Democrats, Republicans Vow to Continue Probe into CFPB Employment Practices

WASHINGTON — Lawmakers from both sides of the political aisle reached a rare accord Wednesday during a House Financial Services subcommittee hearing, pledging to further investigate allegations of retaliation and discrimination among employees of the Consumer Financial Protection Bureau.

In the days immediately preceding the hearing, Democrats had called on the Republican committee leadership to cancel it, saying what was meant to be a broad discussion prompted by an American Banker article had instead become about a single case.

By the end of the hearing, however, Rep. Maxine Waters, the top Democrat on the House Financial Services Committee, said the discussion had been productive and raised important issues that warranted further examination.

Initially the hearing turned into "one person, one hearing," Waters told Rep. Patrick McHenry, chairman of the House oversight and investigations subcommittee. "But since it's turned out to be what it is, I agree with you that it should be held. I like what we have here today … and [those testifying] just opened up a conversation in a way we've never had before."

The hearing featured Angela Martin, a senior enforcement attorney at the CFPB, and an independent investigator who was called in to examine her allegations of discrimination and retaliation. Both witnesses said the CFPB has a systemic problem of "hostility" by management after employees file complaints.

But McHenry told Waters the hearing "is not simply about Angela Martin."

"It's the Angela Martins within these agencies, whether there's one more or dozens or hundreds more," he said. "It is important we have that oversight."

The CFPB declined to send witnesses in response to the allegations, saying it would interfere with the integrity of the internal grievance process.

Instead, CFPB Director Richard Cordray issued a statement: "I take seriously the concerns raised at today's hearing and deeply apologize to any member of the CFPB staff who feels that they have not been heard or treated fairly.

"I welcome the opportunity to appear before Congress to discuss these issues fully," Cordray said.

That appears to be where lawmakers are headed next. Democrats urged committee leaders to hold a full panel hearing featuring senior CFPB leaders to discuss broad concerns about the agency's Equal Employment Opportunity process and allegations of discrimination. Moreover, Democrats are seeking to probe possible discrimination at all the federal banking regulators.

"I do not see this as the end, I see this as the beginning," said Rep. Al Green, D-Texas, the ranking member of the House oversight subcommittee. "I believe we are at Genesis and I think Revelations are yet to come. But to get to revelations, we cannot focus solely on one regulator.

"We have to allow revelations to go through the other regulators as well. It's important that we require the empirical evidence necessary to ascertain whether or not this type of behavior that we are investigating today exists in other agencies as well."

Nine Democrats, including Waters and Green, sent letters last week to the inspector generals of all the federal financial regulators as well as the U.S. Treasury Department requesting an investigation of their employment policies and practices with regard to women and minorities.

The hearing originally stemmed from documents obtained and reported by American Banker on March 6 that showed racial disparities among how employees were rated. The story also discussed the more than 100 official grievances filed in the past several months, largely over allegations of pay inequity and unfair treatment. (The CFPB has since said it was changing the performance evaluation process.)

But the hearing largely revolved around Martin's case as a symbol for larger issues within the CFPB. The panel also heard additional testimony from Misty Raucci, a former director of the Defense Investigators Group, who looked into the case on behalf of the CFPB.

Raucci's report, provided to the CFPB in December, strongly backed Martin's allegations that she had been retaliated against by agency managers. The CFPB has said the report is biased and unfair since it relies in part on claims by anonymous sources.

Such a claim is ironic, Martin said, because the agency itself relies on anonymized data for employee evaluations and other actions.

Raucci said Wednesday that she was initially supposed to only collect two to five statements about Martin's case, but that it quickly spiraled into a six-month investigation as she "became a veritable hotline for employees at CFPB, who called to discuss their own maltreatment at the bureau." She said many of the complaints focused on a particular agency division.

"I found that the general environment in Consumer Response is one of exclusion, retaliation, discrimination, nepotism, demoralization, devaluation, and other offensive working conditions which constitute a toxic workplace for many of its employees," Raucci said in her written statement. "The corrosive environment of the CFPB workplace was engendered by the bureau's perpetual failure to uphold its own EEO policies."

A spokesman for the CFPB, Samuel Gilford, rejected Raucci's findings.

"We do not believe that this report is credible or valid," Gilford said in an emailed statement. "It is based upon unsworn statements of sometimes anonymous witnesses, the veracity and credibility of which cannot be tested. The investigator also failed to provide subjects an opportunity to address or respond to the witnesses and all of their allegations."

Martin said that she also has become a champion for other employees who are unwilling to come forward for fear of retaliation. She repeatedly said that lawmakers should not look solely at the details of her case, but at the "dozens" of other employees who are scared to speak out.

"The time that it takes and the emotional toll on all these employees when someone can simply say ‘no, it ends here,' is unacceptable," Martin said. "My biggest goal is the restoration of EEO process and the due process itself. I'm telling you stories about consumer response because that's where some of the stories lie. But this is a bureau [wide] systemic problem and the EEO process itself is unhealthy and needs to be fixed."

Overall, lawmakers on both sides of the aisle appeared disturbed by Martin's testimony, including Democrats normally sympathetic to the CFPB. Most went out of the way to praise her for coming forward.

Martin, who is white, said she was speaking for many African-Americans and other minorities who had spoken to her about their cases. She claimed that many managers at the CFPB were "racist" and made inappropriate remarks. She also alleged that one division of the CFPB, which was dominated by African-Americans but managed by white employees, had become known internally as "the plantation."

Lawmakers were also alarmed by the sheer length of time it took to deal with Martin's case, which started in late 2012 and is still ongoing. House Financial Services Committee Chairman Jeb Hensarling also asked Martin about direct contact between Cordray and her about the case. She said he called her on Aug. 7 of last year and asked her to tell her attorneys to "back down" so they could strike a deal.

"In a two-minute conversation he told me to tell my attorneys to back down because he was trying to secure me a position in [the division of] enforcement," Martin said. "My reporting structure was the last thing to be settled and I settled it the next morning and everything was fine and I was coming back to work."

But that turned out not to be the end of the case.

"We actually signed the settlement agreement on August 14. But what I did not know was on August 8, after I thought it was settled, Director Cordray and somebody else gave that position to somebody else," she said. "That is what the fight is about now currently with the bureau that I don't have a position."

Hensarling forcefully responded by saying "we will fight not to let you and the other employees down."

"It is not my custom to speak at subcommittee hearings, but today is clearly an exception. As most members, I have been moved by what I've heard," he said. "As chairman of this committee, if this was merely restricted to Ms. Martin's story, as compelling as it is, I would not have allowed this hearing to go forward. But instead, regrettably, shamefully, this appears to be the tip of the iceberg."