Credit Union Times recently published a guest editorial ("Let's Help Make Them Do it" – Jan. 22, 2014) the basic premise of which was that the federal government should make financial institutions implement diversity policies and practices as mandated by Section 342 of the highly partisan and still controversial Dodd-Frank Act. In reality, that point of view was misguided and ill-informed.

The "Proposed Interagency Policy Statement Establishing Joint Standards for Assessing the Diversity Policies and Practices of Entities Regulated by the Agencies" developed by the NCUA and other banking regulators' Offices of Minority and Women Inclusion are a compliance nightmare that should be keeping credit union CEOs and chief compliance officers awake at night. It is bad rulemaking that is based upon bad law that will lead to lots of bad lawsuits. And I am not the only one who thinks so.

In a Nov. 4, 2013, letter to the Office of the Comptroller of the Currency four members of the eight-member U.S. Commission on Civil Rights writing for themselves and not for the entire commission said, "We urge that the (Proposed Statement) be changed so that it does not require or encourage the use of classifications and preferences based on race, ethnicity and sex. Further, the Proposed Statement should affirmatively state that the Department of the Treasury, the Federal Reserve, the FDIC, the NCUA, the (CFPB) and the SEC should not assess the diversity policies and practice of regulated entities based on the entities' use of numerical goals, metrics or percentages with regard to diversity in hiring or contracting, because such goals and metrics may lead to unlawful discrimination by the regulated entities."