Tags: CFPB | Cordray | discrimination | study

House Financial Services Subcommittee Revisits CFPB Discrimination

By    |   Thursday, 29 May 2014 08:08 AM

The House Financial Services Committee's Subcommittee on Oversight and Investigations, chaired by Rep. Patrick McHenry, R-N.C., held a hearing May 21 titled "Allegations of Discrimination and Retaliation within the Consumer Financial Protection Bureau, Part Two."

The first hearing, held on April 2, featured Angela Martin, a whistleblower who has charged the agency with discrimination and retaliation against her.

In the most recent hearing, witnesses were two CFPB staffers appearing pursuant to subpoena, Liza Strong, lead of employee relations, and Benjamin Konop, an enforcement attorney who also serves as executive vice president of the CFPB chapter of the National Treasury Employees Union, which represents the employees of the CFPB.

More than most Congressional proceedings, this series of hearings represents the morality play genre of political theater. The establishment of the CFPB under the Dodd-Frank Act over the objections of Republicans to take over the consumer protection duties long neglected by the established so-called "prudential" financial regulators, followed by victory in a long battle to get Rich Cordray confirmed as the sole boss at CFPB with a generous, if not unlimited budget, created heaven on earth for liberal reformers.

Soon there was trouble in paradise, as reports surfaced, first, of discord within the leadership, seemingly resolved by former Deputy Director Raj Date leaving, but retaining a consultancy, followed by a March expose by the American Banker of a culture of discrimination and retaliation among employees who charged in more than a hundred complaints that white and Asian employees were getting preferential treatment to African-American and Hispanic employees in performance reviews and in compensation based on those reviews.

How could this happen within an organization populated almost exclusively by idealistic liberal Democrats? There aren't even any Republicans on the scene to blame for this one.

In his opening remarks, McHenry suggested that the CFPB has finally reworked the offending performance review system based on findings of a study on diversity and inclusion by Deloitte Consulting, delivered last September, which the agency tried to suppress but that documented charges of discrimination. McHenry charged that progress has only been made in response to the American Banker article and the Deloitte study.

Democrats came to the defense of the agency, with Rep. Maxine Waters, D-Calif., pronouncing herself "impressed" with Cordray's actions and Rep. Keith Ellison, D-Minn., charging that the purpose of the hearing was to give Republicans an opportunity to accuse the agency of being hypocritical for bringing enforcement actions for "disparate impact" against financial institutions while harboring discrimination in dealing with its own employees.

In the financial realm, this administration, which was supposed to be the most transparent and ethical ever, seems to have established a pattern of appointing politicians to sensitive regulatory posts. With Cordray, a former Ohio attorney general, an able lawyer who appears eager to court bankers for a possible future race for statewide office, the CFPB may hold the record for the fastest capture by the regulated industry.

This was followed by the appointment of former Rep. Mel Watt, D-N.C., to head the Federal Housing Finance Agency. Watt is also brilliant and able, but he has already taken steps that indicate support for retaining Fannie Mae and Freddie Mac and stifling so-called reform.

Democrats appear to be looking for ways to cut their losses from this scandal. First, it looks like they are settling with the union and entering expensive settlements with aggrieved employees. Maybe once this is done, and after the election, Cordray will be offered a face-saving promotion to another administration post.

(Archived video and the committee memorandum can be found here.)

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Robert-Feinberg
The House Financial Services Committee's Subcommittee on Oversight and Investigations, chaired by Rep. Patrick McHenry, R-N.C., held a hearing May 21 titled "Allegations of Discrimination and Retaliation within the Consumer Financial Protection Bureau, Part Two."
CFPB, Cordray, discrimination, study
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2014-08-29
Thursday, 29 May 2014 08:08 AM
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