Politics & Money

Sound and fury at CFPB racial discrimination hearing

CFPB execs skip hearing on abuse at agency

There was a certain level of disingenuousness that went beyond the usual political posturing at the House Oversight & Investigation Subcommittee investigating discrimination and retaliation at the Consumer Financial Protection Bureau Wednesday morning.

It was a morning of allegations and jockeying for position, with one victim telling the tale, one investigator making her report, and not one of the CFPB’s senior executives present.

On the table were 115 employee grievances, 85 informal complaints, and the testimony of two women who experienced the CFPB management response to the allegations first hand.

In a hearing with partisan heat just simmering, Democrats opened by demanding a standard of proof of the allegations that they’d never demand in any other similar investigation.

Meanwhile, Republicans – who want to keep pressure on the CFPB on as many fronts as possible – seemed to be embracing the vague, controversial legal theory of disparate impact, which says even if there is no discrimination, if the outcome isn’t racially balanced, then there is discrimination anyway.

Having U.S. Rep. Al Green, D-Texas, saying that he wants to make headway and not headlines in anything related to racial discrimination was, in fact, one of the ironies in a morning of ironies.

The hearing Wednesday came after a story in the American Banker detailed a pattern of personnel problems including evidence that “the CFPB's own managers have shown distinctly different patterns in how they rate employees of different races.”

According to “confidential agency data” reviewed by the American Banker, “CFPB managers show a pattern of ranking white employees distinctly better than minorities in performance reviews used to grant raises and issue bonuses. Overall, whites were twice as likely in 2013 to receive the agency’s top grade than were African-American or Hispanic employees.”

Chairman Patrick McHenry, R-N.C., said his office has received an "outpouring" of complaints from CFPB employees since the allegations came to light.

Democrats on the subcommittee repeatedly called for broader hearings about discrimination in all regulatory agencies, even as Green and ranking Democrat U.S. Rep. Maxine Waters, D-Calif., had called on this hearing to be canceled.

The CFPB declined to send anyone to the hearing despite invitations.

"I do not see this as the end, I see this as the beginning,” Green said. “We cannot focus on one regulator."

But Republicans on the committee said that the allegations from witnesses Wednesday were part of a broader problem at the CFPB.

Angela Martin, who was hired directly by CFPB director Richard Cordray, said she was a victim of discrimination and employee retaliation at the hands of the CFPB’s leadership, and that many of the staff at the CFPb have come to her with similar complaints, but they are afraid to report problems for fear that they will suffer the same retaliation she has.

"When you look at me, you must see dozens of employees in my stead," Martin said.

The second witness was Misty Raucci, former Investigator for the Defense Investigators Group. She was tasked by the CFPB to look into allegations of discrimination, and when she concluded that Martin was indeed the victim of retaliation, the CFPB attacked her and her report as unreliable and based on anonymous sources.

Raucci said that when she completed her report – commissioned by the CFPB – that same CFPB leadership tried to discredit it.

Martin cited a complete disregard for employee rights, a corrosive management and working environment, and the “Bureau’s perpetual failure to uphold its own EEO policy.”

She also talked of the pay disparity among similarly experienced and educated CFPB employees based on gender and race, with the gap reaching as high as $60,000 for some positions.

Democrats seemed less concerned with Martin’s allegations than on protecting the reputation of the CFPB.

“You would not like your testimony to be used to weaken the CFPB?” Green asked, several times.

House Financial Services Committee Chairman Jeb Hensarling, R-Texas, broke his usual rule of not speaking at subcommittee hearings. He said the problems mentioned by the witnesses “Appears to be the tip of the iceberg.”

Waters’ tone changed dramatically toward the end of the questioning of the witnesses. She said she effusive, saying she was overjoyed that the committee was hearing about allegations of racism in a hearing she tried to have canceled

“We welcome your new tone – remarkably different from tone of your letter,” McHenry said to Waters.

Waters and Green issued a formal, written request after the hearing for a new hearing with senior management the CFPB, to allow members a more appropriate forum to evaluate and discuss the CFPB’s personnel policies and practices.

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