CFPB Director Richard Cordray went before the investigations and oversight panel of the House Financial Services Committee to address allegations of discrimination and retaliation and the CFPB’s management culture Thursday.
This was the third such hearing on allegations of employment discrimination and retaliation at the CFPB before the subcommittee, and the first attended by Cordray. The first was held April 2 and the second held May 21.
Before a recess to allow floor votes around 4 p.m. ET, there was the usual partisan jockeying for points, preemptive defensive declarations, wholesale score-boarding and a full-court press of leading questions from both sides.
Evidence shows, and the CFPB has conceded, that white male employees were more likely to receive positive performance ratings than minority, women and older employees. The CFPB was aware of these problems as early as September 30, 2013, when a Deloitte Consulting report showed there were disparities in employee evaluations.
The hearings Wednesday were prompted by a story broken in American Banker in March that 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 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.”
Since then it has come to light that the CFPB management was aware of the allegations in January 2014.
Cordray said that despite assertions by some members, the CFPB took action quickly.
“Having recognized these issues, we took decisive and comprehensive actions to address them. We self-initiated a more detailed analysis that ultimately showed ratings disparities across a wide range of employee characteristics, which you have seen in the form of the Snapshot report that we released earlier this year,” Cordray informed the committee in written remarks. “We also put on the table in our union negotiations whether to discard the system, which we agreed to do after bargaining over it. For the next two fiscal years, we will be moving to a new, two-level performance review system, and we have agreed to a joint working group with our union to design a new system to use after that.
“We also announced that we would adjust prior performance-related compensation for the two years during which our employees may have been adversely affected by the flaws in the prior system. By self-correcting and self-remediating disparities in our performance ratings, we are holding ourselves to the same standards of fairness that we expect from the financial industries we oversee,” he said.
Cordray said the CFPB needs to do more to promote diversity in its own culture.
“Although the Bureau has had good diversity numbers around hiring and contracting, we need to focus more consciously on how to improve our culture, so that diversity and inclusion are more deeply ingrained in our everyday work life. To that end, I have elevated our Office of Minority and Women Inclusion to work directly out of my office and tasked the head of OMWI, Stuart Ishimaru, with conducting dozens of Bureau-wide listening sessions to hear directly from our employees about their experience with equality and fairness,” Cordray said.
Republicans on the committee said that it would take a lot more than holding “listening” sessions to correct the problems, and that there has been no holding accountable any senior executives at CFPB.
Rep. Sean Duffy, R-Wisconsin, a frequent critic, said he was highly disappointed in Cordray's handling of the allegations, saying Cordray was not forthcoming with honest answers and that no one in senior management — the very people accused of creating a discriminatory culture — have been held accountable.
Democrats on the committee said that Republicans want to use the history of discrmination at the CFPB as a tool to pull the CFPB's teeth.