A group of federal agencies, including the NCUA, issued a finalinteragency policy statement Tuesday for establishing jointstandards for assessing the diversity policies and practices of theentities they regulate. The standards will be posted to the FederalRegister June 10 along with notice of a 60-day comment periodending Aug. 10.

The final standards, which are generally similar to the proposedstandards issued in 2013 as part of the Dodd-Frank Act, provide aframework for regulated entities to create and strengthen theirdiversity policies and practices. Directives include theirorganizational commitment to diversity, workforce and employmentpractices, procurement and business practices, and practices topromote transparency of organizational diversity and inclusionwithin the regulated entities' U.S. operations.

Credit unions and other financial institutions regulated by theNCUA, as well as the Federal Reserve Board, the CFPB, the FDIC, the Office of the Comptroller of theCurrency, and the Securities and Exchange Commissionare encouraged to use the finalized standards in mannersappropriate to their characteristics.

Dodd-Frank also directed each agency to establish an Office of Minority and Women Inclusion responsible for mattersrelating to diversity in management, employment and businessactivities. The act also instructed each OMWI director to developstandards for assessing the diversity policies and practices of itsregulated entities.

The final standards reflect input from some 200 comments fromdepository institutions, holding companies, industry trade groups,financial professionals, consumer advocates, and community membersthat offered a greater understanding of the issues confrontingminorities and women in finding employment and businessopportunities within the financial services industry, according toan interagency news release. Despite the reported due diligence,the standards are “unconstitutional and wrong-headed,” according toMarvinUmholtz, an Olympia, Wash.-based consultant and former creditunion executive.

“The polarized political environment in which theseill-conceived, racially-charged diversity quotas have been lobbedlike a hand grenade onto Main Street is certain to create anexplosion of rhetorical discord between partisans in Congress,”Umholtz said. “These misguided racial and gender diversity quotasfor the workplace, and for contracting, promise to be a complianceand reputation-risk nightmare.”

Claims by the various enacting agencies, including the NCUA,that the joint standards were additional guidance under anotherexisting statute in the Administrative Procedures Act was clumsysleight of hand, since that statute is also unconstitutional forthe same reason, Umholtz claimed. The joint diversity standards,even in their “voluntary” and “leading practices” final forms, wereestablished under a law that violates the U.S. Constitution 14thAmendment of concerning equal protection.

“The joint diversity quota standards could have been a lotworse, but they still will give the community activists moredisruptive leverage over financial institutions, and will also givethe plaintiffs' attorneys more potential causes of action,” Umholtzadded.