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From Banking and Finance Law Daily, March 10, 2014

Financial Services Committee says CFPB “troubled agency”

By Katalina M. Bianco, J.D.

The House Financial Services Committee has updated its blog with a post by committee staff members that claims the Consumer Financial Protection Bureau is a “troubled agency that has lost credibility.” The committee’s post comes on the heels of an American Banker article on bureau employee charges of discriminatory practices.

According to the article, CFPB managers “show a pattern” of discrimination in the ranking of employees, with white employees ranked “distinctly better” than minorities in performance reviews. “Overall, whites were twice as likely in 2013 to receive the agency's top grade than were African-American or Hispanic employees, the data shows,” the article said. The most concrete data relates to 2013.

Further, the article notes that “morale is poor and management has been accused in several cases of favoring Caucasian men and of creating a hostile work environment.” These statements, say American Banker, are based on interviews “with a dozen current and former staffers across six departments, all of whom requested anonymity over concerns about retaliation.”

CFPB spokesman Sam Gilford said the agency is still analyzing the performance evaluation data and indicated that the data is preliminary and could change "depending on the outcome of pending reviews and appeals." Gilford said the agency voluntarily collected performance evaluation data and hired an outside firm to assess it further.

Hensarling investigation. Financial Services Committee chair Jeb Hensarling (R-Texas) and two other GOP lawmakers are “probing” the bureau to determine employee treatment, according to the post.

“The lawmakers seized on an article by American Banker that revealed data showing that the agency’s white employees had a greater likelihood of receiving the highest rating in performance evaluations—which determine salary increases and bonuses—than minorities,” the committee posted.

National Review Online. The National Review Online is quoted in the post from an article entitled Do as We Say, not as We Do. “The CFPB likes to use the ‘disparate impact’ approach in its regulation of banks, but the American Banker has obtained data showing that the Bureau’s own employment practices might not fare very well under this approach,” the article claims. “The point is not that the CFPB is discriminating; the point is that the numbers approach is one that ought to be used very cautiously.”

Wasting millions on office renovations. The post charges the bureau with overspending on office renovations, citing a March 7 article in the Washington Examiner that notes “Controversy has dogged the CFPB for more than a year for nearly tripling the initial $55 million cost estimate for renovations to the building that will serve as the bureau's permanent headquarters.”

The article states that the Federal Reserve Board also is questioning the cost of the renovation.

Closed-door meetings. Quoting from a February article in the Washington Examiner, the committee charges the bureau with closed-door meetings. “Even after a Mississippi businessman last year was bounced from what should have been an open meeting of the Consumer Financial Protection Bureau, the agency again is making itself closed to the public,” the article claims. “On Wednesday and Thursday, CFPB Director Richard Cordray and other top bureau officials will meet behind closed doors with a group of radical advisers who are having undue influence over financial regulatory policy. Both the public and the press again are barred from covering the private discussions.”

The post notes a write-up in The Hill on the February House vote for a reconstruction of the bureau. Members voted 232-182 to pass the Consumer Financial Protection and Soundness Improvement Act, which would reform the CFPB. The GOP bill would take the CFPB out of the Federal Reserve System, subject it to the regular appropriations process, and change its leadership to a five-member board with staggered terms. The bill also would rename the bureau as the Financial Product Safety Commission, and would make it easier for the government's Financial Stability Oversight Council to overturn its regulatory proposals.

Companies: American Banker; National Review Online; The Hill; Washington Examiner.

MainStory: TopStory CFPB

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