OCC focuses attention on board diversity and inclusion
On October 5, acting Comptroller of the Currency Michael J. Hsu stated the agency is exploring several options to improve bank board diversity and inclusion. Speaking during the Women in Housing & Finance Public Policy Luncheon, Hsu stated that the OCC is considering “encouraging banks to make it a practice to nominate or consider a diverse range of candidates or requiring institutions to either diversify their boards or explain why they have not.” Hsu cited examples such as the SEC’s approval of a new Nasdaq “diversify or explain” listing rule, as well as laws passed by the California legislature “requiring companies to have a certain number of female directors and directors from underrepresented communities.” In addition, the OCC is looking at ways other countries are approaching board diversity. “Without diverse leadership, banks and their regulators may develop blind spots or suffer from groupthink,” Hsu said. “These blind spots can lead to the kinds of nasty surprises that threaten safety and soundness—and possibly the financial sector as a whole. There is a growing body of empirical evidence that companies that address these blind spots by having diverse boards of directors have stronger earnings, more effective corporate governance, better reputations, and less litigation risk.” Hsu added that it is time to shift cultural expectations concerning diversity and inclusion and improve diversity transparency at banks, both at the executive and board levels.