Racial and gender discrimination is widespread within the Consumer Financial Protection Bureau, the first new federal agency President Barack Obama created, according to a blistering report released Monday by the investigative arm of Congress.
Twenty-five percent of black, Asian and female employees of the bureau told the General Accountability Office (GAO) in a survey that they “they had been discriminated against at the CFPB.”
A quarter of the black employees and 20 percent of Hispanic employees told the GAO that racial “differences” are not respected or valued by the bureau’s top officials.
House Financial Services Committee Chairman Rep. Jeb Hensarling told The Daily Caller News Foundation Monday that he considered the discriminatory practices “inexcusable” and criticized CFPB Director Richard Cordray’s “half-hearted attempts” to deal with it.
“For at least three years, Mr. Cordray has been presented time and again with evidence that CFPB managers discriminate and retaliate against his employees,” the Texas Republican told TheDCNF. “Why haven’t heads rolled? Instead of trying to sweep this offensive behavior under the rug, why hasn’t Richard Cordray called someone on the carpet? How can employees expect this to stop if no one in management is going to be held accountable?”
Now five years old, CFPB was intended as a model for government when Obama joined with one of his top appointees, Elizabeth Warren, in designing and proposing the bureau in 2010. Warren later became the progressive Democratic senator from Massachusetts. The bureau was created under the Dodd-Frank Act, and among its purposes was to root out discrimination in the financial marketplace.
Numerous women and employees with minority ethnic backgrounds have accused CFPB managers of serious racial and gender discrimination since its inception. Management reprisals against employees who file complaints over discrimination have had a chilling effect on the workforce as well, according to the GAO.
Monday’s report indicates the pattern of discrimination and reprisals continue. More than one out of four CFPB employee had “unfavorable views” of their agency and “dissatisfaction was above 35 percent in some CFPB offices and demographic groups,” according to the report.
GAO reported “heightened concerns related to fair treatment (and) trust that employees can raise concerns without fear of reprisal,” and little trust by minority and female CFPB employees who used the bureau’s office for equal employment and civil rights.
Among those employees who filed complaints, half said they had “no confidence” the complaint processes were “neutral.” Nearly one out of three told GAO they “did not have confidence that they could pursue a complaint without fear of reprisal.”
A tenth of all CFPB employees surveyed reported they have “personally experienced retaliation,” and another 10 percent said they “personally observed retaliation against another employee.”
Despite those fears, GAO said CFPB workers “filed a total of 125 informal grievances” in 2014, or almost one of every 10 of the bureau’s total 1,300 employees.
One in three of the bureau employees surveyed said success there “is based more on personal connections or favoritism than merit.” Forty-one percent of black employees said favoritism and connections played a larger role in success than merit and 37 percent of women agreed.
One of three CFPB employees surveyed said the bureau has no “culture of accountability” and one quarter felt mangers “were not accountable on personnel issues.”
CFPB’s managers, however, seemed oblivious to the negative sentiment among women and minorities in the bureau’s workforce.
Ninety-seven percent of CFPB managers told GAO they believed employees in their offices “feel comfortable raising concerns.” And 91 percent of its managers claimed they thought success was based on merit.
“You have a lawless agency when it comes to its own employees,” said attorney David H. Shapiro, a former U.S. Attorney who for the last 40 yeas has represented individuals in civil rights law and discrimination.
“These are hotbeds of trouble. That’s true of the agencies that are the ‘do-good agencies,’” Shapiro, who is a partner with the Washington, D.C. law firm of Swick & Shapiro, told TheDCNF. “Because the political leadership comes in and they have agendas. And they deal with the federal workforce in a high-handed manner. That’s the problem with the CFPB.”
Shapiro has represented about ten CFPB employees who faced discrimination at the hands of bureau managers.
The House Financial Services Committee learned of a pattern of discrimination at the agency as early as 2013. An outside investigator hired by CFPB publicly testified in April 2014 that the bureau had created a “toxic workplace” for its employees.
Investigator Misty Raucci told the committee CFPB’s workplace “is one of exclusion, retaliation, discrimination, nepotism, demoralization, devaluation, and other offensive working conditions which constitute a toxic workplace for many of its employees.”
One CFPB unit was bitterly called “The Plantation” because of its black and minority workers.
Problems seem especially acute in CFPB’s Supervision, Enforcement and Fair Lending Division (SELF), the bureau’s largest single division and the office that sanctions businesses for discriminatory practices in the financial marketplace.
Many firms that were targeted by CFPB complained they were bullied by the bureau’s lawyers. A number of businesses filed suit against the bureau, charging that part of CFPB’s arrogance stems from the fact that the agency is not accountable to Congress or the executive branch.
Obama and Warren worked with a Democratic Congress to put CFPB under the Federal Reserve System, which effectively removed the bureau from congressional budgetary and regulatory oversight.
A U.S. appeals court is assessing the unusual placement of CFPB into the Federal Reserve and may rule on its constitutionality this fall.
“There is an arrogance about that agency, it’s leadership and its purpose,” claimed Shaprio.
J. Christian Adams, a former attorney with the Department of Justice’s Civil Rights Division told TheDCNF that “it was inconceivable to me that, given the politically-correct culture of that agency, that anybody would be engaged in this.”
Adams, who left the Department of Justice as a whistleblower, added that he is “completely stupefied. How do you get there? One outlier explanation is that the white radical liberals who get hired to form the architecture have contempt for minorities. They’re patronizing.”
About 45 percent of employees in the SELF also said the division “fails to retain talented and qualified employees.”
Mass departures from the highest levels of the agency have occurred over the last few years.
More than 45 executives left CFPB since its creation, most for highly paid positions in bank and other financial institutions regulated by the bureau.
The highest profile departure was Raj Date, the deputy director who announced his departure in 2012, only about a year into its founding. Date raised eyebrows within the agency when he took with him about a half dozen CFPB employees to create his own financial advisory firm.
At the highest level within CFPB, only Cordray, the director, is one of the few who started the agency and remains.
The GAO report also noted that CFPB hasn’t implemented seven anti-discrimination recommendations issued in March 2015 by the Federal Reserve’s Inspector General. In a letter to the GAO, Cordray accepted many of the report’s findings, but he called the bureau’s internal critics a “small sample” of the workforce.
Cordray claimed his actions are “creating a positive organizational culture at a new agency is a complex task,” adding that CFPB has made steady progress in building an infrastructure that supports a vibrant organizational culture.”
The GAO report surveyed 1,389 “non-executive employees” and 57 managers from April to June 2015, in which two-thirds participated in the web-based survey. The congressional agency also conducted one-on-one interviews with 120 supervisory and non-supervisory personnel. The entire audit covered from September 2014 to May 2016.
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Cross-posted from The Daily Caller.