering business school and acquiring the skill set has remained stagnant for the last 5-plus years, combined with the fact that they are 

spread out over several industries, the end result is a diminished 

pool from which we have to chose. 

It is my belief that recruiting a diverse talent pool takes time 

and effort. Recruiting diverse candidates is a process that cannot 

be done successfully in the same manner as general recruiting. Diversity recruiting is about relationships; it is about building trust. 

And it takes time to build those relationships and time to build 

that trust. In spite of the progress that has been made, and the 

presence of more women and minorities in the financial services 

sector, these groups still have skepticism about whether firms will 

care about them and their careers. 

This means that these candidates do their homework. They dig 

deep. You have to spend a great deal of time with them because 

they want to probe your firm. They want to find out about your 

commitment to meritocracy. They want to find out about your commitment to diversity, and they want to find out about your support 

systems. Therefore, the firms that do not have the infrastructure 

to support this investment in time and to support building these 

relationships will not be as successful as those that do. 

My final observation is that the management structure must be 

engaged in implementing meaningful diversity initiates so that employees at large feel engaged. We have all heard the expression, 

‘‘People don’t leave a company; they leave their manager.’’ Diversity is no different. An organization can have all the top leadership 

commitment there is; however, if this commitment is not communicated on a regular basis, the people who are responsible for the 

day-to-day, the broader efforts to have a more diverse workforce 

will be significantly challenged. 

Firms can go a long way here, by being visible in their initiatives, communicating them broadly, and demonstrating that each 

employee, particularly managers, have a stake in the diversity 

mandate. 

33

To this end, Morgan Stanley has been proactive in having visible 

initiatives and communicating them broadly. Some of our visible 

initiatives include conferences for our minority and women employees, focused on career and ‘‘leadershipment’’. We also have very 

mature campus-recruiting programs that target women and minorities. And our employee networks have been a great way of building 

informal networking relationships and providing an additional 

forum for professional development. 

We are also very focused on talent management and leadership 

development. It is my belief that if you have good leaders in place, 

diversity will follow. Great leaders know talent when they see it, 

and they create the conditions under which people, all people, live 

up to their potential. 

Further, we also feel it’s important that our minorities and 

women have access to senior management. Our CEO and other 

members of top management have numerous events each year 

where this is possible. This has been very helpful for our firm in 

making sure that our diverse employees have the opportunity to 

stay on the radar screens of the decision makers in the firm. 

Once again, I would like to thank you, Mr. Chairman, and your 

subcommittee, for the opportunity to testify here today. Although 

we have made progress in a number of areas with respect to diversity programs, and they are much more robust now than they have 

been in the past, we do know that we can always improve upon 

what is a solid foundation. 

I welcome your support and hope that I can be helpful as we continue to work on something that is very important to all of us, diversity. 

[The prepared statement of Ms. Booker can be found on page 81 

of the appendix.] 

Chairman WATT. Thank you. That’s about as timed as I could— 

Ms. BOOKER. I know. 

Chairman WATT. Just as the red light went off. 

Ms. BOOKER. I timed it. 

[Laughter] 

Chairman WATT. Mr. Abdul-Aleem, you are recognized for 5 minutes. 

STATEMENT OF ZAID ABDUL-ALEEM, VICE PRESIDENT, PIEDMONT INVESTMENT ADVISORS, ON BEHALF OF THE NATIONAL ASSOCIATION OF SECURITIES PROFESSIONALS 

Mr. ABDUL-ALEEM. Thank you. Good afternoon, Chairman Watt, 

Ranking Member Miller, and members of the subcommittee. I am 

Zaid Abdul-Aleem, a member of the National Legislative Committee of the National Association of Securities Professionals, also 

known as NASP. I am also a senior vice president at Piedmont Investment Advisors, a minority-owned asset management firm. 

Founded in 1985, NASP is an organization that supports people 

of color and women in the financial services industry. Based in 

Washington, D.C., NASP has 10 chapters at major financial centers 

throughout the United States. Our members include everyone from 

asset managers to broker dealers and other professionals in financial services. 

34

We have reviewed the GAO report and found that while many 

firms have initiated programs to increase workforce diversity, these 

initiatives still face challenges. We firmly believe that the best way 

to fundamentally impact and accelerate diversity is to do business 

with minorities and women wherever they are found, both within 

majority-owned firms and minority or women-owned firms. 

We also believe that high-level sponsorship for managerial diversity performance should be linked to compensation. 

Beginning as early as high school, I received the necessary highlevel sponsorship to realize my potential. I recall one day the CEO 

of Refco wanted to see me during lunch. I asked him what he did 

for a living, and he explained that he watched a computer screen 

all day. I knew there was more to it, and it peaked my interest. 

I was 18 years old, and the CEO of Refco had given me a job as 

a runner on the Chicago Mercantile Exchange. Five years later, I 

was working on the trading floor at Morgan Stanley, when I heard 

a commanding voice call me. I turned amidst the crowd of managing directors. The CEO of Morgan Stanley stood over me, a firstyear analyst. When he reached to shake my hand, he raised his 

arm to push me, but I quickly got ‘‘inside hands.’’ The CEO knew 

that I had played college football and was testing my inside-hands 

technique. There we were, the CEO and I fighting for inside hands. 

That day he made a public commitment to my success. Our interaction made it clear that we had a relationship and that he was 

my sponsor. My colleagues knew that supporting me would be consistent with the goals of the firm. As a result, I was given opportunities to attend client meetings, work on a range of transactions, 

on an occasion work directly for the CEO. 

Through Morgan Stanley, I worked in capital markets, corporate 

finance, and mergers and acquisitions while living in the United 

States and globally in Africa, Asia, and Europe. 

Eight years later, after leaving Morgan Stanley, I sat in the conference room alongside my partner and CEO of Piedmont Investment Advisors. We were at an introductory meeting with General 

Motors Asset Management. The previous month I had met the 

CEO of General Motors, who asked me for information on Piedmont in order to put me in touch with the right people. Those people listened to our pitch that day, and currently Piedmont is one 

of its most successful money managers. 

These stories reaffirm how high-level sponsorship for investment 

and minorities and minority-owned firms can increase diversity as 

well as generate successful business opportunities. In each case, 

sponsorship came from the CEO level. In addition to mentoring, 

the sponsorship included a high-level public commitment, which ultimately encouraged upper and middle managers to also embrace 

a diverse approach in developing talent and pursuing good business 

opportunities. 

The CEOs of Refco, Morgan Stanley, and Piedmont are my trusted confidants to this day, and over time their sponsorship has 

grown to include strategic, operational, and financial commitments. 

In light of the industry information on diversity, my individual 

experiences, and other members of NASP’s experiences, I will cite 

three key steps to improve workforce diversity. 

35

Number one, link diversity components to the mid- and senior 

management levels’ compensation. Number two, target recruiting 

efforts and establish partnerships with well-known organizations 

that support women and minorities. Number three, we recommend 

that the Federal Government include a significant diversity component in selecting financial and investment service providers. The 

legal service industry has a precedent for this through a call to action adopted in 2004 in which large U.S. corporations required 

their law firms to implement measurable and quantifiable diversity. 

In conclusion, increasing diversity within the financial services 

industry is critical to the economic growth of this country. A more 

diverse workplace facilitates competition, pricing efficiency, and 

product innovation. The United States enjoys the largest multi-ethnic and cultural country population in the world. Realizing the potential of our diverse perspectives, ideas, and solutions is absolutely necessary to compete in the global economy. 

Thank you. 

[The prepared statement of Mr. Abdul-Aleem can be found on 

page 56 of the appendix.] 

Chairman WATT. Thank you for your testimony. 

Mr. Graves, you are recognized for 5 minutes. 

STATEMENT OF DON GRAVES, JR., GRAVES & HORTON, LLC. 

Mr. GRAVES. Thank you, Chairman Watt, Ranking Member Miller, and members of the subcommittee. I thank you for the opportunity to testify before you today. I am Don Graves, a partner with 

the law firm of Graves & Horton, LLC, a minority-owned law firm 

here in Washington, D.C., and chief executive officer of Progress 

Through Business, a nonprofit corporation with centers around the 

country, focused on sustaining and enhancing underserved communities. 

Progress addresses the needs of low- and moderate-income individuals and communities through a variety of business-based approaches. In focusing on private-sector-led efforts in diversity in the 

financial services sector, it is my hope that the committee will 

glean useful and innovative approaches for those within the industry and those of us who work with the industry. There are a number of examples, and you have heard some already today, of corporations that have developed successful strategies in increasing 

diversity. In many instances, it is not just a single company implementing new approaches that is most successful, but groups of 

companies, companies from a geographic area, or entire industry. 

One of the things that I learned early on during my time working for the Business Roundtable was that in working with the chief 

executive officers of the Nation’s largest corporations, the ability of 

those chief executives and other senior level executives to focus on 

any issue, project, or program is limited. Where just 20 years ago, 

a CEO’s tenure averaged more than 8 years, the tenure of a CEO 

today is around 4 years. A CEO’s time, as you might imagine, is 

constrained to the point that their activities must revolve around 

increasing shareholder value with a laser-like focus on the bottom 

line. 

36

I don’t raise this as a means of excusing corporations, their 

CEOs, and senior executives from doing their best to promote diversity, but rather as a means of suggesting that the best way to 

promote diversity within the senior ranks of corporations, be they 

within the financial services sector or otherwise, is to prove the 

value proposition of diversity itself. It is incumbent upon those of 

us who believe that diversity makes sense for business, for the 

economy, and for the country as a whole to help those CEOs and 

their senior executives, their boards, and their shareholders to understand that by increasing diversity within the company, they will 

also improve the company’s long-term financial position. 

Former Federal Reserve Chairman Alan Greenspan perhaps said 

it best: ‘‘By removing the non-economic distortions that arise as a 

result of past discrimination, we can generate higher returns to 

human capital and other productive resources.’’ I have no illusions 

about the difficulty inherent in such long-range strategies for today’s chief executives and the companies they lead. 

Today’s CEO is increasingly judged on short-term returns and 

stock price movements. Business Roundtable President John 

Castellani has addressed this issue this way: ‘‘The fundamental reality that CEOs face today is that they are long-term managers 

who must depend on the short-term investors for much of their 

capital and financial strength. That creates the powerful temptation for companies to play to short-term investors with short-term 

fixes to a company’s results; but a growing number of CEOs are 

putting up more resistance and emphasizing their company’s longterm strengths, including non-financial strengths. They are just as 

committed to earnings growth, but they just have a more grounded 

idea of how to achieve and sustain that growth over time.’’ 

Others on this panel have already provided a rationale for diversity in the financial services sector, so I will use my time to focus 

on solutions. This hearing was to focus in part on private sector efforts to monitor increased diversity in the financial services sector. 

In addition to those solutions being offered by members of the 

panel today, I believe that as a means of sharing learnings and 

best practices, we must look to a number of existing efforts by the 

business community that attempt to increase and monitor adversity. 

With more than 17,000 members, the Greater Cleveland Partnership is the largest private-sector economic development organization in the State of Ohio, and one of the largest regional chambers 

of commerce in the Nation. The organization serves as a catalyst 

to increase economic vitality in Greater Cleveland and the region. 

In addition, the Greater Cleveland Partnership created the Commission on Economic Inclusion to significantly improve the level of 

inclusion, the meaningful involvement of minority businesses and 

individuals in the economic engine that drives Greater Cleveland. 

The Partnership and more importantly its leaders were convinced that a key to long-term economic growth and stability in the 

region was the ability of hometown corporations to bridge the gap 

between local minority talent and employment opportunities. 

The Commission was created to serve as the vehicle that could 

help build that bridge. What began with 28 large corporations and 

governmental entities in 2000 has gone to more than 100 large corVerDate 0ct 09 2002 11:27 Apr 17, 2008 Jkt 041177 PO 00000 Frm 00044 Fmt 6633 Sfmt 6633 K:\DOCS\41177.TXT TERRIE
37

porations and government members today. The program strives to 

be a civic model for the development and implementation of diversity and inclusion strategies that advance productivity, innovation, 

and economic growth. 

Additional examples can be found in my written testimony, so I 

won’t spend much further time on those examples. 

A discussion of diversity in the financial services sector must also 

include a discussion of diversity as it relates to the provision of financial services in underserved and diverse communities. Access to 

credit and capital is dependent upon the ability of an institution to 

understand the marketplace and provide products that meet the 

needs of consumers in the community. 

My own organization believes that economic development in underserved and diverse communities can only be accomplished 

through support of scaleable businesses. In the long term, these 

businesses will be the true job creators and wealth builders in minority communities. The ability of the financial services industry to 

meet their credit and capital needs will have a major impact on the 

success of those businesses. 

Importantly, the lack of financial and business literacy is one of 

the leading factors for individuals and businesses to obtain credit 

and capital. Progress Through Business works closely with employers and entrepreneurs to enhance that financial and business literacy. 

Another part of the problem is around the performance and capacity of smaller businesses within those communities. Without 

better information on performance and capacity, financial markets 

cannot provide credit and capital and potential business partners 

cannot in good faith engage those smaller businesses. 

Diversity in both the financial services workforce and in the provision of financial services will be crucial to the long-term economic 

vitality of the industry in this Nation. I firmly believe that by 

working constructively and in partnership, communities in the private sector can implement the programs and procedures now that 

will lead to a greater diversity and greater economic stability in all 

of our communities, leading to long-term economic growth for the 

Nation as a whole. 

I thank the committee for its time and attention to this matter, 

and I will be pleased to answer any questions. 

[The prepared statement of Mr. Graves can be found on page 100 

of the appendix.] 

Chairman WATT. I thank you, and all of the witnesses for their 

outstanding testimony, and we will now turn to questions from the 

members of the subcommittee. I recognize Ms. Waters for 5 minutes. 

Ms. WATERS. Thank you very much, Mr. Chairman. And I would 

like to thank the witnesses who have appeared here today, and listening to their testimony certainly causes me to focus and to examine some of the subject matter that has been presented to us, and 

it creates more questions, you know, for me about the industry and 

how it all works. 

I must say to the chairman that while we are looking at the financial services industry, I really think we should take more responsibility for seeing what we can do in the public sector as well 

38

as the private sector, which leads me to those agencies or GSAs in 

particular that we have oversight for. 

I have spent a lot of time talking with the Federal Home Loan 

Bank, Fannie Mae, and Freddie Mac about diversity, and we have 

looked at the information that they have shared with us over a period of time. And then I always learn afterwards that I didn’t ask 

the right questions. 

So, I’m going to ask Mr. Abdul-Aleem, vice president of Piedmont 

Investment Advisors, if I was talking to Fannie Mae or Freddie 

Mac about increasing their involvement with minority-owned firms 

that would help do money management or asset management for 

investment in their firms for their firms, what questions should I 

ask them? What would I say to them? How would I get to finding 

out whether or not they are contracting with minority firms to do 

asset management for them? Do they do that in Fannie and 

Freddie? Do they use minority firms? Could they use minority 

firms to help do money management for them? 

Mr. ABDUL-ALEEM. Yes, they could. Can you hear me? 

Ms. WATERS. Yes. 

Mr. ABDUL-ALEEM. Yes, they could. I think first the right question is have a look at the managers that they use, and assess that, 

and see if that does reflect, you know, good minority representation. And then I would also ask what policies are in place and if 

there is any documentation of the high sponsorship level for 

pursing business with minority— 

Ms. WATERS. But we do know that they contract with firms to 

do money management for them? We know that that’s what they—

one of the things they do. 

Mr. ABDUL-ALEEM. Yes, that’s one of the things. 

Ms. WATERS. So if I ask them about how much of that they do, 

that would not be a foreign—they never discuss that with us. They 

come and they kind of discuss the organization chart, and they 

don’t really do that, and they talk about employment of some individuals in various roles, but I did know enough to talk with them 

about the contracting that they could or should be doing. So we 

would just simply ask them— 

Mr. ABDUL-ALEEM. Yes— 

Ms. WATERS. ‘‘Who do contract with for money management?’’ 

Mr. ABDUL-ALEEM. Exactly. 

Ms. WATERS. Okay. 

Let me just ask Ms. Booker. 

Ms. BOOKER. Yes. 

Ms. WATERS. Morgan Stanley. Are there minorities on the board 

of Morgan Stanley? 

Ms. BOOKER. Yes. Choctaw Phillips, who used to be a managing 

director in Morgan Stanley’s research department—he’s now at Oracle—he is a member of our board of directors. 

Ms. WATERS. How big is your board? 

Ms. BOOKER. I believe it’s approximately 13 to 14 people, but I 

need to get back to you on the exact number for that. 

Ms. WATERS. Thirteen to fourteen. And of that, how many 

women, and how many minorities? 

Ms. BOOKER. We have Chuck, who is a minority, and we have 

a woman on the board. 

39

Ms. WATERS. I beg your pardon? 

Ms. BOOKER. We have one other woman on the board. 

Ms. WATERS. So one woman and one African-American, is that 

it? 

Ms. BOOKER. That is correct. 

Ms. WATERS. Okay. 

Bank of America, how big is your board? 

Ms. THOMAS. I believe approximately 15 to 16 people. I can get 

back to you on the exact number. 

Ms. WATERS. Okay. And how many minorities are on your board? 

Ms. THOMAS. I believe we have three, and two women. But I can 

get that and get back to you on those specifics. 

Ms. WATERS. But you think there may be two women and three 

African-American and Latino— 

Ms. THOMAS. Two African American, I believe, one Latino, and 

two women. 

Ms. WATERS. Okay. 

Ms. THOMAS. But I’ll get that for you. 

Ms. WATERS. All right. Thank you very much. 

Ms. BOOKER. Excuse me, Congresswoman Waters. 

Ms. WATERS. Yes. 

Ms. BOOKER. I’d like to make a correction. There are actually two 

women on Morgan Stanley’s Board. Put that in the record, please. 

Ms. WATERS. Okay. I asked that because really the attitude of diversity starts with the board, as far as I’m concerned. When you 

take a look at a board, and you see whether or not there’s diversity 

there, then you almost can determine whether or not there is a real 

commitment to it. 

The next thing is the organization chart, taking a look at the organization chart. And, you know, when I was Chair of the Congressional Black Caucus, one of the things I did for—whenever the 

agencies or department came in to talk with us, I said, ‘‘Bring the 

organization chart.’’ Then they would have to bring it, and I would 

say, ‘‘Now tell me who is at every level.’’ And once they did that, 

I really understood, you know, what they were all about. 

We don’t have an opportunity to do that, but I think that’s something that we may incorporate in our investigation and oversight 

as we continue with this kind of work. And I know that Mr. Chairman, you have been very generous with the time, and I thank you 

very much, and yield back. 

Mr. ABDUL-ALEEM. Congresswoman Waters, I would like to add 

something to your question regarding Freddie and Fannie. Their 

main business line is mortgage securitization, so another question 

you could ask them is what minority firms they do business with 

as it relates to their mortgage securitization as well. 

Ms. WATERS. Very good. 

Chairman WATT. Thank you so much for your steadfast support 

and continued commitment in this area, Representative Waters, 

and I will now yield 5 minutes to the ranking member. 

Mr. MILLER. I enjoyed the testimony. Mr. Abdul-Aleem—I got 

that right the first time, I beat Maxine to that one—it is impressive that the CEO of Morgan Stanley selected you, a new guy, and 

obviously there was a reason you went on to become vice president 

40

of Piedmont Investment, so he saw something in you that sparked 

his interest. Why do you think he selected you? 

Mr. ABDUL-ALEEM. I think, well, number one, we share— 

Mr. MILLER. Besides the women behind you grinning when I ask. 

[Laughter] 

Mr. MILLER. Okay. 

Mr. ABDUL-ALEEM. I mean you would have to ask him that, 

but— 

Ms. WATERS. No, tell him you’re smart. 

Mr. MILLER. Because I have another question for Ms. Sims based 

on this, and that’s why I want to hear this. 

Mr. ABDUL-ALEEM. Well, I think you alluded to it. I think he 

identified something in me that he thought was talented, and I 

think he realized I needed a break in order to realize those talents, 

and some opportunities to bring them to fruition as well. 

Mr. MILLER. Well, based on your success, he was right. But Ms. 

Sims, you stated in your testimony that as a person of color, you 

are less likely to be picked by a senior leader to be mentored. And 

I’m looking at this. Can you explain that to me a little bit? 

Ms. SIMS. Sure. I would offer that is a tremendous opportunity— 

Mr. MILLER. You just turned it off. 

Ms. SIMS. I got it. There are definitely isolated situations where 

individuals with talent and potential are identified, but not sufficiently enough to be able to impact the type of critical mass that 

we’re talking about. With the Toigo population, certainly we are 

also looking for other markers, and one of the things that we measure as a leadership opportunity is actually running public pension 

funds. Our group right now works with a variety of public pension 

funds who also have commitment to diversity and most recently 

one of our alums from a graduating class of 1994 was just named 

the CIO for New York City Common Retirement Fund. So again 

managing $150 billion investment fund for beneficiaries is an important marker. 

So again looking at all the various ways in which we can see 

leadership continue to grow, the opportunities for identifying them 

within the larger institutions is equally important. It is just not as 

frequent as we would like it to be. 

Mr. MILLER. If you look at the whole financial services industry, 

based on the stock market, everybody is in deep trouble. I mean, 

you don’t know what a good buy is out there any more. It doesn’t 

matter what the bottom line is. But any business looks at the bottom line, and most business people who have half a brain in their 

head realize diversity is beneficial to their bottom line, because 

they want to do business with as many people as possible. 

And I think, Mr. Corey, you testified that your training programs 

are being tested, and can you describe precisely what your training 

programs are intended to accomplish as they’re being tested? 

Mr. COREY. Well, we see growth. There’s growth from high school 

curriculum, to college, to university graduate school. We’re talking 

with a law school in northern New England, and we have been 

asked to go up to Tuck in April, Tuck School of Business at Dartmouth, to teach the course. 

In addition to that, a bank in the State of Maine has initiated 

conversation— 

41

Mr. MILLER. But how are they being tested? This is how they’re 

being tested? 

Mr. COREY. Tested? No. Well, there are two ways. The answer 

I just gave you. But the second and the more important way is that 

we have designed an evaluation, an assessment questionnaire, 

which measures 17 different aspects of ethical leadership. We test 

our students at discreet points along the process of learning valuesbased leadership training. We test them. So we can see progress or 

lack of progress. We can see leadership profiles that give us the opportunity as facilitators to step into the process and help them pick 

up their socks where they droop and recognize them where they’re 

strong. 

Mr. MILLER. And that is the private sector doing this? 

Mr. COREY. Excuse me? 

Mr. MILLER. That is the private sector doing this? Which I think 

the answer to this— 

Mr. COREY. Yes, that is us doing that. That’s right. 

Mr. MILLER. Yes. That’s why I think the answer to this situation 

is the private sector. And I’m listening to the testimony, and, you 

know, I’m watching the private sector, whether they’re becoming 

insightful or just looking around and realizing the benefit to their 

business and it being inclusionary, and it seems to be working. 

Mr. Graves, you had discussed your organization and the efforts 

you put forward to help minorities in the workforce. Can you describe that? 

Mr. GRAVES. Sure. You’re talking about Progress Through Business. One of the things that we do is work with major corporations 

to help them identify pools of talent. To give you an example of a 

company that we work with that I believe has got it, Johnson Controls. It’s not in the financial services sector, but it’s a Fortune 100 

engineering firm that looked at the demographic changes in the 

United States recognized that its workforce was changing, that its 

predominantly white male 50-plus engineers were going to be retiring, that its mid-level and senior-level managers were going to be 

leaving the workforce. 

So in partnership with Johnson Controls and a number of other 

organizations, we are helping them to identify pools of talent within minority communities, because they also recognize that the 

urban core is their place of business for the future. 

Mr. MILLER. You worked at Business Link when you worked to 

help minorities and women-owned business. Was it very similar to 

that? 

Mr. COREY. There were a number of similar programs around the 

country and companies that were adopting those. I refer back to 

what I talked about in my testimony. You have a number of corporations in Cleveland that was the Cleveland Business Link Program, that ended up being the Commission on Economic Inclusion. 

They’re very focused on diversity of the workforce, diversity at the 

board level, supplier diversity as well. And they’ve had some pretty 

meaningful results. 

Mr. MILLER. Well, my time has expired. I had something for all 

of you, but I’m out of time. So thank you very much. 

Chairman WATT. And we’re almost out of time. You probably 

heard the bells and whistles going off in the background, which inVerDate 0ct 09 2002 11:27 Apr 17, 2008 Jkt 041177 PO 00000 Frm 00049 Fmt 6633 Sfmt 6633 K:\DOCS\41177.TXT TERRIE
42

dicates that we have six votes, which according to my calculation 

would take, even in the best of all possible worlds, 40 minutes before we could get back—more likely an hour and 15 minutes. 

So I’m going to let you all off the hook, and promise to ask my 

questions— 

[Discussion held off the record] 

Chairman WATT. I’m going to come to you, but I have to ask a 

couple of general questions that I’m not really asking for a response to right now. But, Mr. Visconti—and this actually helps the 

corporate people, because you can go back and kind of work some 

of these things up the corporate ladder. 

There obviously is a big disparity between what’s going on in 

banks and in some other parts of the financial services industry. 

That is apparent from the statistics. Some feeling is that is because 

of CRA and the requirement that banks are responsive to their 

communities. So one of the questions I want you all to vet—and we 

have two wonderful participants here who can vet it, because you 

do both banking and brokerage—what’s the attitude toward what 

Mr. Visconti suggested about a broader CRA requirement that 

transcends just banks? Especially since everybody’s getting into everybody else’s business now in the financial services sector. 

Mr. Visconti, I’m going to want you to address why on page 4 of 

your testimony, DiversityInc has found that the top 50 is 20 percent higher in their bottom line, and I’d like to know what more 

specifically you attribute this success. But I’m asking these questions. Probably there will be others that will come in writing, and 

I would ask that in lieu of keeping you here for another hour, you 

be as responsive to the questions that we ask in writing as you 

have been to the questions we’ve asked verbally. 

I’m going to recognize Mr. Scott for as long as—we’ll keep an eye 

on the clock on the floor, but we won’t miss the votes. 

Mr. SCOTT. Thank you, sir. I’ll be quick. 

Mr. Visconti, I’d like to just ask you a series of questions because— 

Chairman WATT. You have to ask him in 2 minutes, though. 

Mr. SCOTT. How do you check the veracity or the truthfulness of 

your survey questions? 

Mr. VISCONTI. We have two means. We look at things very statistically. We have a metrics-based measurement system, and we look 

at—most of the questions are looked at parametrically. So we look 

for statistical outliers, and we certainly ask questions about that, 

then we have a team of full-time journalists and we spot-check answers all the way. 

We have found over the last 8 years that corporations tend to answer more conservatively than not. We uncover things that they 

could have answered in a way that would have benefitted them— 

Mr. SCOTT. Okay. A good way of measurement to me, as I mentioned earlier, is money, budgets, bonuses, how do you measure 

that? Have you looked at the Diversity advertising budgets, for example? 

Mr. VISCONTI. Yes— 

Ms. SCOTT. The recruitment advertising budgets? Give me a little 

bit on that. 

43

Mr. VISCONTI. We look at several different fiscal measures. We 

look at bonuses, percent of bonuses, to whom they are paid. We 

look at plans, accountability, who signs off on them. We look at 

percentages of supplier diversity spent. And I’ll tell you that Johnson Controls is a top company, because they supply the automotive 

industry, who in turn supplies the Federal Government. And the 

supplier diversity programs that the Federal Government put into 

effect with their suppliers caused in turn Ford and GM to turn 

around to Johnson Controls and act more responsively. 

We also look at advertising budget and percentage spent on recruitment. We look at number of new recruits by race, gender, orientation, and age, and we look at promotions, and we look at retention. So all of those things by every parameter, we look at very 

closely. 

Mr. SCOTT. How do they apply the bonuses? How much money 

are we talking about? 

Chairman WATT. Mr. Scott, can I encourage you to submit your 

questions in writing? 

Mr. SCOTT. I will do that. 

Chairman WATT. Otherwise, we’re going to miss these, at least 

the first in the series of votes, which we don’t want to do, because 

it’s an important amendment, it looks like. 

And I will just note that some members, including the Chair and 

Mr. Scott and others may have additional questions for the panel, 

which they may wish to submit in writing. Without objection, the 

hearing record will remain open for 30 days for members to submit 

written questions to these witnesses and to place their responses 

in the record. 

I am delightfully grateful to all of you for your testimony. I knew 

we were going to get to this point where we would have a series 

of votes, so I have been kind of pushing everybody a little bit more 

aggressively than I normally like to. But I knew at least one person 

had a 7:00 flight, so we don’t anybody to miss their flight as a result of having to stay here waiting on me to come back and ask 

questions, because I doubt any other member will come and ask 

questions. So I will submit mine in writing. 

I thank you all so much, and the hearing is officially adjourned. 

[Whereupon, at 5:06 p.m., the hearing was adjourned.] 

(45)

A P P E N D I X

February 7, 2008

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