Today, Congresswoman Maxine Waters (D-CA), Chairwoman of the House Committee on Financial Services, Congresswoman Carolyn B. Maloney (D-NY), Chairwoman of the House Committee on Oversight and Reform, and Congresswoman Joyce Beatty (D-OH), Chairwoman of the House Financial Services Subcommittee on Diversity and Inclusion, issued the following statements on a new Government Accountability Office (GAO) report entitled, “Fannie Mae and Freddie Mac: Efforts to Promote Diversity and Inclusion.” The report is part of a series of reviews on diversity and inclusion requested by Representatives Waters, Maloney and Beatty in 2018.
“Under my leadership, the Committee has had a strong focus on diversity and inclusion,” said Chairwoman Waters. “This is work that began when I was Ranking Member and joined with Representatives Maloney and Beatty to request a series of reports from the GAO on diversity and inclusion. Then, as now, I was concerned that, despite the many qualified women and people of color who can contribute to the GSEs’ workforce, supplier, broker-dealer, senior management, and board diversity, their talents have not been utilized. This GAO report demonstrates that despite efforts to increase diversity, there has been a troubling lack of growth in diversity and inclusion at Fannie and Freddie. According to the report, the percentage of women of color in senior management roles at both Fannie and Freddie remained in the single digits from 2011 to 2019. The GSEs can and must do better. However, I am also concerned that GAO has failed to make any recommendations to the Federal Housing Finance Agency as to how its oversight could be improved to better hold Fannie and Freddie accountable for achieving real diversity and inclusion results.”
“This GAO report shows that Fannie Mae and Freddie Mac have made insufficient progress in diversifying their boards, workforce, and use of broker-dealers,” said Chairwoman Maloney. “The two GSEs were responsible for more than 60% of U.S. residential mortgages outstanding in 2019 and the report makes clear that they need to improve their diversity and inclusion efforts to better reflect and understand the customers they serve. In 2018, women represented 45% of employees at Fannie Mae and 46% at Freddie Mac, compared to 58% across firms in the private sector. To make matters worse, the report showed the share of female employees at both GSEs declined from 2011-2018. It is key for the GSEs to recruit more women in these lower-level positions, as they are better positioned to be promoted and considered for future senior management positions, like board membership. As I’ve stated before, improving board diversity is good governance, good business, and good policy, but promoting diversity and inclusion requires a holistic approach – from the highest levels of management to lower-level employees.”
“This GAO report – produced at the request of Chairwoman Waters, Rep. Maloney, and myself – proves that, while some progress has been made to make Fannie Mae and Freddie Mac more diverse and inclusive while under government conservatorship, much more needs to be done to create a truly diverse and inclusive workforce at the two government-sponsored entities (GSEs),” said Chairwoman Beatty. “Study after study has proven that companies that are more diverse and inclusive are more profitable and perform better financially. It is in the interest of the American people that the GSEs lead the industry in diversity and inclusion to help bolster their bottom-line and ensure they never need another taxpayer-funded bailout. I strongly recommend the leadership of Fannie Mae and Freddie Mac to review the findings of the GAO report and take decisive action to increase diversity and inclusion within their workforces.”
Summary of GAO’s report findings:
|Fannie Mae||Freddie Mac|
|Board Diversity||In 2019, Fannie Mae’s board demographics included 23 percent minorities and 37 percent females.||In 2019, Freddie Mac’s board demographics included 44 percent minorities and 33 percent females.|
|Leadership Diversity||In 2018, women represented 33 percent and minorities represented 21 percent of senior management roles at Fannie Mae.||In 2018, women represented 28 percent and minorities represented 27 percent of senior management roles at Freddie Mac.|
|Supplier Diversity||In 2018, Fannie Mae and Freddie Mac both utilized minority-, women-, and disabled-owned suppliers for only 18 percent of their contracts.|
|Broker-Dealer Diversity||In 2019, Fannie Mae and Freddie Mac each paid only 6 percent of its financial transaction fees to diverse broker-dealers.|
Source: Committee on Financial Services Staff Analysis of GAO-20-637Despite the limited growth in diversity within Fannie Mae and Freddie Mac, GAO did not make any recommendations for the two enterprises regarding how they could increase their diversity and inclusion results.
To view the full report, click here.
The Subcommittee on Diversity and Inclusion held a hearing on Tuesday, September 8 entitled, “Holding Financial Regulators Accountable for Diversity and Inclusion: Perspectives from the Offices of Minority and Women Inclusion,” to examine the role of the OMWIs in tracking diversity and inclusion performance inside their respective agencies and among their regulated entities.
In June, the Committee on Financial Services held a full Committee hearing entitled, “Diversity in the Boardroom: Examining Proposals to Increase the Diversity of America’s Boards.”
In June of 2019, the Subcommittee on Diversity and Inclusion held a hearing entitled, “Diverse Asset Managers: Challenges, Solutions and Opportunities for Inclusion.”
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