Com­ing to a con­sumer watch­dog’s de­fense

The Washington Post Sunday - - BUSINESS - MICHELLE SIN­GLE­TARY

In a pre­emp­tive move, Democrats, con­sumer groups and civil rights leaders have been mo­bi­liz­ing to de­fend the head of the fed­eral con­sumer watch­dog agency should Pres­i­dent Trump try to fire him.

Since the in­cep­tion of the Con­sumer Fi­nan­cial Pro­tec­tion Bureau, Repub­li­cans have de­nounced the en­tity, which was cre­ated un­der the 2010 Dod­dFrank Wall Street Re­form Act in the wake of the fi­nan­cial cri­sis. Its crit­ics think the bureau is too hos­tile to­ward the fi­nan­cial ser­vices in­dus­try.

Repub­li­cans have in­tro­duced leg­is­la­tion that would change the CFPB’s lead­er­ship struc­ture, re­plac­ing the one-per­son di­rec­tor­ship with a five-per­son com­mis­sion, which could ef­fec­tively slow or stymie the agency’s aggressive con­sumer pro­tec­tion ac­tions in an ef­fort to get a con­sen­sus.

The term of the cur­rent di­rec­tor, Richard Cor­dray, isn’t over un­til July 2018, but some have ex­pressed con­cern that Trump will try to dis­miss him early.

Un­der ex­ist­ing law, the pres­i­dent can re­move Cor­dray only “for in­ef­fi­ciency, ne­glect of duty or malfea­sance in of­fice.”

The CFPB was de­signed to be as in­de­pen­dent as pos­si­ble so that it wouldn’t be­come a pawn of politi­cians be­holden to cam­paign con­trib­u­tors from the fi­nan­cial

in­dus­try. That’s why it’s struc­tured to have a sin­gle di­rec­tor who can be re­moved only for cause and why the Fed­eral Re­serve, not Congress, con­trols its bud­get.

Last year, bureau crit­ics re­joiced in an open­ing that could oust Cor­dray af­ter a three-judge fed­eral ap­peals court panel ruled that its lead­er­ship struc­ture is un­con­sti­tu­tional. But the CFPB ap­pealed the de­ci­sion, and, this month, the full court agreed to re­visit it.

So now pro­po­nents are con­cerned that Trump is be­ing urged to fire Cor­dray be­cause of al­le­ga­tions of em­ploy­ment dis­crim­i­na­tion at the bureau.

In an email, a White House spokesman declined to com­ment on the pres­i­dent’s plans re­gard­ing Cor­dray.

In 2013, the CFPB iden­ti­fied dis­par­i­ties in em­ploy­ees’ per­for­mance rat­ings by race, age and of­fice lo­ca­tion, ac­cord­ing to a re­port by the Gov­ern­ment Ac­count­abil­ity Of­fice. Af­ter the dis­clo­sure, the House Fi­nan­cial Ser­vices Com­mit­tee launched an in­ves­ti­ga­tion.

Over the course of sev­eral hear­ings, five CFPB em­ploy­ees tes­ti­fied about al­le­ga­tions of dis­crim­i­na­tion. Sev­eral oth­ers sub­mit­ted anony­mous writ­ten tes­ti­mony.

The GAO was asked to re­view per­son­nel man­age­ment and or­ga­ni­za­tional cul­ture at the bureau and found “height­ened con­cerns re­lated to fair treat­ment.”

The agency’s Of­fice of the In­spec­tor Gen­eral also con­ducted an audit in re­sponse to a con­gres­sional re­quest. It iden­ti­fied four ar­eas in which the agency could im­prove its di­ver­sity ef­forts.

But both the GAO and the OIG con­cluded that Cor­dray had taken steps to foster a more di­verse and in­clu­sive work­force.

In a let­ter last month to Trump, the union rep­re­sent­ing the CFPB em­ploy­ees said it was sat­is­fied with Cor­dray’s com­mit­ment to ad­dress­ing dis­crim­i­na­tion claims, writing: “In no way could the di­rec­tor’s ac­tions in these mat­ters con­sti­tute a ba­sis for a dis­missal for cause.”

The Con­gres­sional Black Cau­cus also wrote to Trump, declar­ing that Cor­dray had done “noth­ing to give the nec­es­sary cause for his re­moval from of­fice.”

Demo­cratic mem­bers of the House Fi­nan­cial Ser­vices Com­mit­tee also com­mended Cor­dray’s ef­forts to ad­dress the em­ploy­ment is­sues, in­clud­ing pro­vid­ing merit-pay in­creases and mak­ing lump-sum pay­ments to af­fected em­ploy­ees. And the Lead­er­ship Con­fer­ence on Civil and Human Rights, the NAACP, the Na­tional Coun­cil of La Raza and the Na­tional Ur­ban League re­leased a joint state­ment in sup­port of the CFPB and Cor­dray, writing that the di­rec­tor has worked to fix a flawed em­ployee per­for­mance sys­tem.

“Any ef­fort to weaken the agency or un­der­mine its lead­er­ship would risk se­vere im­pacts on our com­mu­ni­ties — in­clud­ing com­mu­ni­ties of color and low-in­come fam­i­lies who are most vul­ner­a­ble to fi­nan­cial abuse,” the groups wrote.

Wade Hen­der­son, pres­i­dent and chief ex­ec­u­tive of the Lead­er­ship Con­fer­ence on Civil and Human Rights, said in an in­ter­view that any ef­fort to use “agency em­ploy­ment is­sues [would be] for the pur­pose of ac­com­plish­ing a po­lit­i­cal re­sult.”

One of the main ar­gu­ments used by the CFPB’s op­po­nents is that it’s not ac­count­able. Yet the di­rec­tor has to re­port to Congress. The dis­crim­i­na­tion al­le­ga­tions were scru­ti­nized in con­gres­sional hear­ings.

“Di­ver­sity is one of our most fun­da­men­tal strengths, both as an agency and as a na­tion, and it con­trib­utes di­rectly to our suc­cess in de­liv­er­ing results for Amer­i­can con­sumers,” Cor­dray said in a state­ment. “We’ve been work­ing hard on these is­sues since we opened our doors.”

Even while deal­ing with its own is­sues, the CFPB has levied fines against com­pa­nies for dis­crim­i­na­tory mort­gage, auto and credit-card lend­ing prac­tices af­fect­ing African Amer­i­can and His­panic con­sumers.

I find it hyp­o­crit­i­cal that some politi­cians might deal the race card to try to get what they want, which es­sen­tially is to pro­tect those com­pa­nies that have dis­crim­i­na­tory prac­tices that have harmed mi­nor­ity con­sumers.

It would be ap­palling if the em­ploy­ment prob­lems at the CFPB were used to oust Cor­dray. Do­ing so could emas­cu­late an agency that has done so much good for all con­sumers. Write Sin­gle­tary at The Wash­ing­ton Post, 1301 K St. NW, Wash­ing­ton, D.C. 20071 or sin­gle­tarym@ wash­ To read more, go to­gle­tary.

Michelle Sin­gle­tary THE COLOR OF MONEY

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