The OCC is weighing requirements for banks “to either diversify their boards or explain why they have not,” Acting Comptroller of the Currency Michael Hsu said in remarks at a housing industry event today. Hsu cited several models for implementing such requirements, including new Nasdaq rules—which were recently approved by the Securities and Exchange Commission—requiring companies listing on the stock exchange to publicly disclose consistent transparent diversity statistics regarding their board composition, and diversity rules adopted by the California state legislature. The OCC is also looking to how other countries are approaching board diversity, he added.
“Ultimately, we need to shift cultural expectations so that diversity and inclusion are the norm, not some distant aspiration,” Hsu said. “For the financial sector, this starts with improving transparency about the diversity of large bank boards of directors and executive leadership.”
Hsu emphasized the role that DEI work plays in ensuring safety and soundness. “Without diverse leadership, banks and their regulators may develop blind spots or suffer from groupthink,” he 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.”
