Democratic Rep. Maxine Waters: 'We are encouraging the CEOs to understand that diversity is a positive thing'

The first African-American Financial Services chair makes diversity a priority
The first African-American Financial Services chair makes diversity a priority

CNBC's John Harwood sat down with Rep. Maxine Waters, D-Calif., new chairwoman of the House Financial Service Committee, to discuss diversity and closing the gap on income inequality.

John Harwood: When you were born there was one African-American in Congress, just a couple of women. Now you're the chair of this committee. How does that make you feel?

Maxine Waters: A lot of people talk about it as if this is so unbelievable. How could this have happened? How did you do this? Well, I was taught no matter what the circumstances were, that America was a place where everybody could achieve and become what they want to become if they work hard, if they're dedicated to it. I believe that, and that's what I've done.

John Harwood: The United States' economy is the richest in the world. We've made some significant gains — the black middle class is a lot bigger than it was. But we still have tremendous income inequality and wealth inequality. What does that tell you about what's worked, and hasn't worked, about the American economy and the American financial system?

Maxine Waters: People of color, or poor people, have not had a combination of resources and wherewithal to really deal with a system that was not organized to improve their quality of life or invest in them. Unless we work at it and understand how it happened, we wouldn't be able to change it. No matter what the system does, we're going to keep trying and we're going to keep inspiring and motivating young people to make this democracy what it should be.

John Harwood: Now, you've established, as I understand it, a diversity and inclusion subcommittee on this committee. What do you hope to achieve with that?

Maxine Waters: I hope that we can gather the information, do the research, and help people to understand how big the gap is and what can be done in order to close that gap. And I think, looking in the financial services community, we can put together the kind of information that help people to understand that women and minorities don't really play in this arena, and that we have to do more to close that gap.

John Harwood: You're talking about executive hiring?

Maxine Waters: I'm talking about diversity in every aspect of our society, but certainly in the financial services. If you go to college and you study economics, or you get involved in a job that brings you to a point where you should be seriously considered for management or other high level jobs, it should be done in a fair way. Your application should not go in the wastebasket because of your color.

John Harwood: Do you think that financial services companies should be required to have more diverse boards than they have now?

Maxine Waters: What we are doing now is we are encouraging the CEOs to understand that diversity is a positive thing. For all the studies that have been done, it shows to the degree that a business or a company is diverse, it does better. In many cases it's more profitable, they get more experience, they get more intelligence, and it works well for the company. We're helping people to learn that and to understand that.

John Harwood: So you're about encouraging, not requiring?

Maxine Waters: I'm not about trying to changing any laws, necessarily. But I'm about using whatever leverage and whatever power I have to help make it happen.

John Harwood: You have the most diverse 2020 presidential field in the Democratic Party's history. What do you think about that, and who do you like?

Maxine Waters: I'm not surprised, as we emerge and we become more advanced in understanding our possibility, and understanding our influence, that we should be competing at every level — in every business, everywhere. That's what's beginning to happen.

John Harwood: Do you think it's important for the Democratic Party to have a nominee who reflects that diversity?

Maxine Waters: I think Republicans should learn how to have diversity in the Republican Party. I think the Republicans should understand that they are trailing way behind in getting to the point where they have an appreciation for other races and other cultures.

John Harwood: You haven't picked a candidate?

Maxine Waters: Oh no, it's too early. As a matter of fact, I wouldn't tell you now if I had.