The House Oversight and Investigations Subcommittee held the fourth in a series of hearings probing allegations of discrimination and retaliation at the Consumer Financial Protection Bureau (CFPB). The July 30 hearing marked the first time the subcommittee heard directly from CFPB Director Richard Cordray on the issue.
Cordray told subcommittee members that he takes seriously concerns about the bureau’s work environment. He also acknowledged that, in the race to build the new agency from scratch, the bureau “did not get everything right” for its employees. He said, however, that the bureau has since taken steps to address workplace issues.
Cordray said that when the CFPB found that many categories of employees were treated unequally under its performance rating system, the bureau scrapped the system and now plans to work with its union to develop a new one.
The bureau has worked to ensure that “diversity and inclusion are more deeply ingrained” in its culture, Cordray said. For instance, he noted that the CFPB’s Office of Minority and Women Inclusion has been elevated to work directly out of his office. The bureau has also conducted dozens of agency-wide listening sessions to hear directly from employees about their experience with equality and fairness.
“I am committed to ensuring that all bureau employees are treated fairly and that they receive the respect and dignity they deserve,” Cordray said.
Republicans weren’t impressed. They argued that the bureau hasn’t done enough to hold its managers accountable. They questioned the agency’s policy of paying the legal expenses of some of its managers. They also expressed doubts regarding whether top bureau officials take the subcommittee’s oversight seriously.
The subcommittee’s leaders also announced that the Government Accountability Office has agreed to look into claims regarding the CFPB’s workplace culture.
Some lawmakers discussed specific claims that were raised during previous hearings.
In June, Ali Naraghi, an examiner in the Southeast Region of the CFPB’s Division of Supervision, Enforcement and Fair Lending, testified before the subcommittee that “favoritism and cronyism runs rampant at the bureau.” Naraghi said he witnessed instances of gross mismanagement in the Southeast Region and suffered retaliation when he voiced his concerns to his superiors.
Naraghi claimed that, on at least some occasions, the CFPB engaged in “results-oriented examinations” where bureau headquarters seemed determined to find violations at a supervised firm even if none were initially discovered. He also said lawyers from the CFPB’s enforcement division occasionally mentioned plans to bring an enforcement action against a company before exam work was completed or violations were discovered.
Cordray defended the CFPB’s supervision program, contending that those claims are neither accurate nor justified.
“Our supervision program has been looked at very carefully three times now,” Cordray said. “It’s been looked at by the inspector general, it’s been looked at by the U.S. Chamber of Commerce … [and] it’s been looked at by the clearinghouse of the large banks, all of whom determined that our supervision program is being run professionally and capably.“
Cordray also indicated that he would welcome Congressional scrutiny of the supervision program should lawmakers decide to probe the claims further.
View Cordray’s prepared testimony
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