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From Banking and Finance Law Daily, August 1, 2013

House Committee seek information on CFPB’s “revolving door”

By John M. Pachkowski, J.D.

House Financial Services Chairman Jeb Henserling (R-Texas) and House Oversight and Government Reform Committee Chairman Darrell Issa (R-Calif) have sent a letter to Consumer Financial Protection Bureau (CFPB) Director Richard Cordray expressing their concerns that senior employees have left CFPB in order to profit from the very rules they helped create. The letter was also signed by Financial Institutions and Consumer Credit Subcommittee Chairman Shelley Moore Capito (R-WVa), Oversight and Investigations Subcommittee Chairman Patrick McHenry (R-NC), and Economic Growth, Job Creation & Regulatory Affairs Subcommittee Chairman Jim Jordan (R-Ohio).

The House members stated, “Simply put, it appears that former CFPB employees are now offering financial products in a market sector created by the very rules they were in a position to influence while working in senior leadership positions at the CFPB.” They cite former CFPB Deputy Director Raj Date’s departure shortly after the bureau issued its final rule on qualified mortgages as an example. Specifically, the legislators noted, “Two months later, Date incorporated an advisory and investment firm focused on “those borrowers who do not meet the standards for ‘qualified mortgages’ as set by the CFPB.”

The letter continues, “This conduct raises serious questions about the integrity of the CFPB’s rulemaking process and the conduct of some of its most senior former officials. We are deeply concerned that this close relationship between the CFPB and its former officials ultimately could harm consumers.”

Finally, the letter’s authors expressed concern that, “Although the CFPB is now two years old, it remains ‘something of a mystery to many market participants as it ramps up operations.’ This lack of transparency has apparently incentivized [Raj] Date and other CFPB alumni to create a cottage industry unique to the Bureau’s regulatory agenda.”

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