Thank you for your invitation to testify at the U.S. House Committee on Financial Services’ Subcommittee on Diversity and Inclusion’s hearing on “Holding Financial Regulators Accountable for Diversity and Inclusion: Perspectives from the Offices of Minority and Women Inclusion” on September 8.
Enclosed is the National Credit Union Administration’s 2019 Office of Minority and Women Inclusion Annual Report (opens new window), which details the NCUA’s comprehensive efforts to foster diversity, equity, and inclusion within the agency and the credit union system.
The Federal Credit Union Act designates the NCUA Chairman as the spokesperson for the NCUA Board and as the agency’s representative in all official relations with other branches of government. I will appear before this subcommittee in my capacity as the director of the NCUA’s Office of Minority and Women Inclusion to discuss the agency’s policies.
When it comes to the NCUA’s ability to carry out its mission to regulate and supervise the nation’s federally insured credit union system effectively, a commitment to the values of diversity, equity, and inclusion, or DEI, is vital. This is why the NCUA is focused on incorporating these values throughout the agency’s strategic priorities and workforce.
Additionally, the NCUA is committed to promoting the principles of diversity, equity, and inclusion within the credit union system. For example, in 2019, the NCUA hosted its first annual DEI Summit. It was the first event of its kind for the credit union industry, and it attracted more than 150 attendees.
The summit’s goals were to:
- Promote the value of DEI for credit unions;
- Provide an opportunity for credit unions to share best practices; and
- Offer attendees a forum to discuss solutions to challenges.
The NCUA is also committed to supporting minority depository institutions, or MDIs. Enclosed is the NCUA’s 2019 Annual Report to Congress on Preserving Minority Depository Institutions (opens new window), which was released this year on the Juneteenth holiday. The MDI report includes metrics indicating the financial strength of MDIs insured or supervised by the NCUA in the prior year.
MDIs are often the only federally insured financial institution available in rural and urban communities that have been historically unserved by traditional financial institutions. These institutions play a vital role in providing safe and affordable financial services in our nation’s underserved communities.
At the end of 2019, the NCUA regulated or supervised 514 federally insured credit unions with the MDI designation in 36 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands. These MDI credit unions served more than 3.9 million members and have assets of $40.5 billion. Approximately 10 percent of all federally insured credit unions were MDIs at the end of 2019. These institutions were generally small, with 57 percent having less than $10 million in assets.
One area the NCUA is focusing on is encouraging more credit unions to complete the voluntary “Credit Union Diversity Self-Assessment.” When the agency began collecting these assessments in 2016, only 35 were submitted. In 2019, that number increased to 118 submissions. However, the NCUA is not satisfied with the credit union industry’s response rate. We continue to promote the Self-Assessment among federally insured credit unions, and the NCUA Board is considering ways to incentivize credit union participation in the assessment.
Within the NCUA, racial diversity is improving. For example, in 2015, minorities accounted for 26.9 percent of the workforce. In 2019, minorities accounted for 29.9 percent. It is also worth noting that when comparing individual racial and ethnic groups to the Civilian Labor Force (CLF), the NCUA’s workforce, as of December 31, 2019, is greater than the CLF in three of the five minority categories — African American, Asian American, and Multiracial employees.
In terms of the NCUA’s leadership pipeline, the agency has improved the racial diversity of its senior staff positions, from 13.2 percent in 2015 to 25.0 percent in 2019. Racial diversity in our manager-level staff (Grades 13 to 15) increased from 22.1 percent in 2015 to 27.5 percent in 2019.
Examiners make up 67.6 percent of the agency’s workforce and, therefore, comprise a significant portion of the leadership pipeline. Without greater diversity in the examiner series, the potential for greater diversity in the agency’s leadership applicant pool is limited.
To address this issue, the NCUA collaborated with the U.S. Office of Personnel Management to analyze potential barriers to groups advancing through the testing process to become Principal Examiners. In 2019, OPM developed and administered a survey to examiners who recently took the Principal Examiner test. The agency will use these results to improve employee preparation for the exam and to ensure consistency in the level of on-the-job training each examiner receives.
The NCUA is also increasing its efforts to recruit diverse talent. The majority of these recruitment efforts target groups with less-than-expected participation in the agency’s workforce and individuals with disabilities. The NCUA has expanded its recruitment efforts at historically black colleges and universities, Hispanic-serving institutions, and other minority-serving institutions, as well as at targeted recruitment events sponsored by:
- Accounting and Financial Woman’s Alliance;
- Careers & the Disabled Magazine;
- Career Expo for People with Disabilities & Wounded Warriors;
- Congressional Black Caucus;
- National Association of the Deaf;
- National Black MBA Association; and
- Prospanica, an advocacy organization for Hispanic professionals.
The agency is also utilizing internships to help more underrepresented groups consider careers at the agency. In addition to the Pathways program for college students and recent graduates, the NCUA participated in the Office of the Comptroller of the Currency’s High School Scholars Internship Program, a six-week paid summer internship program for students entering their senior year of high school. This program provided students from Wards 7 and 8, two of the most underserved communities in Washington, D.C., with an opportunity to explore potential careers in the financial and government sectors while also gaining an understanding of the NCUA’s mission and the important work the agency does for the credit union industry.
While noteworthy progress has been made, much work remains to be done. Going forward, we will focus on building and cultivating an inclusive culture, so as the agency’s diversity increases that diverse talent can be retained. To that end, the NCUA established a successful Employee Resource Group program, with 22 percent of the agency’s workforce participating.
Increasing diversity is also crucial to the NCUA’s procurement activities. A diverse supplier network helps the agency obtain the best value and the most innovative solutions. The NCUA continues to be a leader in supplier diversity, awarding 43 percent of its 2019 contracts to minority and women-owned businesses.
Thank you again for your invitation to testify on September 8. I look forward to answering your questions about the NCUA’s initiatives to support diversity, equity, and inclusion in the credit union system and within the agency.