House Democrats are proposing that all banks and credit unions receive a new "diversity and inclusion" rating in an unprecedented step that would fundamentally alter federal regulators' critical "CAMELS" rating system that currently employs a series of metrics that solely assess the financial health of banking institutions.
The "Promoting Diversity and Inclusion in Banking Act of 2019" is draft legislation supported by Democrats on the House Subcommittee on Diversity and Inclusion, which was created by House Financial Services Committee chairwoman Maxine Waters Rep. Maxine Waters, D-Calif.
The CAMELS system, known as the Uniform Financial Institutions Rating System, assesses banks' (c)apital adequacy; (a)ssets; (m)anagement capability; (e)arnings; (l)iquidity; and (s)ensitivity to market risk, each on a scale of 1 to 5.
Last June, the panel met in a hearing entitled, "Diverse Asset Managers: Challenges, Solutions and Opportunities for Inclusion," and released a draft of a bill called the ‘‘Diverse Asset Managers Act.”
A draft of the legislation stated that "conscious efforts to facilitate diverse and inclusive asset management firm selection are required to overcome obstacles facing diverse individual-owned and controlled asset management firms."