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entitled 'Financial Services Industry: Overall Trends in Management-
Level Diversity and Diversity Initiatives, 1993-2004' which was 
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Report to Congressional Requesters: 

United States Government Accountability Office: 

GAO: 

June 2006: 

Financial Services Industry: 

Overall Trends in Management-Level Diversity and Diversity Initiatives, 
1993-2004: 

Financial Services Industry: 

GAO-06-617: 

GAO Highlights: 

Highlights of GAO-06-617, a report to congressional requesters. 

Why GAO Did This Study: 

During a hearing in 2004 on the financial services industry, 
congressional members and witnesses expressed concern about the 
industry’s lack of workforce diversity, particularly in key management-
level positions. Witnesses stated that financial services firms (e.g., 
banks and securities firms) had not made sufficient progress in 
recruiting and promoting minority and women candidates for management-
level positions. Concerns were also raised about the ability of 
minority-owned businesses to raise capital (i.e., debt or equity 
capital). 

GAO was asked to provide an overview on the status of diversity in the 
financial services industry. This report discusses (1) what available 
data show regarding diversity at the management level in the financial 
services industry from 1993 through 2004, (2) the types of initiatives 
that financial firms and related organizations have taken to promote 
workforce diversity and the challenges involved, and (3) the ability of 
minority- and women-owned businesses to obtain access to capital in 
financial markets and initiatives financial institutions have taken to 
make capital available to these businesses. 

GAO makes no recommendations in this report. 

What GAO Found: 

Between 1993 through 2004, overall diversity at the management level in 
the financial services industry did not change substantially, but 
increases in representation varied by racial/ethnic minority group. 
During that period, Equal Employment Opportunity Commission (EEOC) data 
show that management-level representation by minority men and women 
increased from 11.1 percent to 15.5 percent (see figure below). 
Specifically, African-Americans increased their representation from 5.6 
percent to 6.6 percent, Asians from 2.5 percent to 4.5 percent, 
Hispanics from 2.8 percent to 4.0 percent, and American Indians from 
0.2 percent to 0.3 percent. The EEOC data also show that representation 
by white women remained constant at slightly more than one-third 
whereas representation by white men declined from 52.2 percent to 47.2 
percent. 

Financial services firms and trade groups GAO contacted stated that 
they have initiated programs to increase workforce diversity, including 
in management-level positions, but these initiatives face challenges. 
The programs include developing scholarships and internships, 
establishing programs to foster employee retention and development, and 
linking managers’ compensation with their performance in promoting a 
diverse workforce. However, firm officials said that they still face 
challenges in recruiting and retaining minority candidates. Some 
officials also said that gaining employees’ “buy-in” to diversity 
programs was a challenge, particularly among middle managers who were 
often responsible for implementing key aspects of such programs. 

Research reports suggest that minority- and women-owned businesses have 
generally faced difficulties in obtaining access to capital for several 
reasons such as these businesses may be concentrated in service 
industries and lack assets to pledge as collateral. Other studies 
suggest that lenders may discriminate in providing credit, but 
assessing lending discrimination may be complicated by limited data 
availability. However, some financial institutions, primarily 
commercial banks, said that they have developed strategies to serve 
minority- and women-owned businesses. These strategies include 
marketing existing financial products specifically to minority and 
women business owners. 

Figure: Workforce Representation in the Financial Services Industry at 
the Management Level (1993, 1998, 2000, and 2004): 

[See PDF for Image] 

Source: GAO analysis of EEOC data. 

[End of Figure] 

[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-06-617]. 

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact Orice M. Williams at 
(202)512-5837 or williamso@gao.gov. 

[End of Section] 

Contents: 

Letter: 

Results in Brief: 

Background: 

Diversity in the Financial Services Industry At the Management Level 
Did Not Change Substantially: 

Initiatives to Promote Workforce Diversity in the Financial Services 
Industry Face Challenges: 

Minority-and Women-Owned Businesses Often Face Difficulties in 
Obtaining Capital, but Some Financial Services Firms Have Developed 
Strategies to Assist Them: 

Agency Comments and Our Evaluation: 

Appendix I: Objectives, Scope, and Methodology: 

Appendix II: Overall Statistics on Workforce Diversity in the Financial 
Services Industry: 

Appendix III: Diversity in Key Positions in the Accounting Industry: 

Appendix IV: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: AACSB Demographic Data of Students Reported Enrolled in MBA 
Degree Programs at AACSB Accredited Business Schools in the United 
States by Racial/Ethnic Group (2000-2004): 

Table 2: Workforce Representation at the Professional, CPA and Partner/ 
Owner Levels by Racial/Ethnic Group (2005): 

Table 3: Workforce Representation at the Professional Level by Racial/ 
Ethnic Group and Firm Size: 

Figures: 

Figure 1: EEO-1 Data on Trends in Workforce Diversity in the Financial 
Services Industry at the Management Level (1993, 1998, 2000, and 2004): 

Figure 2: EEO-1 Data on Trends in Workforce Diversity in the Financial 
Services Industry at the Management Level by Racial/Ethnic Group and 
Gender (1993, 1998, 2000, and 2004): 

Figure 3: EEO-1 Data on Workforce Diversity in the Financial Services 
Industry at the Management Level by Sector (2004): 

Figure 4: EEO-1 Data on Workforce Diversity in the Financial Services 
Industry at the Management Level by Firm Size (2004): 

Figure 5: EEO-1 Data (Percentage) on Workforce Diversity in the 
Financial Services Industry by Position, Racial/Ethnic Group, and 
Gender (2004): 

Figure 6: EEO-1 Data (Number of Employees) on Workforce Diversity in 
the Financial Services Industry by Position, Racial/Ethnic Group, and 
Gender (2004): 

Figure 7: EEO-1 Data on Workforce Diversity in the Financial Services 
Industry by Position and Racial/Ethnic Group (2004): 

Figure 8: EEO-1 Data on Workforce Diversity in the Accounting Industry 
at the Management Level by Firm Size, Gender, and Racial/Ethnic Group, 
and Gender (2004): 

Figure 9: EEO-1 Data on Workforce Diversity in the Accounting Industry 
at the Management Level by Firm Size and Racial/Ethnic Group (2004): 

Abbreviations: 

AACSB: Association to Advance Collegiate Schools of Business: 
ABA: American Bankers Association: 
ACS: American Community Survey: 
AICPA: American Institute of Certified Public Accountants: 
CPA: certified public accountant: 
ECOA: Equal Credit Opportunity Act: 
EEO-1 data: Employer Information Report data: 
EEOC: Equal Employment Opportunity Commission: 
GMAC: Graduate Management Admission Council: 
HMDA: Home Mortgage Disclosure Act: 
IIABA: Independent Insurance Agents and Brokers of America: 
MBA: Masters of Business Administration: 
NAICS: North American Industry Classification System: 
PUMS: Public Use Microdata Sample: 
SBA: Small Business Administration: 
SBO: Survey of Business Owners: 
SIA: Securities Industry Association: 
SIC: Standard Industrial Classification: 

[End of section] 

United States Government Accountability Office: 

Washington, DC 20548: 

June 1, 2006: 

The Honorable Michael G. Oxley: 
Chairman: 
The Honorable Barney Frank: 
Ranking Minority Member: 
Committee on Financial Services: 
House of Representatives: 

The Honorable Sue W. Kelly: 
Chairwoman: 
The Honorable Luis V. Gutierrez: 
Ranking Minority Member: 
Subcommittee on Oversight and Investigations: 
Committee on Financial Services: 
House of Representatives: 

The Honorable David Scott: 
House of Representatives: 

At a July 2004 hearing before the Subcommittee on Oversight and 
Investigations of the House Committee on Financial Services, some 
members and witnesses expressed concern about the financial services 
industry's lack of workforce diversity, particularly in key management- 
level positions.[Footnote 1] Witnesses stated that financial services 
firms (e.g., banks and securities firms) had not made sufficient 
progress in recruiting minority and women candidates for management- 
level positions. Concerns were also raised about the ability of 
minority-owned businesses to raise debt and equity capital. 

This report follows up on the issues raised in the subcommittee hearing 
and responds to your February 2005 request that we provide an overview 
on the status of diversity in the financial services industry. 
Specifically, our objectives were to discuss (1) what the available 
data show regarding diversity at the management level in the financial 
services industry from 1993 through 2004, (2) the types of initiatives 
that the financial services industry and related organizations have 
taken to promote workforce diversity and the challenges involved, and 
(3) the ability of minority-and women-owned businesses to obtain access 
to capital in financial markets and initiatives financial institutions 
have taken to make capital available to these businesses. You also 
asked that we include information about the accounting industry, which 
we address separately in this report. In an earlier report, we defined 
workforce diversity as ways in which people in a workforce are similar 
and different from one another including background, education, and 
language skills.[Footnote 2] For the purposes of this report, we 
focused the diversity discussion on changes in management-level 
representation over time by racial/ethnic minority groups (for both 
women and men), including African-Americans, Asian/Pacific Islanders 
(Asians), Hispanics or Latinos (Hispanics), and American Indians/ 
Alaskan Natives (American Indians). We also discussed changes in 
management-level representation by whites (both women and men) over 
time. Finally, we defined raising capital as debt or equity capital 
obtained in conventional financial markets, such as from commercial 
banks or venture capital funds. 

To address objective one, we primarily analyzed the Equal Employment 
Opportunity Commission's (EEOC) Employer Information Report (EEO-1) 
data for the financial services industry for employers with 100 or more 
employees for the years 1993, 1998, 2000, and 2004.[Footnote 3] The EEO-
1 data provide information on racial/ethnic and gender representation 
for various occupations within a broad range of industries, including 
financial services. We used the EEO-1 "officials and managers" job 
category as the basis for our discussion of management-level diversity 
within the financial services industry, as well as for its various 
sectors, such as banking and securities firms. EEOC defines the job 
category of "officials and managers" as occupations requiring 
administrative and managerial personnel, who set broad policies, 
exercise overall responsibility for execution of these policies, and 
direct individual departments or special phases of a firm's operation. 
First-line supervisors who engage in the same activities as the 
employees they supervise are reported in the same job category as the 
employees they supervise rather than in the "officials and managers" 
category. To address objectives two and three, we collected publicly 
available information and interviewed officials from a variety of 
financial services firms, including commercial banks, securities firms, 
and private equity/venture capital organizations. We also interviewed 
representatives from industry trade organizations, such as the American 
Bankers Association (ABA); the Securities Industry Association (SIA); 
Mortgage Bankers Association (Association); and the Independent 
Insurance Agents and Brokers of America (IIABA); federal agencies, 
including EEOC; the U.S. Department of Commerce's Minority Business 
Development Administration (MBDA); the Small Business Administration 
(SBA); and federal bank regulators; academics; and organizations that 
represent minority-and women-owned businesses, such as the U.S. 
Hispanic Chamber of Commerce and the National Association of Women 
Business Owners. We also reviewed available government and industry 
studies that address workforce diversity in the financial services 
industry and the ability of minority-and women-owned businesses to 
obtain access to capital. 

We conducted our work from July 2005 to May 2006 in Washington, D.C., 
and New York City in accordance with generally accepted government 
auditing standards. Appendix I describes the objectives, scope, and 
methodology of our review in more detail. At your request, appendix II 
discusses overall statistics on workforce diversity in the financial 
services industry, and appendix III discusses workforce diversity in 
the accounting industry. 

Results in Brief: 

From 1993 through 2004, overall diversity at the management level in 
the financial services industry did not change substantially, but some 
racial/ethnic minority groups experienced more change in representation 
than others. During that period, EEO-1 data show that management-level 
representation by minority women and men overall increased from 11.1 
percent of all industry management-level positions to 15.5 percent. 
Specifically, African-Americans increased their management-level 
representation from 5.6 percent to 6.6 percent, Asians from 2.5 percent 
to 4.5 percent, Hispanics from 2.8 percent to 4.0 percent, and American 
Indians from 0.2 percent to 0.3 percent. Representation by white women 
remained constant at slightly more than one-third whereas 
representation by white men declined from 52.2 percent to 47.2 percent 
(overall white management-level representation declined from 88.9 
percent in 1993 to 84.5 percent in 2004). Additionally, the EEO-1 data 
indicate that, within the financial services industry, certain sectors 
have a somewhat more diverse management-level workforce than others. 
For example, the EEO-1 data show that depository institutions, such as 
commercial banks, and insurance companies generally have a higher 
degree of representation by minorities or white women at the management 
level than securities firms. 

Although financial services firms and trade groups have initiated 
programs to increase workforce diversity, including in management-level 
positions, these initiatives face challenges that may help explain why 
overall diversity at the management level did not change substantially 
from 1993 through 2004. According to officials from financial services 
firms we spoke with, diversity is an important goal, and their 
companies' top leadership is committed to implementing programs to 
recruit and retain minority and women candidates. For example, to 
develop a pool of minority candidates, financial services firms have 
established scholarship and internship programs or partnered with 
groups that represent minority professionals, such as the National 
Black Master of Business Administration Association. Additionally, 
officials from a few firms told us that in the last few years they have 
been linking managers' compensation with their performance in promoting 
workforce diversity. Moreover, some firms have developed performance 
indicators (e.g., representation by minorities and women in key 
positions) to measure their progress in achieving workforce diversity. 
However, financial services firm officials said that they still face 
challenges in recruiting and retaining minority candidates. Some firm 
officials also said that gaining employees' "buy-in" to diversity 
programs was a challenge, particularly among middle managers who were 
often responsible for implementing key aspects of such programs. 

Research reports and our discussions with financial services firms and 
relevant trade groups suggest that minority-and women-owned businesses 
generally have difficulty obtaining access to capital in conventional 
financial markets for several reasons. A 2004 report by the MBDA stated 
that minority-owned businesses may have difficulty in obtaining capital 
because they are often concentrated in service industries and lack 
sufficient assets to pledge as collateral to obtain financing or 
because many such businesses lack an established record of 
creditworthiness.[Footnote 4] Other studies suggest that lenders may 
discriminate in deciding whether to make loans to minority-owned 
businesses. However, assessing lending discrimination against minority-
and women-owned businesses may be complicated by limited data 
availability. In particular, the Federal Reserve's Regulation B, which 
implements the Equal Credit Opportunity Act, prohibits financial 
institutions from requiring information on race and gender from 
applicants for nonmortage credit products.[Footnote 5] Federal 
financial regulators and others have stated that Regulation B limits 
their capacity to monitor potential business lending discrimination. 
While minority-and women-owned businesses may have faced difficulties 
in obtaining capital from conventional sources over the years, some 
financial institutions, primarily commercial banks, said that they have 
developed strategies to serve minority-and women-owned businesses. 
These strategies include marketing financial products specifically to 
minority-and women-owned businesses, although it does not appear that 
these financial institutions actually changed their general 
underwriting standards for such businesses. In addition, some financial 
institutions have established programs to provide technical assistance 
(e.g., assistance in developing business plans) to minority-owned and 
women-owned businesses so that these firms are better positioned to 
obtain capital from conventional sources. 

This report does not contain recommendations. We requested comments on 
a draft of this report from the Chair, U.S. Equal Employment 
Opportunity Commission (EEOC). EEOC provided technical comments, which 
we incorporated as appropriate. We also obtained comments from 
officials at selected industry trade associations, federal agencies, 
and organizations that examine access to capital issues on selected 
excerpts of a draft of this report. We have incorporated their comments 
as appropriate. 

Background: 

This section provides brief descriptions of the financial services 
industry and its component sectors, the changing demographic 
characteristics of the United States, and diversity management. 

Overview of the Financial Services Industry: 

The financial services industry plays a key role in the U.S. economy 
by, among other things, providing vehicles, such as insured deposits, 
providing credit to individuals and businesses, and providing 
protection against certain financial risks. We defined the financial 
services industry to include the following sectors: 

* depository credit institutions, which is the largest sector, include 
commercial banks, thrifts (savings and loan associations and savings 
banks), and credit unions; 

* holdings and trusts, which include investment trusts, investment 
companies, and holding companies; 

* nondepository credit institutions, which extend credit in the form of 
loans, but are not engaged in deposit banking, include federally 
sponsored credit agencies, personal credit institutions, and mortgage 
bankers and brokers; 

* the securities industry, which is made up of a variety of firms and 
organizations (e.g., broker-dealers) that bring together buyers and 
sellers of securities and commodities, manage investments, and offer 
financial advice; and: 

* the insurance industry, including carriers and insurance agents, 
which provides protection against financial risks to policyholders in 
exchange for the payment of premiums. 

Additionally, the financial services industry is a major source of 
employment in the United States. The financial services firms we 
reviewed for this study, which have 100 or more staff, employed nearly 
3 million people in 2004, according to the EEO-1 data. According to the 
U.S. Bureau of Labor Statistics, employment growth in management and 
professional positions in the financial services industry was expected 
to grow at a rate of 1.2 percent annually through 2012. 

Changing U.S. Demographic Characteristics and Definition of Diversity 
Management: 

According to the U.S. Census Bureau, the U.S. population is becoming 
more diverse by race and ethnicity.[Footnote 6] In 2001, Census 
projected that the non-Hispanic, white share of the U.S. population 
would fall from 75.7 percent in 1990 to 52.5 percent in 2050, with a 
similar increase from the minority population during the same period. 
Census further projected that the largest increases would be in the 
Hispanic and Asian populations. According to the Census Bureau's 2004 
American Community Survey results, Hispanics are now the second largest 
racial/ethic group after whites.[Footnote 7] The rapid growth of 
minorities in the Unites States may also influence its economic 
activities. For example, according to Census, the number of firms owned 
by minorities and women continues to grow faster than the number of 
other firms. In particular, a recent Census report based on data from 
the 2002 Economic Census stated that, between 1997 and 2002, Hispanics 
in the United States opened new businesses at a rate three times faster 
than the national average.[Footnote 8] 

As we stated in a 2005 report, the composition of the U.S. workforce 
has become increasingly diverse, and many organizations are 
implementing diversity management initiatives.[Footnote 9] Diversity 
management is a process intended to create and maintain a positive work 
environment that values individuals' similarities and differences, so 
that all can reach their potential and maximize their contributions to 
an organization's strategic goals and objectives. On the basis of a 
literature review and discussions with experts, we identified nine 
leading diversity management principles: (1) top leadership commitment, 
(2) diversity as part of an organization's strategic plan, (3) 
diversity linked to performance, (4) measurement, (5) accountability, 
(6) succession planning, (7) recruitment, (8) employee involvement, and 
(9) diversity training. 

Diversity in the Financial Services Industry At the Management Level 
Did Not Change Substantially: 

EEO-1 data indicate that overall diversity among officials and managers 
within the financial services industry did not change substantially 
from 1993 through 2004, but that changes by racial/ethnic group varied. 
The EEO-1 data also show that certain financial sectors, such as 
depositories, including commercial banks, are somewhat more diverse at 
the management level than others, including securities firms. 
Additionally, EEO-1 data do not show material differences in management-
level diversity based on the size of individual firms within the 
financial services industry. 

Overview of Management-Level Diversity: 

Figure 1 shows the representation of minorities and whites at the 
management level within the financial services industry in 1993, 1998, 
2000, and 2004 from EEO-1 data.[Footnote 10] Management-level 
representation by minorities increased from 11.1 percent to 15.5 
percent during the period, while representation by whites declined 
correspondingly from 88.9 percent to 84.5 percent. Management-level 
representation by white men declined from 52.2 percent to 47.2 percent 
during the period while the percentage of management positions held by 
white women was largely unchanged at slightly more than one-third. 

Figure 1: EEO-1 Data on Trends in Workforce Diversity in the Financial 
Services Industry at the Management Level (1993, 1998, 2000, and 2004): 

[See PDF for image] 

Source: GAO analysis of EEOC data. 

Note: Percentages may not always add to 100 due to rounding. 

[End of figure] 

Existing EEO-1 data may actually overstate representation levels for 
minorities and white women in the most senior-level positions because 
the "officials and managers" category includes lower-and mid-level 
management positions that may have higher representations of minorities 
and white women. According to an EEOC official we spoke with, examples 
for "officials and managers" would range from the Chief Executive 
Officer from a major investment bank to an Assistant Branch Manager of 
a small regional bank. A revised EEO-1 form for employers that becomes 
effective with the 2007 reporting year divides the category of 
"officials and managers" into two hierarchical sub-categories based on 
responsibility and influence within the organization: "executive/ 
senior level officials and managers" and "first/mid-level officials." 
According to a trade association that commented on the revised EEO-1 
form, collecting information about officials and managers in this 
manner will enable EEO-1 to more accurately report on the 
discriminatory artificial barriers (the "glass ceiling") that hinder 
the advancement of minorities and white women to more senior-level 
positions. 

Figure 2 provides EEO-1 data for individual minority groups and 
illustrates their trends in representation at the management level, 
which varied by group. African-American representation increased from 
5.6 percent in 1993 to 6.8 percent in 2000 but declined to 6.6 percent 
in 2004. Representation by Hispanics and Asians also increased, with 
both groups representing 4 percent or more of industry officers and 
managers by 2004. Representation by American Indians remained well 
under 1 percent of all management-level positions. 

Figure 2: EEO-1 Data on Trends in Workforce Diversity in the Financial 
Services Industry at the Management Level by Racial/Ethnic Group and 
Gender (1993, 1998, 2000, and 2004): 

[See PDF for image] 

Source: GAO analysis of EEOC data. 

Note: Percentages may not always add exactly due to rounding. 

[End of figure] 

Certain Financial Sectors Are Somewhat More Diverse Than Others, but 
Diversity Does Not Vary by Firm Size: 

EEO-1 data show that the depository and nondepository credit sectors, 
as well as the insurance sector, were somewhat more diverse in specific 
categories at the management level than the securities and holdings and 
trust sectors (see fig. 3). For example, in 2004, the percentage of 
management-level positions held by minorities ranged from a high of 
19.9 percent for nondepository credit institutions (e.g., mortgage 
bankers and brokers) to a low of 12.4 percent for holdings and trusts 
(e.g., investment companies). The share of positions held by white 
women varied from a high of 40.8 percent in the insurance sector to a 
low of 27.4 percent among securities firms. The percentage of white men 
in management-level positions ranged from a high of 57.5 percent in the 
securities sector to a low of 44.0 percent in both the depository 
(e.g., commercial banks) and nondepository credit sectors. Consistent 
with the EEOC data, a 2005 SIA study we reviewed found limited 
diversity among key positions in the securities sector.[Footnote 11] 

Figure 3: EEO-1 Data on Workforce Diversity in the Financial Services 
Industry at the Management Level by Sector (2004): 

[See PDF for image] 

Source: GAO analysis of EEOC data. 

Note: Percentages may not always add to 100 due to rounding. 

[End of figure] 

EEO-1 data also show that the representation of minorities and whites 
at the management level in financial services firms generally does not 
vary by firm size (see fig. 4). Specifically, we did not find a 
material difference in the diversity of those in management-level 
positions among firms with 100 to 249 employees, 250 to 999 employees, 
and more than 1,000 employees. There were some variations across 
financial sectors by size.[Footnote 12] However, we note that SIA's 
2005 study of securities firms did find variation in diversity by firm 
size for a variety of positions within the securities sector.[Footnote 
13] 

Figure 4: EEO-1 Data on Workforce Diversity in the Financial Services 
Industry at the Management Level by Firm Size (2004): 

[See PDF for image] 

Source: GAO analysis of EEOC data. 

Note: Percentages may not always add exactly due to rounding. 

[End of figure] 

Initiatives to Promote Workforce Diversity in the Financial Services 
Industry Face Challenges: 

Officials from financial services firms and industry trade associations 
we contacted stated that the rapid growth of minorities as a percentage 
of the overall U.S. population and increased global competition have 
convinced their organizations that workforce diversity is a critical 
business strategy. Financial firm officials we spoke with said that 
their top leadership was committed to implementing a variety of 
workforce diversity programs to help enable their organizations to take 
advantage of the full range of available talent to fill critical 
positions and to maintain their firms' competitive position. However, 
officials from financial services firms and trade associations also 
described the challenges they faced in implementing these initiatives, 
such as ongoing difficulties in recruiting and retaining minority 
candidates and in gaining commitment from employees to support 
diversity initiatives, especially at the middle management level. 

Financial Services Firms Have Implemented a Variety of Diversity 
Initiatives: 

Over the past decade, the financial services firms we contacted have 
implemented a variety of initiatives to increase workforce diversity, 
including programs designed to recruit and retain minority and women 
candidates to fill key positions. Some bank officials said that they 
had developed scholarship and internship programs to encourage minority 
high school and college students to consider careers in banking with 
the goal of increasing the diversity of future applicant pools. Some 
firms have established formal relationships with colleges and Masters 
of Business Administration (MBA) programs to recruit minority students 
from these institutions. Some firms and trade organizations have also 
developed partnerships with groups that represent minority 
professionals, such as the National Black MBA Association and the 
National Society of Hispanic MBAs, as well as with local communities to 
recruit candidates, using events such as conferences and career fairs. 
Officials from other firms said that the goal of partnerships was to 
build long-term relationships with professional associations and 
communities and to increase the visibility of financial services firms 
among potential employees. 

Officials from financial services firms also said that they had 
developed programs to foster the retention and professional growth of 
minority and women employees. Specifically, these firms have: 

* encouraged the establishment of employee networks. For example, a 
commercial bank official told us that, since 2003, the company had 
established 22 different employee networks that enabled employees from 
various backgrounds to meet each other, share ideas, and create 
informal mentoring opportunities. 

* established mentoring programs. For example, an official from another 
commercial bank told us that the company had a Web-based program that 
allowed employees of all backgrounds to connect with one another and to 
find potential mentors. 

* instituted diversity training programs. Officials from financial 
services firms said that these training programs increase employees' 
sensitivity to and awareness of workforce diversity issues and helped 
staff deal effectively with colleagues from different backgrounds. One 
commercial bank we contacted requires its managers to take a 3-to 5-day 
training course on dealing with a diverse workforce. The training 
stressed the concept of workforce diversity and provided a forum in 
which employees spoke about their differences through role-playing 
modules. The bank has also developed a diversity tool kit and 
certification program as part of the training. 

* established leadership and career development programs. For example, 
an official from an investment bank told us that the head of the firm 
would meet with every minority and woman senior executive to discuss 
his or her career development. For lower-level individuals, the 
investment bank official said that the organization had created a 
career development committee to serve as a forum for discussions on 
career advancement. 

Officials from some financial services firms we contacted as well as 
industry studies noted that that financial services firms' senior 
managers were involved in diversity initiatives. For example, SIA's 
2005 study on workforce diversity in the securities industry found that 
almost half of the 48 securities firms surveyed had full-time senior 
managers dedicated to diversity initiatives. According to a report from 
an executive membership organization, an investment bank had developed 
a program that involved lower-level employees from diverse backgrounds, 
along with their senior managers, to develop diversity initiatives. 
Moreover, officials from a few commercial banks that we interviewed 
said that the banks had established diversity "councils" of senior 
leaders to set the vision, strategy, and direction of diversity 
initiatives. The 2005 SIA study and a few of the firm officials we 
spoke with also suggested that some companies have instituted programs 
that link managers' compensation with progress made toward promoting 
workforce diversity. Officials from one investment bank said that 
managers of each business unit reported directly to the company's Chief 
Executive Officer who determined their bonuses in part based on the 
unit's progress in hiring, promoting, and retaining minority and women 
employees. 

According to some officials from financial services firms, their firms 
have also developed performance indicators to measure progress in 
achieving diversity goals. These indicators include workforce 
representation, turnover, promotion of minority and women employees, 
and internal employee satisfaction survey responses. An official from a 
commercial bank said that the company monitored the number of job 
openings, the number of minority and women candidates who applied for 
each position, the number of such candidates who interviewed for open 
positions, and the number hired. In addition, a few officials from 
financial services firms told us that they had developed additional 
indicators such as promotion rates for minorities and whites and 
compensation equity across ranks for minorities and whites. Officials 
from several financial services firms stated that measuring the results 
of diversity efforts over time was critical to the credibility of the 
initiatives and to justifying the investments in the resources such 
initiatives demanded. 

Several Financial Services Trade Organizations Have Promoted Workforce 
Diversity: 

Financial services trade organizations from the securities, commercial 
banking, and insurance sectors that we contacted have been involved in 
promoting workforce diversity. The following are some examples: 

* In 1996 SIA formed a "diversity committee" of senior-level executives 
from the securities industry to assist SIA's member firms in developing 
their diversity initiatives and in their efforts to market to diverse 
customers. This committee has begun a number of initiatives, such as 
developing diversity management tool kits, conducting industry 
demographic and diversity management research, and holding conferences. 
SIA's diversity tool kit provides step-by-step guidelines on 
establishing diversity initiatives, including identifying ways to 
recruit and retain diverse candidates, overcoming challenges, measuring 
the results of diversity initiatives, and creating strategies for 
transforming a firm's culture. In addition, since 1999 SIA has been 
conducting an industry-wide diversity survey every 2 years to help its 
members measure their progress toward increasing workforce diversity. 
The survey includes aggregated data that measure the number of minority 
and women employees in the securities industry at various job levels 
and a profile of securities industry activities designed to increase 
workforce diversity. In 2005, SIA held its first diversity and human 
resources conference, which was designed so that human resources and 
senior-level managers could share best practices and current strategies 
and trends in human resource management and diversity. 

* The American Bankers Association collaborated with the Department of 
Labor's Office of Federal Contract Compliance Programs in 1997 to 
identify key issues that banks should consider in recruiting and hiring 
employees in order to create fair and equal employment opportunities. 
The issues include managing the application process and selecting 
candidates in a way that ensures the equal and consistent treatment of 
all job applications. 

* The Independent Insurance Agents and Brokers of America (IIABA) 
established the IIABA Diversity Task Force in 2002 to promote diversity 
within the insurance agent community. The task force is charged with 
fostering a profitable independent agency force that reflects, 
represents, and capitalizes on the opportunities of the diverse U.S. 
population. Among its activities, the diversity task force is 
developing a database of minority insurance agents and minority-owned 
insurance agencies as a way to help insurance carriers seeking to 
expand their business with a diverse agent base and potentially reach 
out to urban areas and underserved markets. According to IIABA, the 
task force has just completed a tool kit for IIABA state associations, 
volunteer leadership, and staff. This step-by-step guide advises state 
associations on how to recruit and retain a diverse membership through 
their governance, products, service offerings, and association 
activities. In addition, IIABA participates in a program to educate 
high school and community college students on careers in insurance, 
financial services, and risk management and encourages students to 
pursue careers in the insurance industry. 

* The Mortgage Bankers Association (Association) has established plans 
and programs to increase the diversity of its own leadership, as well 
as to promote diversity within the Association's member firms in 2005. 
The Association plans to increase diversity within its leadership ranks 
by 30 percent by September 2007 and has asked member firms to recommend 
potential candidates. To help member firms expand the pool of qualified 
diverse employees in the real estate finance industry, the Association 
has instituted a scholarship program called "Path to Diversity," which 
awards between 20 and 30 scholarships per year to minority employees 
and interns from member firms. Recipients can take courses at 
CampusMBA, the Association's training center for real estate finance, 
in order to further their professional growth and development in the 
mortgage industry. 

Several Challenges May Have Affected the Success of Initiatives 
Designed to Increase Workforce Diversity in the Financial Services 
Industry: 

Although financial services firms and trade organizations we contacted 
have launched diversity initiatives, they cited a variety of challenges 
that may have limited their success. First, the officials said that the 
industry faces ongoing challenges in recruiting minority and women 
candidates even though firms may have established scholarship and 
internship programs and partnered with professional organizations. 
According to officials responsible for promoting workforce diversity 
from several firms, the industry lacks a critical mass of minority and 
women employees, especially at the senior levels, to serve as role 
models to attract other minorities to the industry. Officials from an 
investment bank and a commercial bank also told us that the supply (or 
"pipeline") of minority and women candidates in line for senior or 
management-level positions was limited in some geographic areas and 
that recruiting a diverse talent pool takes time and effort. Officials 
from an investment bank said that their firm typically required a high 
degree of specialization in finance for key positions. An official from 
another investment bank noted that minority candidates with these 
skills were very much in demand and usually receive multiple job 
offers. 

Available data on minorities enrolled in and graduated from MBA 
programs provide some support for the contention that there is a 
limited external pool that could feed the "pipeline" for some 
management-level positions within the financial services industry, as 
well as other industries. According to the Department of Labor, many 
top executives from all industries, including the financial services 
industry, have a bachelor's degree or higher in business 
administration. MBA degrees are also typically required for many 
management development programs, according to an official from a 
commercial bank and an official from a foundation that provides 
scholarships to minority MBA students. We obtained data from the 
Association to Advance Collegiate Schools of Business (AACSB) on the 
percentage of students enrolled in MBA degree programs in accredited 
AACSB schools in the United States from year 2000 to 2004.[Footnote 14] 
As shown in table 1, minorities accounted for 19 percent of all 
students enrolled in accredited MBA programs in 2000 and 23 percent in 
2004. African-American and Hispanic enrollment in MBA programs was 
generally stable during that period, and both groups accounted for 6 
and 5 percent of enrollment, respectively, in 2004. Asian 
representation increased from 9 percent in 2000 to 11 percent in 2004. 
Other data indicate that MBA degrees awarded may be lower than the MBA 
enrollment data reported by AACSB. For example, Graduate Management 
Admission Council® (GMAC®) data indicate that minorities in its survey 
sample accounted for 16 percent of MBA graduates in 2004 versus 23 
percent minority enrollment during the same year as reported by 
AACSB.[Footnote 15] Because financial services firms compete with one 
another, as well as with companies from other industries to recruit 
minority MBA graduates, their capacity to increase diversity at the 
management level may be limited. 

Table 1: AACSB Demographic Data of Students Reported Enrolled in MBA 
Degree Programs at AACSB Accredited Business Schools in the United 
States by Racial/Ethnic Group (2000-2004): 

Year: 2000; 
White: 81%; 
Minority: African-American: 5%; 
Minority: Hispanic: 5%; 
Minority: Asian: 9%; 
Minority: American Indian: a; 
Total minority: 19%. 

Year: 2001; 
White: 80; 
Minority: African-American: 6; 
Minority: Hispanic: 5; 
Minority: Asian: 10; 
Minority: American Indian: a; 
Total minority: 20. 

Year: 2002; 
White: 80; 
Minority: African-American: 5; 
Minority: Hispanic: 5; 
Minority: Asian: 10; 
Minority: American Indian: a; 
Total minority: 20. 

Year: 2003; 
White: 78; 
Minority: African-American: 6; 
Minority: Hispanic: 5; 
Minority: Asian: 11; 
Minority: American Indian: a; 
Total minority: 22. 

Year: 2004; 
White: 77%; 
Minority: African-American: 6%; 
Minority: Hispanic: 5%; 
Minority: Asian: 11%; 
Minority: American Indian: 1%; 
Total minority: 23%. 

Source: GAO analysis of AACSB data. 

Note: Percentages may not always add exactly due to rounding. 

[A] Less than 1 percent. 

[End of table] 

Other evidence suggests that the financial services industry may not be 
fully leveraging its "internal" pipeline of minority and women 
employees for management-level positions. As shown in figure 5, there 
are job categories within the financial services industry that 
generally have more overall workforce diversity than the "officials and 
managers" category, particularly among minorities. For example, 
minorities held 22 percent of professional positions as compared with 
15 percent of "officials and managers" positions in 2004. See appendix 
II for more information on the specific number of employees within 
other job categories, as well as more specific breakouts of various 
minority groups by sector. 

According to a recent EEOC report, which used 2003 EEO-1 data, the 
professional category represented a likely pipeline of internal 
candidates for management-level positions within the industry.[Footnote 
16] Compared with white males, the EEOC study found that the chances of 
minorities and women (white and minority combined) advancing from the 
professional category into management-level positions were low. The 
study also found that the chances of Asians (women and men) advancing 
into management-level positions from the professional category were 
particularly low. Although EEOC said there are limitations to its 
analysis, the agency suggests that the findings could be used as a 
preliminary screening device designed to detect potential disparities 
in management-level opportunities for minorities and women.[Footnote 
17] 

Figure 5: EEO-1 Data (Percentage) on Workforce Diversity in the 
Financial Services Industry by Position, Racial/Ethnic Group, and 
Gender (2004): 

[See PDF for image] 

Source: GAO analysis of EEOC data. 

Note: Percentages may not always add to 100 due to rounding. 

[End of figure] 

Following are descriptions of the job categories in EEO-1 data from 
EEOC: (1) "officials and managers" occupations requiring administrative 
and management personnel who set broad policies, exercise overall 
responsibility for execution of these policies, and direct individual 
departments or special phases of a firm's operations; (2) 
"professionals" occupations requiring either college graduation or 
experience of such kind and amount as to provide a comparable 
background; (3) "technicians" occupations requiring a combination of 
basic scientific knowledge and manual skill that can be obtained 
through 2 years of post high school education; (4) "sales workers" 
occupations engaging wholly or primarily in direct selling; (5) "office 
and clerical" includes all clerical-type work regardless of level of 
difficulty, where the activities are predominantly nonmanual; and (6) 
the category "other" includes craft workers, operatives, laborers, and 
service workers. 

Many officials from financial services firms, industry trade groups, 
and associations that represent minority professionals agreed that 
retaining minority and women employees represented one of the biggest 
challenges to promoting workforce diversity. The officials said that 
one reason minority and women employees may leave their positions after 
a short period is that the industry, as described previously, lacks a 
critical mass of minority women and men, particularly in senior-level 
positions, to serve as role models. Without a critical mass, the 
officials said that minority or women employees may lack the personal 
connections and access to informal networks that are often necessary to 
navigate an organization's culture and advance their careers. For 
example, an official from a commercial bank we contacted said he 
learned from staff interviews that African-Americans believed that they 
were not considered for promotion as often as others partly because 
they were excluded from informal employee networks. 

While firms may have instituted programs to involve managers in 
diversity initiatives, some industry officials said that achieving 
commitment, or "buy-in," can still pose challenges. Other officials 
said that achieving the commitment of middle managers is particularly 
important because these managers are often responsible for implementing 
key aspects of the diversity initiatives, as well as explaining them to 
their staffs. However, the officials said that middle managers may be 
focused on other aspects of their responsibilities, such as meeting 
financial performance targets, rather than the importance of 
implementing the organization's diversity initiatives. Additionally, 
the officials said that implementing diversity initiatives represents a 
considerable cultural and organizational change for many middle 
managers and employees at all levels. An official from an investment 
bank told us that the bank has been reaching out to middle managers who 
oversee minority and woman employees by, for example, instituting an 
"inclusive manager program." According to the official, the program 
helps managers examine subtle inequities and different managerial and 
working styles that may affect their relationships with minority and 
women employees. 

Minority-and Women-Owned Businesses Often Face Difficulties in 
Obtaining Capital, but Some Financial Services Firms Have Developed 
Strategies to Assist Them: 

Studies and reports, as well as interviews we conducted, suggest that 
minority-and women-owned businesses have faced challenges obtaining 
capital (primarily bank credit) in conventional financial markets for 
several business reasons, such as the concentration of these businesses 
in the service sector and relative lack of a credit history.[Footnote 
18] Other studies suggest that lenders may discriminate, particularly 
against minority-owned businesses. However, assessing lending 
discrimination against minority-owned businesses may be complicated by 
limited data availability. Available research also suggests that 
factors, including business characteristics, introduce challenges for 
both minority-and women-owned businesses in obtaining access to equity 
capital.[Footnote 19] However, some financial institutions, primarily 
commercial banks, have recently developed strategies to market their 
loan products to minority-and women-owned businesses or are offering 
technical assistance to them. 

Research Suggests That Business Characteristics May Affect Minority-and 
Women-Owned Businesses' Access to Commercial Loans: 

Reports issued by the MBDA, SBA, and academic researchers, as well as 
interviews we conducted with commercial banks, minority-owned banks, 
and trade groups representing minority-and women-owned businesses 
suggest that minority-and women-owned businesses may face challenges in 
obtaining commercial bank credit.[Footnote 20] The reports and 
interviews typically cite several business characteristics shared by 
both minority-owned firms and, in most cases, women-owned firms that 
may compromise their ability to obtain bank credit as follows: 

* First, recent MBDA reports found that many minority-owned businesses 
in the United States are concentrated in retail and service industries, 
which have relatively low average annual capital expenditures for 
equipment.[Footnote 21] Low capital expenditures are an attractive 
feature for start-up businesses, but with limited assets to pledge as 
collateral against loans, these businesses often have difficulty 
obtaining financing. According to the U.S. Census Bureau's 2002 Survey 
of Business Owners, approximately 61 percent of minority-owned 
businesses and approximately 55 percent of women-owned firms operate in 
the service sectors as compared to about 52 percent of all U.S. 
firms.[Footnote 22] 

* Second, the Census Bureau's 2002 Survey of Business Owners indicated 
that many minority-and women-owned businesses were start-ups or 
relatively new and, therefore, might not have a history of sound 
financial performance to present when applying for credit. Some 
officials from a private research organization and a trade group 
official we contacted said that banks are reluctant to lend to start-up 
businesses because of the costs involved in assessing the prospects for 
such businesses and in monitoring their performance over time. 

* Third, the relatively small size and lack of technical experience of 
some minority-owned businesses may affect their ability to obtain bank 
credit.[Footnote 23] For example, an MDBA report stated that minority 
businesses often need extensive mentoring and technical assistance such 
as help developing business plans in addition to financing.[Footnote 
24] 

Other Studies Suggest That Discrimination May Limit Minority-Owned 
Businesses' Ability to Obtain Commercial Loans: 

Several other studies suggest that discrimination may also be a reason 
that minority-owned businesses face challenges obtaining commercial 
loans. For example, a 2005 SBA report on the small business economy 
summarized previous studies by researchers reporting on lending 
discrimination.[Footnote 25] These previous studies found that minority-
owned businesses had a higher probability of having their loans denied 
and would likely pay higher interest rates than white- owned 
businesses, even after controlling for differences in creditworthiness 
and other factors.[Footnote 26] For example, a study found that given 
comparable loan applications--by African-American and Hispanic-owned 
firms and white-owned firms--the applications by the African-American 
and Hispanic-owned firms were more likely to be denied.[Footnote 27] 
Another study found that minorities had higher denial rates even after 
controlling for personal net worth and homeownership.[Footnote 28] The 
SBA report concludes that lending discrimination is likely to 
discourage would-be minority entrepreneurs and reduce the longevity of 
minority-owned businesses. 

Another 2005 report issued by SBA also found that minority-owned 
businesses face some restrictions in access to credit.[Footnote 29] 
This study investigated possible restricted access to credit for 
minority-and women-owned businesses by focusing on two types of credit-
-"relationship loans" (lines of credit) and "transaction loans" 
(commercial mortgages, equipment loans, and other loans) from 
commercial banks and nonbanks, such as finance companies.[Footnote 30] 
The researchers found that minority business owners were more likely to 
have transaction loans from nonbanks and less likely to have bank loans 
of any kind. The researchers also found that African-American and 
Hispanic business owners have a greater probability of having either 
type of loan denied than white male owners.[Footnote 31] The 
researchers did not find evidence suggesting that women or Asian 
business owners faced loan denial probabilities different from those of 
firms led by white, male-owned firms. 

Although studies have found potential lender discrimination against 
minority-owned businesses, assessing such discrimination may be 
complicated by limited data availability. The Federal Reserve's 
Regulation B, which implements the Equal Credit Opportunity Act, 
prohibits financial institutions from requiring information on race and 
gender from applicants for nonmortgage credit products.[Footnote 32] 
Although the regulation was implemented to prevent the information from 
being used to discriminate against underserved groups, some federal 
financial regulators have stated that removing the prohibition would 
allow them to better monitor and enforce laws prohibiting 
discrimination in lending. We note that under the Home Mortgage 
Disclosure Act (HMDA), lenders are required to collect and report data 
on racial and gender characteristics of applicants for mortgage loans. 
Researchers have used HMDA data to assess potential mortgage lending 
discrimination by financial institutions. In contrast, the studies we 
reviewed on lending discrimination against minority and small business 
tend to rely on surveys of small businesses by the Federal Reserve or 
the Census rather than on lending data obtained directly from financial 
institutions. 

Many Minority-and Women-Owned Businesses May Also Face Difficulties 
Raising Equity Capital: 

According to available research, many minority-and women-owned 
businesses face challenges in raising equity capital--such as, from 
venture capital firms. For example, one study estimated that only $2 
billion of the $95 billion available in the private equity market in 
1999 was managed by companies that focused on supplying capital to 
entrepreneurs from traditionally underserved markets, such as minority- 
owned businesses.[Footnote 33] Moreover, according to a study by a 
private research organization, in 2003 only 4 percent of women-owned 
businesses with $1 million or more in revenue had been funded through 
private equity capital as compared with 11 percent of male-owned 
businesses with revenues of $1 million or more.[Footnote 34] 

According to studies and reports by private research organizations, 
some of the same types of business characteristics that may affect the 
ability of many minority-and women-owned businesses to obtain bank 
credit also limit their capacity to raise equity capital.[Footnote 35] 
For example, industry reports and industry representatives that we 
contacted state that venture capitalists place a high priority on the 
management and technical skills companies; whereas some minority-owned 
businesses may lack a proven track record of such expertise. 

Although venture capital firms may not have traditionally invested in 
minority-owned businesses, a recent study suggests that firms that do 
focus on such entities can earn rates of return comparable to those 
earned on mainstream private equity investments.[Footnote 36] This 
study, funded by a private foundation, found that venture capital funds 
that specialize in investing in minority-owned businesses were 
relatively profitable compared with a private equity performance index. 
According to the study, the venture capital funds that specialized in 
minority-owned businesses invested in a more diverse portfolio of 
businesses than the typical venture capital fund, which typically 
focuses on high-tech companies. The study found that investing in broad 
portfolios helped mitigate the losses associated with the downturn in 
the high-tech sector for firms that focused on minority-owned 
businesses. 

Some Commercial Banks Have Developed Programs for Minority-and Women- 
Owned Businesses: 

While minority-and women-owned businesses may have traditionally faced 
challenges in obtaining capital, as noted earlier, Census data indicate 
that such businesses are forming rapidly. Officials from some financial 
institutions we contacted, primarily large commercial banks, told us 
that they are reaching out to minority-and women-owned businesses. 

Some commercial banks are marketing their financial products to 
minority-and women-owned businesses by, for example, printing financial 
services brochures in various languages and assigning senior executives 
with diverse backgrounds to serve as the spokespersons for the 
institutions efforts to reach out to targeted groups (e.g., a bank may 
designate an Asian executive as the point person for Asian 
communities). However, officials at a bank and a trade organization 
told us that the loan products marketed to minority-and women-owned 
businesses did not differ from those marketed to other businesses and 
that underwriting standards had not changed. 

Bank officials also said that their companies had established 
partnerships with trade and community organizations for minorities and 
women to reach out to their businesses. Partnering allows the banks to 
locate minority-and women-owned businesses and gather information about 
specific groups of business owners. Bank officials said that such 
partnerships had been an effective means of increasing their business 
with these target groups. 

Finally, officials from some banks said that they educate potential 
business clients by providing technical assistance through financial 
workshops and seminars on various issues such as developing business 
plans and obtaining commercial bank loans. Other bank officials said 
that their staffs work with individual minority-or women-owned 
businesses to provide technical assistance. 

Officials from banks with strategies to market to minority-and women- 
owned businesses said that they faced some challenges in implementing 
such programs. Many of the bank officials told us that it was time- 
consuming to train their staff to reach out to minority-and women-owned 
businesses and provide technical assistance to these potential business 
customers. In addition, an official from a bank said that Regulation B 
limited the bank's ability to measure the success of its outreach 
efforts. The official said that because of Regulation B the bank could 
only estimate the success of its efforts using estimates of the number 
of loans it made to minority-and women-owned businesses. 

Agency Comments and Our Evaluation: 

We requested comments on a draft of this report from the Chair, U.S. 
Equal Employment Opportunity Commission (EEOC). We received technical 
comments from EEOC and incorporated their comments into this report as 
appropriate. 

We also requested comments on selected excerpts of a draft of this 
report from 12 industry trade associations, federal agencies, and 
organizations that examine access to capital issues. We received 
technical comments from 4 of the 12 associations, agencies, and 
organizations and incorporated their comments into this report as 
appropriate. The remaining eight either informed us that they had "no 
comments" or did not respond to our request. 

As agreed with your offices, unless you publicly announce the contents 
of this report earlier, we plan no further distribution until 30 days 
from the report date. At that time, we will send copies of this report 
to the Senate Committee on Banking, Housing, and Urban Affairs. We also 
will send copies to the Chair of EEOC, the Administrator of SBA, and 
the Secretary of the Department of Commerce, among others, and will 
make copies available to others upon request. In addition, the report 
will be available at no charge on the GAO Web site at [Hyperlink, 
http://www.gao.gov]. 

If you or your staff have any questions about this report, please 
contact me at 202-512-8678 or at williamso@gao.gov. Contact points for 
our Offices of Congressional Relations and Public Affairs may be found 
on the last page of this report. GAO staff that made major 
contributions to this report are listed in appendix IV. 

Signed by: 

Orice M. Williams: 
Director, Financial Markets and Community Investment: 

[End of section] 

Appendix I: Objectives, Scope, and Methodology: 

The objectives of our report were to discuss (1) what the available 
data show regarding diversity at the management level in the financial 
services industry, from 1993 through 2004; (2) the types of initiatives 
that the financial services industry and related organizations have 
taken to promote workforce diversity and the challenges involved; and 
(3) the ability of minority and women-owned businesses to obtain access 
to capital in financial markets and initiatives financial institutions 
have recently taken to make capital available to these businesses. 

To address objective one, we requested Employer Information Reports 
(EEO-1) data from the Equal Employment Opportunities Commission (EEOC) 
for the financial services industry. The EEO-1 data, which is reported 
annually generally by firms with 100 or more employees, provides 
information on race/ethnicity and gender for various occupations, 
within various industries, including financial services.[Footnote 37] 
We used the racial/ethnic groups specified by EEOC; whites, not of 
Hispanic origin (whites); Asians or Pacific Islanders (Asians); Blacks, 
not of Hispanic origin (African-Americans); Hispanics or Latinos 
(Hispanics); and American Indians or Alaskan Natives (American Indians) 
for our analysis. The EEO-1 occupations are officials and managers, 
professional, technicians, sales workers, clerical workers, and others. 
The other category includes laborers, craft workers, operatives, and 
service workers. We defined the financial services industry to include 
the following five sectors: depository credit institutions (including 
commercial banks), holdings and trusts (including investment 
companies), non-depository credit institutions (such as mortgage 
bankers), securities firms, and insurance (carriers and agents). We 
also requested and analyzed EEO-1 data for the accounting industry. 

We chose to use the EEO-1 database because it is was designed to 
provide information on representation by a variety of groups within a 
range of occupations and industries, covered many employers, and had 
been collected in a standardized fashion for many years. Although the 
EEO-1 data generally do not capture information from small businesses 
with less than 100 employees, we believe, due to their annual mandatory 
reporting, they allow us to characterize the financial services 
industry of firms with 100 or more employees. We also corroborated the 
EEO-1 data with other available studies, particularly a 2005 study by 
the Securities Industry Association on diversity within the securities 
sector.[Footnote 38] We did consider other sources of data besides EEO- 
1, but chose not to use them for a variety of reasons including their 
being more limited or less current.[Footnote 39] 

We requested and analyzed the EEO-1 data, focusing on the "officials 
and managers" category, for the years 1993, 1998, 2000, and 2004 for 
financial services firms having 100 or more employees. We compared that 
data from the selected years to determine how the composition of 
management-level staff had changed since 1993. We also analyzed the 
data based on the number of employees in the firm or firm size. The 
four firm size categories we used were 100 or more employees, 100-249 
employees, 250-999 employees, and 1,000 or more employees. We also 
requested EEO-1 data for the accounting industry for 2004, and 
therefore did not perform a trend analysis. The scope of our work did 
not include developing appropriate benchmarks to assess the extent of 
workforce diversity within the financial services industry. 

EEOC collects EEO-1 data from companies in a manner that allowed us to 
specify our data request and analysis by financial sector (e.g., 
commercial banking or securities). EEOC assigns each firm a code based 
on its primary activity (referred to as the North American Industry 
Classification System [NAICS] or the Standard Industrial Classification 
[SIC]). For example, a commercial bank will have a specific code 
denoting commercial banking, whereas a securities firm would have its 
own securities code. In addition, EEOC assigns codes to companies and 
their subsidiaries based on their primary line of business. For 
example, a commercial bank with an insurance subsidiary would have a 
separate code for that subsidiary. By requesting the EEO-1 data by the 
relevant codes, we were able to separate the different financial 
services businesses within a firm and then aggregate the data by 
sector. Although the NAICS replaced the SIC in 1997, EEOC staff are to 
assign both codes to each firm that existed prior to 2002 to ensure 
consistency.[Footnote 40] 

We conducted a limited analysis to assess the reliability of the EEO-1 
data. To do so, we interviewed EEOC officials regarding how the data 
are collected and verified as well as to identify potential data 
limitations. EEOC has conducted a series of data reliability analyses 
for EEO-1 data to verify the consistency of the data over time. For 
example, EEOC reviewed the 2003 EEO-1 data for its report on diversity 
in the financial services industry.[Footnote 41] As part of this 
review, EEOC deleted 81 of the 13,000 establishments because the data 
for the deleted establishments were not consistent year to year. The 
EEOC staff do not verify the EEO-1 data, which are self-reported by 
firms, but they do review the trends of the data submitted. For 
example, EEOC staff look for major fluctuations in job classifications 
within an industry. On the basis of this analysis, we concluded that 
the EEO-1 data are sufficiently reliable for our purposes. 

To address objective two, we interviewed a range of financial services 
firms, including commercial banks and securities firms. We also 
interviewed representatives from a large accounting firm to discuss 
workforce diversity in the accounting industry. We chose these firms 
for a variety of reasons including whether they have ever received 
public recognition of their diversity programs or on the basis of 
recommendations from industry officials. We also interviewed 
representatives from industry trade organizations such as the American 
Bankers Association, the Securities Industry Association, the 
Independent Insurance Agents and Brokers of America, the American 
Institute of Certified Public Accountants, and Catalyst, which is a 
private research firm. We reviewed the trade organizations' available 
studies and reports to document the state of diversity within the 
different sectors of the financial services industry. In addition, we 
reviewed publicly available data on firms' programs by searching their 
Web sites. We also interviewed representatives of federal agencies such 
as the Bureau of Labor Statistics of the Department of Labor, the 
Minority Business Development Agency of the Department of Commerce, the 
Small Business Administration, and federal bank regulators. 
Additionally, we collected and analyzed demographic data on enrollment 
in accredited Masters of Business Administration (MBA) programs from 
Association to Advance Collegiate Schools of Business and MBA 
graduation data from the Graduate Management Admissions Council. 

To address objective three, we reviewed 20 available studies and 
reports from federal agencies, such as the Small Business 
Administration and the Minority Business Development Agency, and 
academic studies on the ability of minority-and women-owned businesses 
to access credit. We also interviewed officials from banks, investment 
firms and private equity/venture capital firms to discuss their 
initiatives to provide capital to minority-and women-owned 
businesses.[Footnote 42] Moreover, we interviewed officials from 
organizations that represent minority-and women-owned businesses such 
as the U.S. Hispanic Chamber of Commerce, the Pan Asian American 
Chamber of Commerce, National Black Chamber of Commerce, and the 
National Association of Women Business Owners. In addition, we 
interviewed officials from organizations that examine access to capital 
issues, such as the Milken Institute and the Kauffman Foundation. 

We conducted our work from July 2005 to May 2006 in Washington, D.C., 
and New York City and in accordance with generally accepted government 
auditing standards. 

[End of section] 

Appendix II: Overall Statistics on Workforce Diversity in the Financial 
Services Industry: 

This appendix provides Employer Information Report (EEO-1) data on the 
number of employees within the financial services industry by position 
(see fig. 6) and more specific breakouts of the various racial/ethnic 
groups by position (see fig. 7). 

Figure 6: EEO-1 Data (Number of Employees) on Workforce Diversity in 
the Financial Services Industry by Position, Racial/Ethnic Group, and 
Gender (2004): 

[See PDF for image] 

Source: GAO analysis of EEOC data. 

[End of figure] 

Figure 7: EEO-1 Data on Workforce Diversity in the Financial Services 
Industry by Position and Racial/Ethnic Group (2004): 

[See PDF for image] 

Source: GAO analysis of EEOC data. 

Note: Percentages may not always add exactly due to rounding. 

[End of section] 

Appendix III: Diversity in Key Positions in the Accounting Industry: 

This appendix discusses workforce diversity of management-level 
positions in the accounting industry for 2004 as depicted by Employer 
Information Report (EEO-1) data. Additionally, it describes the 
findings of a report by the American Institute of Certified Public 
Accountants (AICPA) that assessed diversity within the accounting 
industry in a broad range of positions. Finally, the appendix 
summarizes efforts by AICPA and a large accounting firm to increase 
diversity in key positions. 

Minorities Account for 14 Percent of Management-Level Positions in the 
Accounting Industry: 

According to the 2004 EEO-1 data, minorities held 13.5 percent (5.9 
percent for minority women and 7.7 percent for minority men) of all 
"officials and managers" positions, white women held 32.4 percent while 
white men held 54.1 percent of all official and manager positions in 
the accounting industry (see fig. 8).[Footnote 43] Contrary to the 
financial services sector where diversity among firms generally did not 
vary by firm size, EEO-1 data also show that larger accounting firms 
are in general more diverse than smaller firms. For example, minorities 
accounted for 17.8 percent of all officials and managers in accounting 
firms with 1,000 or more employees. For firms with 100 to 249 
employees, minority representation for officials and managers accounted 
for 10.1 percent. 

Figure 8: EEO-1 Data on Workforce Diversity in the Accounting Industry 
at the Management Level by Firm Size, Gender, and Racial/Ethnic Group, 
and Gender (2004): 

[See PDF for image] 

Source: GAO analysis of EEOC data. 

Note: Percentages may not always add to 100 due to rounding. 

[End of figure] 

Within the minority category in the accounting industry, EEO-1 2004 
data show that Asians held 7.3 percent of all management-level 
positions, which is more than the representation of African-Americans 
(3.0 percent) and Hispanics (3.0 percent) combined (see fig. 9). 

Figure 9: EEO-1 Data on Workforce Diversity in the Accounting Industry 
at the Management Level by Firm Size and Racial/Ethnic Group (2004): 

[See PDF for image] 

Source: GAO analysis of EEOC data. 

Note: Percentages may not always add exactly due to rounding. 

[End of figure] 

AICPA Study Identified a Lack of Diversity in the Accounting Industry: 

AICPA's 2005 demographic study showed that, in 2004, minorities 
represented 10 percent of all professional staff, 8 percent of all 
certified public accountants (CPA), and 5 percent of all partners/ 
owners employed by CPA firms.[Footnote 44] Correspondingly, the 
representation of whites among professional staff, CPAs, and the 
partner/owner level at accounting firms were all at 89 percent or above 
(see table 2)[Footnote 45]. In addition, consistent to the 2004 EEO-1 
data for the accounting industry, the AICPA study found that the 
largest CPA firms were, in general, the most ethnically and racially 
diverse (see table 3).[Footnote 46] 

Table 2: Workforce Representation at the Professional, CPA and Partner/ 
Owner Levels by Racial/Ethnic Group (2005): 

Gender and racial/ethnic group: Minority; 
Professional staff: 10%; 
CPA: 8%; 
Partner/owner: 5%. 

Gender and racial/ethnic group: African-American; 
Professional staff: 2; 
CPA: 1; 
Partner/owner: 1. 

Gender and racial/ethnic group: Hispanic; 
Professional staff: 3; 
CPA: 3; 
Partner/owner: 2. 

Gender and racial/ethnic group: Asian/Pacific Islander; 
Professional staff: 5; 
CPA: 4; 
Partner/owner: 2. 

Gender and racial/ethnic group: American Indian; 
Professional staff: a; 
CPA: a; 
Partner/owner: a. 

Gender and racial/ethnic group: White; 
Professional staff: 89; 
CPA: 92; 
Partner/owner: 95. 

Gender and racial/ethnic group: Other; 
Professional staff: 1%; 
CPA: a; 
Partner/owner: a. 

Source: GAO analysis of AICPA data. 

Note: Percentages may not always add to 100 due to rounding. AICPA data 
are from The Supply of Accounting Graduates and the Demand for Public 
Accounting Recruits (2005). 

[A] Less than 1 percent. 

[End of table] 

Table 3: Workforce Representation at the Professional Level by Racial/ 
Ethnic Group and Firm Size: 

Gender and racial/ethnic group: Minority; 
More than 200 employees: 18%; 
50-200 employees: 8%; 
10-49 employees: 8%; 
Fewer than 10 employees: 10%; 
All CPA firms: 10%. 

Gender and racial/ethnic group: * African-American; 
More than 200 employees: 3; 
50-200 employees: 2; 
10-49 employees: 2; 
Fewer than 10 employees: 2; 
All CPA firms: 2. 

Gender and racial/ethnic group: * Hispanic; 
More than 200 employees: 4; 
50-200 employees: 2; 
10-49 employees: 3; 
Fewer than 10 employees: 4; 
All CPA firms: 3. 

Gender and racial/ethnic group: * Asian/Pacific Islander; 
More than 200 employees: 11; 
50-200 employees: 4; 
10-49 employees: 3; 
Fewer than 10 employees: 4; 
All CPA firms: 5. 

Gender and racial/ethnic group: * American Indian; 
More than 200 employees: [A]; 
50-200 employees: [A]; 
10-49 employees: [A]; 
Fewer than 10 employees: [A]; 
All CPA firms: [A]. 

Gender and racial/ethnic group: * Other; 
More than 200 employees: [A]; 
50-200 employees: 1; 
10-49 employees: [A]; 
Fewer than 10 employees: 1; 
All CPA firms: 1. 

Gender and racial/ethnic group: White; 
More than 200 employees: 82; 
50- 200 employees: 91; 
10-49 employees: 92; 
Fewer than 10 employees: 89; 
All CPA firms: 89. 

Gender and racial/ethnic group: Other; 
More than 200 employees: [A]; 
50-200 employees: 1%; 
10-49 employees: [A]; 
Fewer than 10 employees: 1%; 
All CPA firms: 1%.  

Source: GAO analysis of AICPA data. 

Note: Percentages may not always add to 100 due to rounding. AICPA data 
is from The Supply of Accounting Graduates and the Demand for Public 
Accounting Recruits (2005). 

[A] Less than 1 percent. 

[End of table]

According to officials from AICPA and a large accounting firm we spoke 
with, one reason for the lack of diversity in key positions in the 
industry is that relatively few racial/ethnic minorities take the CPA 
exam and thus relatively few minorities are CPAs. According to the 2004 
congressional testimony of an accounting professor, passing the CPA 
exam is critical for achieving senior management-level positions in the 
accounting industry.[Footnote 47] 

Efforts to Enhance Accounting Industry Diversity: 

According to officials we spoke with from AICPA and an accounting firm, 
similar to the financial services industry, the accounting industry had 
also initiated programs to promote the diversity of its workforce. An 
official from the large accounting firm we spoke with told us that his 
firm's top management is committed to workforce diversity and has 
implemented a minority leadership development program, which ensures 
that minorities and women become eligible for and are recommended for 
progressively more senior positions. As part of the commitment to 
workforce diversity, the firm also has a mentoring program, which pairs 
current partners with senior management-level minority and women staff 
to help them achieve partnership status. In addition, the firm also 
requires middle-and high-level managers to undergo diversity training 
to encourage an open dialogue around racial-ethnic and gender issues. 
An AICPA official said the organization formed a minority initiatives 
committee to promote workforce diversity with a number of initiatives 
to increase the number of minority accounting degree holders, such as 
scholarships for minority accounting students and accounting faculty 
development programs. AICPA also formed partnerships with several 
national minority accounting organizations such as the National 
Association of Black Accountants and the Association of Latino 
Professionals in Finance and Accounting to develop new programs to 
foster diversity within the workplace and the community. 

[End of section] 

Appendix IV: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Orice M. Williams (202) 512-8678: 

Staff Acknowledgments: 

In addition to the individual named above, Wesley M. Phillips, 
Assistant Director; Emily Chalmers; William Chatlos; Kimberly Cutright; 
Simin Ho; Marc Molino; Robert Pollard; LaSonya Roberts; and Bethany 
Widick made key contributions to this report. 

FOOTNOTES 

[1] Diversity In the Financial Services Industry and Access to Capital 
for Minority Owned Businesses: Challenges and Opportunities, Hearing 
Before the Subcommittee On Oversight and Investigations of the House 
Committee on Financial Services, 108th Cong. (2004). 

[2] GAO, Diversity Management: Expert-Identified Leading Practices and 
Agency Examples, GAO-05-90 (Washington, D.C.: Jan. 14, 2005). 

[3] Generally, private employers with fewer than 100 employees and 
certain federal contractors who employ fewer than 50 employees are not 
required to submit EEO-1 reports to EEOC. Although the EEO-1 data do 
not include these smaller firms, the data do allow for the 
characterization of workforce diversity for firms with 100 or more 
employees due to EEOC's annual reporting requirement. 

[4] U.S. Department of Commerce, Minority Business Development Agency, 
"Expanding Financing Opportunities for Minority Businesses" (2004). 

[5] The Equal Credit Opportunity Act (ECOA), 15 U.S.C. §§ 1691-1691f, 
makes it unlawful for a creditor to discriminate against an applicant 
in any aspect of a credit transaction on the basis of the applicant's 
national origin, religion, sex, color, race, age (provided the 
applicant has the capacity to contract). Racial and gender information 
can be collected in two very limited circumstances, neither of which 
results in publicly available data regarding the race/ethnicity or 
gender of the bank's nonmortgage credit applicants. 

[6] See U.S. Census Bureau, National Population Projections (January 
2001). 

[7] U.S. Census Bureau, American Community Survey (2004). 

[8] U.S. Census Bureau, Survey of Business Owners: Hispanic-Owned 
Firms: 2002 (March 2006). 

[9] GAO-05-90. 

[10] Our review did not attempt to define appropriate benchmarks for 
assessing the extent of management level diversity within the financial 
services industry and, instead, focused on changes in representation 
over time. While some analyses compare minority or gender 
representation in job categories or industries with general population 
statistics, such studies have limitations. For example, such analyses 
do not account for the educational attainment, age, or experience 
requirements, among many others, that may be necessary for particular 
positions, including management-level positions within the financial 
services industry. Further, we did not identify a feasible means to 
comprehensively adjust available population or labor force data based 
on the qualification requirements (e.g., education and experience) for 
management-level positions in the financial services industry due to 
the large number of such positions and their related qualification 
requirements. Such adjustments would have to be made to determine the 
relevant civilian labor force against which to assess the management- 
level diversity with the financial services industry. However, the 
report does discuss some potential management requirements, such as 
holding a Masters of Business Administration degree. 

[11] See Securities Industry Association, 2005 Report on Diversity 
Strategy, Development and Demographics: Executive Summary (November 
2005). The study also found that total representation of minorities and 
women increased between 2001 and 2005. 

[12] For example, for the holdings and trust sector, the share of 
positions held by white women are higher in firms with more than 1,000 
employees than smaller firms. 

[13] SIA (2005). Unlike our analysis, the study of 48 securities firms 
included positions such as assistants, analysts and associates, mid- 
level positions, senior-level positions, retail brokers, and 
institutional sales staff. 

[14] AACSB, the world's largest accreditation association for business 
schools, conducts an annual survey called "Business School 
Questionnaire" of all its accredited schools. Participation in this 
survey is voluntary. For the year 2004, the most recent year, 92.7 
percent of the accredited schools responded to the survey. 

[15] GMAC® has been conducting its "Global MBA Graduate Survey" since 
2000. To obtain the demographic data for 2004, GMAC® mailed out 18,504 
surveys to graduating MBA students with a response rate of 34 percent. 

[16] See EEOC, Diversity in the Finance Industry (April 2006). In the 
study, EEOC analyzed the 2003 EEO-1 data by an analytical technique 
referred to as odds-ratio analysis to assess the potential chances of 
minorities and women becoming managers as compared with white men. The 
analysis assumes the pipeline for "officials and managers" job category 
generally consists of professionals. However, the study also included 
"sales workers" as a potential pool of managers in some analyses 
because in the securities sector, stock brokers might become managers, 
according to EEOC. 

[17] For example, EEOC said that the EEO-1 data do not show how many 
employees are promoted from one job group to another over time, and so 
promotion data are not available. Rather, the EEO-1 survey collects 
information on the number of employees in various job categories at a 
given point in time. In the absence of promotion data, EEOC views the 
analysis as a screening tool to identify potential disparities. 

[18] A minority-owned business is defined by Census as a business in 
which a minority owns 51 percent or more of the stock or equity in the 
business. A woman-owned business is defined by Census as a business in 
which a woman owns 51 percent or more of the stock or equity in the 
business. 

[19] Equity capital can be raised from several sources including 
venture capital funds, private stock sales, or issuing stock in public 
financial markets. 

[20] It should be noted that all small businesses may face challenges 
in obtaining credit due to the risks and costs involved in such 
lending. See Board of Governors of the Federal Reserve System, Report 
to the Congress on the Availability of Credit to Small Businesses 
(September 2002). 

[21] U.S. Department of Commerce, Minority Business Development Agency, 
Expanding Financing Opportunities for Minority Businesses (2004). U.S. 
Department of Commerce, Minority Business Development Agency, Keys to 
Minority Entrepreneurial Success, Capital, Education, and Technology 
(September 2002). U.S. Department of Commerce, Minority Business 
Development Agency, State of Minority Business Enterprises: A 
Preliminary Overview of the 2002 Survey of Business Owners (September 
2005). 

[22] U.S. Department of Commerce, Minority Business Development Agency, 
State of Minority Business Enterprises: A Preliminary Overview of the 
2002 Survey of Business Owners (September 2005). U. S. Census Bureau, 
"2002 Survey of Business Owners, Women-Owned Firms" (Jan. 26, 2006). 

[23] U.S. Department of Commerce, Minority Business Development Agency, 
Keys to Minority Entrepreneurial Success, Capital, Education, and 
Technology (September 2002). U.S. Small Business Administration, Office 
of Advocacy, Financing Patterns of Small Firms: Findings from the 1998 
Survey of Small Business Finance (September 2003). 

[24] U.S. Department of Commerce, Minority Business Development Agency, 
Expanding Financing Opportunities for Minority Businesses (2004). 

[25] U.S. Small Business Administration, The Small Business Economy 
(Washington, D.C.: 2005). 

[26] Blanchard, Lloyd, John Yinger, and Bo Zhao (2005), "Do Credit 
Market Barriers Exist for Minority and Women Entrepreneurs?" Syracuse 
University, Center for Policy Research Working Paper No. 74. 
Blanchflower, David G, P. Levine, and D. Zimmerman (1998). 
"Discrimination in the Small Business Credit Market", National Bureau 
of Economic Research. Cavalluzzo, Ken and John Wolken (2002). "Small 
Business Loan Turndowns, Personal Wealth and Discrimination. Georgetown 
University." Coleman, Susan (2002). "Characteristics and Borrowing 
Behavior of Small, Women-Owned Firms: Evidence from the 1998 National 
Survey of Small Business Finances." University of Hartford. 

[27] Blanchard, Lloyd, John Yinger, and Bo Zhao (2005), "Do Credit 
Market Barriers Exist for Minority and Women Entrepreneurs?" Syracuse 
University, Center for Policy Research Working Paper No. 74. 

[28] Cavalluzzo, Ken and John Wolken (2002). "Small Business Loan 
Turndowns, Personal Wealth and Discrimination." Georgetown University. 

[29] U.S. Small Business Administration (2005). Availability of 
Financing to Small Firms Using the Survey of Small Business Finances. A 
report for the U.S. Small Business Administration, Washington, D.C. 

[30] Relationship loans are defined as a commitment by the lender to a 
pre-set maximum amount of credit over a certain time period. 
Transaction loans are injections of cash made after loan approval and 
used to acquire tangible assets that can serve as loan collateral. 

[31] See Small Business Administration (2005). 

[32] The Equal Credit Opportunity Act (ECOA), 15 U.S.C. §§ 1691-1691f. 

[33] Milken Institute, The Minority Business Challenge: Democratizing 
Capital for Emerging Domestic Markets (September 2000). 

[34] Center for Women's Business Research, Access to Capital: Where 
We've Been, Where We're Going (March 2005). 

[35] Center for Women's Business Research, Access to Capital: Where 
We've Been, Where We're Going (March 2005). Brush, C. G; Carter, N; 
Gatewood, E; Greene P. G; and Hart, M. M. Gatekeepers of Venture 
Growth: A Diana Project Report on the Role and Participation of Women 
in the Venture Capital Industry (Oct. 20, 2001). 

[36] Bates, Timothy and William Bradford (2003). "Minorities and 
Venture Capital, A New Wave in American Business." Kauffman Foundation. 

[37] Federal contractors with 50 or more employees are also required to 
report EEO-1 data. However, we did not include these firms in our 
analysis. See 29 C.F.R. Part 1602, Subpart B. 

[38] See Securities Industry Association, 2005 Report on Diversity 
Strategy, Development and Demographics: Executive Summary (November 
2005). 

[39] We considered using data from Census' Current Population Survey 
(CPS), Public Use Microdata Sample (PUMS), Special EEO Tabulation File, 
and the American Community Survey (ACS). The CPS is reported by 
individuals and includes smaller employers, and the PUMS is reported by 
households; however due to small sample sizes, reliable estimates to 
specific minority groups could not be derived. The Special EEO 
Tabulation File's most recent data are based on the 2000 census and 
thus were more dated than other data sources. The ACS only has data 
since 2002 and therefore did not allow us to show shifts over a large 
span of time. 

[40] EEOC implemented the NAICS in 2002. 

[41] Equal Employment Opportunity Commission, Diversity in the Finance 
Industry (April 2006). 

[42] Banks included national, community, minority-owned banks, and one 
women-owned bank. We also selected the firms based on our interviews 
with organizations that represent minority-and women-owned businesses. 
We were seeking firms that may have initiatives to assist minority-and 
women-owned businesses in obtaining capital. 

[43] Percentages may not always add exactly due to rounding. 

[44] AICPA, The Supply of Accounting Graduates And the Demand for 
Public Accounting Recruits - 2005 For Academic Year 2003-2004 (2005). 
AICPA surveyed 5,821 certified public accounting firms, and 1,423 
responded. 

[45] AICPA's study did not report representation levels of whites and 
minorities by gender. 

[46] The largest firms are defined as those with more than 200 members. 

[47] Diversity in the Financial Services Industry and Access to Capital 
for Minority Owned Businesses: Challenges and Opportunities, Hearing 
before the Subcommittee On Oversight and Investigations of the House 
Committee on Financial Services, 108th Cong (2004). 

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