Wall Street's racial challenge

Banks and wealth management firms have a racial problem. Several, actually.

Many financial institutions made big, public promises following the 2020 killing of George Floyd in Minneapolis to increase the diversity of their workforces and equitability of their lending practices. Morgan Stanley, for example, pledged to increase the number of its Black and Hispanic managing directors, executive directors and vice presidents in the U.S. — at 3% and 5%, respectively, in 2021 — by 50%. That year, the bank reported that only 32 Hispanic persons out of 1,057 total senior employees, and 34 Black persons out of 1,057, had those titles. With wealth management an area that banks and brokerages are going all in on, there's a lot of room for new hires.

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At the same time, big banks are fighting an effort by the Consumer Financial Protection Bureau, which guards against consumer lending abuses, to promulgate measures to protect against discrimination, including against low-income and minority borrowers. Banks’ most powerful trade groups, including the U.S. Chamber of Commerce, the American Bankers Association and the Consumer Bankers Association, sued the agency last September in a Texas federal court over its effort.

Meanwhile, banks and brokerages have been unable to avoid a wave of lawsuits brought by former employees alleging racial discrimination. Those cases typically end in confidential settlements — the likely outcome of a lawsuit brought by two Black financial advisors who accused their employer Merrill Lynch but recently dropped the case.?

Read more: Dismissal of Merrill discrimination lawsuit highlights industry's mixed record

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