Dems’ Defense of CFPB: Let’s Talk About Something Else
Racial Tension Erupts at House Hearing on Discrimination at CFPB
“Two CFPB staffers testifying before a Financial Services oversight panel told lawmakers Thursday that CFPB’s atmosphere is ‘soulless’ and that things have been getting worse.”
“Senior Equal Employment Specialist Florine Williams said that she had never seen such discrimination problems in her 32 years of government service.”“Williams said the bureau has yet to reprimand anyone for discrimination in her two years on the job, ‘despite my repeated attempts to bring to the attention of CFPB’s senior management.’”
CFPB employees: Workplace discrimination getting worse, leadership absent
“The Committee first began investigating allegations of widespread discrimination and retaliation against CFPB employees in April of 2014. What they heard today from CFPB employees is that it’s actually gotten worse since then”
“‘Director Cordray’s inaction over the past year has created a more discriminatory, challenging, and intimidating workplace for CFPB employees,’ she said.”
“Cauldwell was equally damning in his testimony. ‘Never until my employment at the CFPB have I witnessed such blatant and willful disregard for the law, merit system principles, and the well-being of its employees,’ he said.”
Congressional Hearing on Discrimination Leads to Partisan Mudslinging on Race, Confederate Flag
“‘How can the CFPB address racial discrimination in banks if they have the same problem?’ asked Rep. Mick Mulvaney, R-S.C.”
“‘It is disheartening that after three congressional hearings and nearly two years of my attempts to address these issues internally that no appreciable progress has been made,’ said Florine Williams, a senior civil rights official at the bureau.”
“Holding up a stack of paper four inches thick of discrimination complaints by CFPB employees, Hensarling vowed to continue investigating the alleged culture of discrimination and retaliation within the bureau, saying ‘we would be derelict of our duty if we didn’t hold these hearings.’”
“‘The minority of this committee wishes to turn a blind eye when we see discrimination in government,’ he said. ‘We will not allow the Democrat side of the aisle to change the subject.’”
American Banker | CFPB Civil Rights Officer Says Agency Makes 'Mockery' of Process
American Banker | Dems' Defense of CFPB: Let's Talk About Something Else
Housing Wire | Whistleblowers to testify on alleged discrimination at CFPB
American Banker | CFPB 'Whistleblowers' to Air Bias Claims Before LawmakersThe Hill | Yellen pushes back on GOP 'obstruction' claims Read More
The House Financial Services Oversight and Investigations Subcommittee held a hearing today to hear new evidence from employees of the Consumer Financial Protection Bureau (CFPB) about discrimination and retaliation at their workplace.
The Committee first began investigating allegations of widespread discrimination and retaliation against CFPB employees in April of 2014. Today’s hearing is the fourth at which CFPB employees have testified about discrimination and retaliation at the Bureau. At two other hearings, Committee members directed questions about the employees’ allegations and the CFPB’s unacceptable workplace environment to the Bureau’s director, Richard Cordray, who promised to take action.
"Of all the federal financial agencies, the CFPB has the worst track record of protecting its own employees against discrimination. The per capita number of Equal Employment Opportunity complaints at the CFPB is far higher than at other federal agencies. Despite disturbing reports of low morale and Congressional investigations, the leadership at the CFPB continues to turn a blind eye to the treatment of its own people," said Oversight and Investigations Subcommittee Chairman Sean Duffy (R-WI). "The CFPB is more concerned with bad press than the underlying problem, and has done little more than run an ineffective internal PR campaign to assuage employee concerns."
Key Takeaways from the Hearing:
“America is based on equal opportunity, not equal results. The dubious legal theory of disparate impact and the Supreme Court’s ruling pervert this founding principle.
“Discrimination in housing and lending on the basis of race, sex or other prohibited factors is morally repugnant and against the law. Our government must continue to combat discrimination in housing and lending and punish those responsible.
“Inventing discrimination through a disparate impact theory, however, is not a helpful tool in fighting actual discrimination.
“The Supreme Court’s extension of disparate impact theory to the Fair Housing Act will hurt precisely those minority groups that our federal civil rights statutes set out to protect. In fact, disparate impact will have predictable, negative consequences for all Americans who will experience a less competitive and more expensive market for housing and credit—all without providing any meaningful support for the fight against actual discrimination.”
“This is a small step toward renewing a competitive free-market economy and arresting the rise of the progressive welfare state and the cronyism connected to it. Ex-Im is not only corporate welfare, it is corporate welfare for foreign companies and countries. There’s no doubt some U.S. companies receive a benefit from Ex-Im, but there’s also no doubt Ex-Im hurts other companies and their workers. In fact, more are hurt than helped, and nearly 99 percent of all U.S. exports are financed without Ex-Im. Where is the fairness in giving Washington politicians and bureaucrats the power to pick who gets helped and who gets hurt? The few U.S. companies that actually benefit from Ex-Im do so at the expense of every hardworking taxpayer and all other American companies that are forced to assume the risks of Ex-Im’s loans and compete at a disadvantage.
“As more Americans and more members of Congress learned about Ex-Im’s political lending, corruption and fundamental unfairness, the more they wanted it to expire. Now the challenge for supporters of a competitive free-market economy is to make sure Ex-Im stays expired. Ex-Im is a part of yesterday’s economy. Our focus needs to be on tomorrow’s economy and on reforms that will give every American greater opportunities to succeed. Fundamental tax reform, tort reform and regulatory reform will do more to grow our economy and help small business entrepreneurs than corporate welfare ever could. That must be our agenda.”
BACKGROUND ON THE EXPIRATION OF EX-IM’S CHARTER
NO IMPACT ON CURRENT FINANCING
The charter for the Export-Import Bank will expire on June 30, but that expiration will have no impact on Ex-Im’s current obligations.
Ex-Im will not cease to exist on July 1. Instead, Ex-Im will begin a gradual and orderly wind-down and – by law – financing awarded before expiration will continue through the life of the loans, loan guarantees and insurance policies. In fact, some of this financing will extend for 12-18 years after Ex-Im’s charter expires.
“NONE OF US ACTUALLY EXPIRE JUNE 30”
As Ex-Im Chairman and President Fred Hochberg told Politico:
“Well, none of us actually expire June 30. The bank’s authority to make a new loan expires on June 30…But there’s a large function as bank that does not go away – we’ve got an over $110 billion loan portfolio that’s got to be managed and serviced…The authorization is about making new loans, but in any case we’ve got a lot of work to do here.”
The Congressional Research Service reported to Congress that when Ex-Im’s charter expires:
Ex-Im Bank also may “continu[e] as a corporate agency of the United States” and exercise any of its functions “for purposes of an orderly liquidation,” including (but apparently not limited to) administering its assets and collecting any obligations it holds.
EX-IM’S #1 BENEFICIARY CAN FIND ALTERNATIVE FINANCING
“Boeing itself may have undercut arguments to reauthorize the bank last week when it announced it would use its internal financing arm to support foreign buyers in the event the Export-Import Bank goes away, which opponents could point to as proof the bank is unnecessary.” (US News & World Report, June 11, 2015: Export-Import Bank Heading Toward Closure.)
HEADLINE: Boeing to Offer Aircraft Financing If Trade Bank Shuts (Wall Street Journal, June 5, 2015)
Kostya Zolotusky, a managing director at Boeing’s finance arm, “said he was confident the company could find alternative funding sources for customers” but that the company remains “mindful” of the debate over Ex-Im. (Wall Street Journal, August 7, 2013)
CREDIT RATING AGENCIES: ALTERNATIVES AVAILABLE
Boeing Will Survive an Ex-Im Defeat: Standard & Poor’s finds that there’s plenty of financing for aircraft sales: “We don’t believe that the expiration of Ex-Im’s authorization…would hurt Boeing’s credit quality or ability to make planned deliveries.” (Wall Street Journal, July 14, 2014)
“S&P also examined the effect of cutting of Ex-Im financing to three of the bank’s other big clients – General Electric, Caterpillar and United Technologies. Their conclusion? Their credit ratings wouldn’t be affected because ‘the amounts financed are generally less than 2% of revenue.’” (Wall Street Journal, July 14, 2014)
“Any U.S. congressional vote that winds down the Export-Import Bank of the United States (Ex-Im) would be management for aircraft lessors given the availability of other financing alternatives…Solid growth in financing avenues across capital markets has reduced the necessity of Ex-Im guarantees…” (Fitch Ratings report issued July 15, 2014)
“We believe that the risk of Congress not reauthorizing Ex-Im is unlikely to affect our ratings on other U.S.-based exporters.” (S&P Analysis, July 7, 2014)
END OF CIVILIZATION? “THAT’S NONSENSE”
“In the here and now impact, would this be the end of civilization as we know it, would it be raining cats and dogs? No, that’s nonsense.” – Richard Aboulafia, Vice President, Teal Group (Quoted by Bloomberg, June 2, 2015)
“I would venture a guess that it wouldn’t have any impact on Caterpillar and if it were to have impact it would be completely immaterial.” – Ted Grace, Analyst, Susquehanna Financial Group (Quoted by Bloomberg, June 2, 2015)
“Today, with low interest rates around the world, and many commercial options for insuring against business risks, there probably is no intrinsic value to the Ex-Im Bank today and into the future. Thus, at this moment, I believe the charter should not be renewed…If the Ex-Im Bank were to disappear, I believe buyers and sellers would find attractive commercial options unencumbered by politics and special interests.” – Edmund Schweitzer III, Schweitzer Engineering Laboratories (Quoted in The Spokesman-Review, July 15, 2014Read More
The Financial Services Task Force to Investigate Terrorism Financing held a hearing on Wednesday to examine how terrorist groups exploit the U.S. banking system to raise and launder their revenue.“The U.S. financial sector is too important for this task force to overlook when seeking to address the nexus of terrorism and finance. The continued innovation and evolution by our enemies highlights the importance of this body’s role in the fight against terror. The United States must do better when defending our financial system and addressing the threats operating within it. The risk is too great to ignore,” said Task Force Chairman Michael Fitzpatrick (R-PA).
CFPB employees have testified about serious and troubling instances of racial, gender and age discrimination they’ve suffered from CFPB managers and retaliation against employees who speak out about this unacceptable behavior. Summaries of those hearings can be found here and here.
CFPB Director Richard Cordray also testified at an earlier hearing and gave his personal assurance that this inexcusable and unacceptable behavior would stop.
“I am committed to ensuring that all Bureau employees are treated fairly and that they receive the respect and dignity they deserve.”
- Director Cordray, July 30, 2014
But tomorrow at 10 a.m., two more CFPB employees will bring new evidence to the committee that discrimination and retaliation at the CFPB have gotten worse.
Ms. Florine Williams: A career professional with over 20 years of Equal Employment Opportunity experience, she currently serves as a Senior Equal Employment Specialist in the Office of Civil Rights at the CFPB. Ms. Williams’s full testimony can be found here, with excerpts below.
Mr. Robert Cauldwell: A CFPB examiner who currently serves as President of the National Treasury Employees Union Chapter 335. As the President of the Bureau’s employee union, he has been particularly able to observe widespread problems. Mr. Cauldwell’s full testimony can be found here, with excerpts below.
Oversight and Investigations Subcommittee hearing: “Examining Continuing Allegations of Discrimination and Retaliation at the Consumer Financial Protection Bureau”
When: Thursday, June 25 at 10 a.m. EDT
Where: 2128 Rayburn Building
NOTE: The hearing will be webcast live at www.financialservices.house.gov/.
Mr. Cauldwell and Angela Martin who came forward last year as a CFPB whistleblower will be available for interviews immediately following the hearing.
For a brief background memo about Thursday’s hearing, click here.
For even more information, please contact:
Jeff Emerson (House Financial Services Committee) – 202-225-7502, firstname.lastname@example.org
David Popp (House Financial Services Committee) – 202-225-7502, email@example.com
Cassie Smedile (Rep. Sean Duffy’s Office) -- 816-726-1290, firstname.lastname@example.org
WASHINGTON- Financial Services Committee Chairman Jeb Hensarling (R-TX) today announced that Federal Reserve Chair Janet Yellen will appear before the committee on Wednesday, July 15 at 10 a.m. for the Fed’s semi-annual Monetary Policy Report to Congress and to discuss the state of the economy.
During Chair Yellen’s last appearance before the committee in February, Chairman Hensarling highlighted the need for reforms to make the nation’s central bank more accountable and transparent. Among other reforms, Chairman Hensarling has argued the Fed would be more transparent and accountable, and the economy would be healthier, if it would adopt “a more predictable method or rules-based monetary policy” of its own choosing.
“After Dodd-Frank, a quadrupled balance sheet, massive bailouts and unprecedented credit market interventions, and the financing and facilitation of trillions of dollars of new national debt, this is clearly a very different Fed,” Chairman Hensarling said during the February hearing with Chair Yellen.
Media outlets interested in attending the hearing need to contact Maria Kim at email@example.com to RSVP.
Members of the Committee on Thursday questioned Treasury Secretary Jacob Lew on the threats posed to America’s financial stability by misguided government policies, including the Dodd-Frank Act.
The most recent annual report issued by the Dodd-Frank-created Financial Stability Oversight Council (FSOC) identifies several threats to financial stability that are the direct result of these policies. However, “it conspicuously omits any references to specific government policies or agencies as helping cause the systemic risks it identifies,” said Chairman Jeb Hensarling (R-TX).
“FSOC simply refuses to look in the mirror,” he said. “Mr. Secretary, your council and the rest of Washington needs to awaken to this obvious truth: when it comes to systemic risk, Washington is a large part of the problem.”
Not only does FSOC fail to identify the Washington sources of these threats, it ignores other key threats to our financial stability, such as the nation’s $18 trillion – and growing – national debt.
“CBO points out the debt is a problem for our economy, and yet your report does nothing, says nothing about it. And you are supposed to be an agency that points out these problems," Rep. Blaine Luetkemeyer (R-MO) said."The Federal Reserve Bank of Richmond recently reported that 60 percent of the financial system’s liabilities are backed by taxpayers. This report directly contradicts claims by Secretary Lew and the Administration that the Dodd-Frank Act ended ‘too big to fail’ – a stated objective of the Dodd-Frank Act - and that American taxpayers will never again have to foot the bill for bailouts," said Rep. Robert Hurt (R-VA).
Rep. Ann Wagner (R-MO) pointed out that FSOC’s deeply flawed process for designating so-called “non-bank SIFIs” further entrenches another threat to our financial stability: Too Big to Fail.
“To date, FSOC has designated four non-bank financial companies as systemically important financial institutions, or SIFIs, essentially signaling to market participants that the government considers them Too Big to Fail. As a result, Richmond Fed President Jeffrey Lacker stated that shareholders and creditors of those firms can expect the government to shield them from losses during periods of distress, ultimately putting the taxpayer on the hook for a future potential bailout,” she said.
A Cyber Attack Every 34 Seconds
The Oversight and Investigations Subcommittee held a hearing on Tuesday to continue the Committee’s ongoing efforts to combat cyber threats to consumers and the financial sector.
Subcommittee Chairman Sean Duffy (R-WI) said that while the motivations behind cyber attacks may vary, “there remains one constant. They intend to hurt America and our interests. Not only are they targeting the critical infrastructure of our country, like banks, power grids, food supplies, but they also pose a much graver threat directly to the citizens of the United States."
Witnesses called by the Subcommittee shed light on the prevalence of cyber threats to the financial sector. Frank Cilluffo, Associate Vice President of the George Washington University and the Director for the Center for Cyber and Homeland Security, said one major U.S. bank faced 30,000 cyber attacks just last week. “This amounts to an attack every 34 seconds each and every day. And these are just the attacks that the bank actually knows about,” he told the Subcommittee.
Michael Madon of RedOwl Analytics and an advisor to the Center on Sanctions and Illicit Finance, called for a more pro-active stance by the federal government in fighting cyber attacks. "It is clear from watching these attacks dramatically increase in both frequency and damage, our nation's current defensive posture is simply not sufficient to address the threat. We need to have a more pro-active approach, one that shifts the paradigm away from defense to offense."
Subcommittee Reviews Economic Growth Proposals
Building on the success of the bipartisan Jumpstart Our Business Startups (JOBS) Act, the Capital Markets and Government Sponsored Enterprises Subcommittee chaired by Rep. Scott Garrett (R-NJ) has been identifying legal, regulatory and market impediments to capital formation, particularly for small and medium-capitalized companies. On Tuesday, the Subcommittee continued its work with a hearing on the Small Business Credit Availability Act and the Fair Investment Opportunities for Professional Experts Act.
The Fair Investment Opportunities for Professional Experts Act, sponsored by Rep. David Schweikert (R-AZ), “would allow more Americans to have the opportunities to secure their financial future," said Chairman Garrett.
Witnesses at the hearing spoke about the importance of modernizing the regulation of BDCs and expanding the pool of investment opportunities.
Vincent D. Foster of Main Street Capital said, "Modernizing BDC regulations will help support American jobs and foster economic growth by improving access to the public capital markets for BDCs. It will also free up significant resources at the SEC, which can be utilized more effectively to protect investors."
"With the JOBS Act, Congress helped to modernize existing regulations and establish new systems to provide the opportunities to allow Emerging Growth Companies (EGCs) to grow into public companies," said Tom Quaadman with the U.S. Chamber of Commerce’s Center for Capital Markets Competitiveness. "The proposals before us today continue that tradition and are important as they help small and mid-size businesses continue on the path to becoming EGCs."
For further information on these legislative proposals, click here.
Impact of the IMF: Economic Stability or Moral Hazard?
Members of the Monetary Policy and Trade Subcommittee on Thursday expressed concerns that the IMF, in providing public funds to ease current financial problems in Europe is, in effect, transferring the cost of Europe’s past risky lending practices to the American public at large and to commercial banks that were more conservative in selecting their loan portfolios.
June 24, 2015 2:00 p.m.
Task Force to Investigate Terrorism Financing Hearing
"Evaluating the Security of the U.S. Financial Sector"
June 25, 2015 10:00 a.m.
Oversight and Investigations Subcommittee Hearing
"Examining Continuing Allegations of Discrimination and Retaliation at the Consumer Financial Protection Bureau"
Wall Street Journal | House Committee Rejects Yellen’s Reason for Not Complying With Subpoena
Bloomberg | Hensarling Accuses Fed of Willful Obstruction of Leak Probe
American Banker | CFPB Grapples with Spike in Employee Bias Complaints
The Hill | Hensarling accuses Fed of 'willful obstruction' in leak probe
Wall Street Journal | Small Firms Aim to Raise Capital More Easily Under New Rules
MarketWatch | Lew, Hensarling Spar Over Bond Market Liquidity
Washington Times | Obama-Elizabeth Warren payday lender rules slammed by Florida DemocratsRead More
Wednesday, June 24 at 2:00 P.M. - The Task Force to Investigate Terrorism Financing will hold a hearing on “Evaluating the Security of the U.S. Financial Sector.” Task Force members will examine the means utilized by terrorist groups and others to exploit the U.S. banking system in order to raise and launder funds.
Thursday, June 25 at 10:00 A.M. - The Oversight and Investigations Subcommittee will continue its investigation surrounding allegations of discrimination and retaliation at the Consumer Financial Protection Bureau (CFPB). Recent news reports show Equal Employment Opportunity complaints have surged at the CFPB and more whistleblowers have come forward with allegations that the CFPB discriminates and retaliates against its workers who speak out. The Subcommittee began its investigation in April 2014. Several CFPB employees have come forward to the Subcommittee with allegations of discrimination and retaliation. At Thursday’s hearing, two more whistleblowers are expected to testify.
All hearings will take place in room 2128 of the Rayburn House Office Building. Additional information about each hearing, including a list of invited witnesses, will be available online at financialservices.house.gov/.
2129 Rayburn HOB
Washington, DC 20515