Committee on Financial Services

Jeb Hensarling

Hearing entitled “The Future of Housing in America: Oversight of HUD’s Public and Indian Housing Programs”

2015/07/02


Hearing entitled “The Dodd-Frank Act Five Years Later: Are We More Stable?”

2015/07/02


Hearing entitled “Examining the Designation and Regulation of Bank Holding Company SIFIs"

2015/07/02


MEDIA BUZZ: Discrimination Getting Worse at CFPB, Employees Say But Democrats Ferociously Want to Change the Subject

2015/06/29

 

Dems’ Defense of CFPB: Let’s Talk About Something Else
 

“House Democrats decried a hearing Thursday on allegations of discrimination and retaliation by management at the Consumer Financial Protection Bureau”

“Democrats largely declined to ask questions of two agency whistleblowers who testified of a ‘dysfunctional’ civil rights office that has allowed discrimination and retaliation to take place.”

“When asked, both witnesses said they did believe in the mission of the CFPB, but concurred with Republicans that the agency needed a new director.”

 

Racial Tension Erupts at House Hearing on Discrimination at CFPB

“The three-year-old agency has been struggling with internal tensions as some employees say they’ve been the victims of racial, gender and age bias.”

“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 House Financial Services Oversight and Investigations Subcommittee held a hearing Thursday and heard shocking new evidence from employees of the Consumer Financial Protection Bureau 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. 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

“Republicans on the Financial Services Committee were quick to point out the irony of the situation, given the agency’s anti-discrimination mission.”

“‘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.’”

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FSC Majority | Week in Review

2015/06/26

Committee Seeks Accountability for Discrimination and Retaliation at the CFPB

On Thursday the Oversight and Investigations Subcommittee held a hearing to examine new evidence that discrimination and retaliation against employees at the Consumer Financial Protection Bureau (CFPB) continue. The Committee began its investigation into these allegations in April 2014. Since then, several whistleblowers have come forward to allege CFPB managers have created a toxic workplace. Despite promises last year from CFPB Director Richard Cordray that this unacceptable and offensive behavior at the CFPB would stop, two whistleblowers testified on Thursday that discrimination and retaliation have gotten worse during the past year.

Subcommittee Chairman Sean Duffy (R-WI) said in his opening statement, "This Committee has spent two years and more than five Congressional hearings giving a voice to the victims of abusive, unfair and unlawful discriminatory behavior of CFPB managers. We are here again today because their messages have clearly not been heard. There is mounting evidence that not only does the agency still have a huge problem with managers discriminating against employees based on race, age, gender, and sexual orientation, but CFPB leadership refuses to take meaningful action to prevent this behavior and protect its employees."

Both witnesses testified that they believed CFPB Director Richard Cordray did not take these issues seriously.

Committee members emphasized discrimination and retaliation must end, and there must be accountability at the CFPB.

Rep. Scott Tipton (R-CO) remarked, "In the private sector, when there are issues that are coming up on discrimination, there will be fines, there will be penalties, and there will be prescriptive measures to be able to address it. Yet apparently from what you are testifying here today, the government is not applying the same rules to itself that it expects, may not achieve, but expects out of the private sector."

Rep. Mia Love (R-UT) said change is needed at the CFPB.

"How can an agency that is unable and unwilling to govern itself be entrusted to protect the American people and, frankly, make sound decisions about how it pursues its own mission?” she asked. “Perhaps most disturbing to me is that despite all the publicity this issue has received and all the previous congressional hearings, overwhelming evidence indicates this culture of discrimination and intimidation within the CFPB has only been growing worse. It’s clear to me that reform of the CFPB is badly needed," she said.

Task Force Examines Security of U.S. Financial Sector

The Task Force to Investigate Terrorism Financing held its third hearing on Wednesday where it evaluated the security of the U.S. financial sector. At the hearing, the Task Force discussed the financial sector’s vulnerabilities to cyber-attacks as well as how terrorist organizations and criminal groups are using shell companies to launder money and fund their activities.

In his opening statement, Chairman Michael Fitzpatrick (R-PA) voiced concerns about the increasing number, size and damaging effects of recent cyber-attacks. “In the past several years, there has been a noticeable rise in the number of cyber-related attacks on U.S. businesses and government agencies launched by state and non-state actors alike. This is attributed to the fact that such attacks cost very little to carry out, but have potential to cause severe problems and inflict great cost on the victim attempting to carry out the defense. 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. “

Vice Chairman Robert Pittenger (R-NC) echoed these sentiments. “Recent reports from the State Department and the Treasury Department have further highlighted the priority we must place on our counter-terrorist financing efforts. The 2014 State Department country reports on terrorism make it clear that terrorism is becoming more prevalent. The number of attacks increased by 35%. There were 3,000 more attacks in 2014 than in 2013. The fatalities increased 81%, to 32,727 deaths in 2014. The National Terrorism Financing Risk Assessment shows that while we have made progress in undermining terrorist financing, there’s still vulnerabilities in our system and more can be done.”

John W. Carlson, the Chief of Staff at the Financial Services Information Sharing and Analysis Center, shared his view on the current threat faced by the United States today. “The current cyber threat environment continues to evolve and intensify. Each day, cyber risk grows as attacks increase in number, pace, and complexity. Our members constantly adapt to this changing threat environment. We are no longer in the days wherein the threat was confined to individual hacktivists and fraudsters. We are now in an era of attacks by not only organized crime syndicates, but also nation-states and entities affiliated with terrorist operations.”

MEMBER SPOTLIGHT

Rep. Sean Duffy | Accountability at the CFPB

The Chairman of the Oversight and Investigations Subcommittee is Sean Duffy (R-Wisconsin), who has been at the forefront of legislative efforts to reform the CFPB. In March, Duffy introduced a comprehensive package to reform the Bureau, which included proposals to replace the Bureau's director, Richard Cordray, with a bipartisan five-member board; and a proposal to make the Bureau subject to the regular Congressional appropriations process.

Weekend Must Reads


Forbes | Congress Should Reign In Rogue CFPB

That’s not to say that all regulations are bad and consumers tend to support reasonable regulations, ones that make sense, such as regulations that protect people from food that will make them sick or protect them from a dangerous product. They tend to draw the line when regulations that are purported to help them in the name of consumer protection, make things more challenging if not out right difficult for them by prohibiting access to services or in this case capital.

Investor's Business Daily | The New American Dream Under Obama: Renting

The heavy federal hand in the housing market has been a disaster. Despite spending more than $13,000 for every household, Washington has record low homeownership to show for it, even among the middle class.

Hoover Daily Report | How the U.S. Can Return to 4% Growth

Economic growth in real terms is averaging a meager 2.2% annual rate in the 23 quarters since the recession’s trough in June 2009. The consensus forecast of about 1% growth for the first half of this year offers little solace. Americans need not be resigned to such a dim fate.

    In the News

American Banker | CFPB Civil Rights Officer Says Agency Makes 'Mockery' of Process

Housing Wire | CFPB employees: Workplace discrimination getting worse, leadership absent

Politico Pro | Racial tension erupts at House hearing on discrimination at CFPB

American Banker | Dems' Defense of CFPB: Let's Talk About Something Else

The Hill | Dems accuse GOP of playing race card in contentious hearing

Housing Wire | Whistleblowers to testify on alleged discrimination at CFPB

American Banker | CFPB 'Whistleblowers' to Air Bias Claims Before Lawmakers

The Hill | Yellen pushes back on GOP 'obstruction' claims
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Subcommittee Seeks to Hold CFPB Accountable As Whistleblowers Testify of Discrimination and Retaliation

2015/06/25

 

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:

  • Despite the Committee’s urging of Director Cordray to take appropriate action to address discrimination and retaliation at the CFPB, over the past year this unacceptable behavior has gotten worse.
  • New evidence indicates that a culture of discrimination and retaliation still permeates the CFPB, showing the need for greater accountability and oversight of the agency in order to ensure that serious issues such as these are addressed effectively and promptly.
  • Any action that the CFPB has already taken to address discrimination and retaliation against employees has been ineffective and insufficient.
Topline Quotes from Witnesses:

"CFPB employees proudly serve their country, and they deserve the Bureau to treat them in a fair and consistent manner, just like the CFPB expects financial businesses to treat consumers. Unfortunately, the CFPB has not lived up to its own standards. The word “allegations” should be removed from this hearing’s title – discrimination and retaliation against CPFB employees is a fact. The CFPB’s management, all the way to the very top, has not exhibited the leadership, compassion, or skills needed to satisfactorily achieve the mission set forth in the Dodd-Frank Act.”

“Director Cordray’s inaction over the past year has created a more discriminatory, challenging, and intimidating workplace for CFPB employees.”

“Hubris, persecution, retaliation, discrimination. These are not words one would associate with an agency that is supposed to protect American consumers from these very same vices in the financial industry. It is my belief, based on careful consideration and talks with employees for the past two years, that the Bureau does not have the capacity to clean someone else’s house when they cannot get their own house in order.”


- Robert Cauldwell, President of the National Treasury Employees Union Chapter 335 and CFPB Examiner

"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.”

“Because of the CFPB’s mission, I believed I was joining an EEO program where the rule of law was respected, and the workforce would be treated with civility, dignity, and professionalism. Unfortunately, my experience at the Bureau has been a radical departure from the 32 years that preceded it.”

“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.”

“I am frequently approached by colleagues who tell me they are being subjected to maltreatment and discrimination, but who fear they will face reprisal if they seek help through OCR’s EEO process.”


- Florine Williams, Senior Equal Employment Specialist, Office of Civil Rights, CFPB Read More

Hensarling: ‘Disparate Impact’ Ruling to Have Negative Consequences for All Americans

2015/06/25

Financial Services Committee Chairman Jeb Hensarling (R-TX) issued the following statement after the U.S. Supreme Court upheld the use of the controversial “disparate impact” legal theory, saying those who file housing discrimination lawsuits don’t have to show they were victims of intentional discrimination:

“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.”

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Hensarling Statement on Expiration of Export-Import Bank’s Charter

2015/06/25

Financial Services Committee Chairman Jeb Hensarling (R-TX) issued the following statement on the upcoming expiration of the Export-Import Bank’s charter:

“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, 2014

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Terrorism Financing Task Force Evaluates Security of U.S. Financial Sector

2015/06/24

 

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).

Key Takeaways from the Hearing:
  • Shell companies are widely used by terrorists and criminal organizations to both disguise and finance their activities.  Such untraceable shell companies have few, if any, employees and can be used to hide illegal businesses or facilitate illegal activity, such as tax evasion and Ponzi schemes that can rob billions from unsuspecting citizens.
  • The U.S. is a preferred destination for illicit actors from around the world to set up companies for the purpose of moving or hiding dirty money.  For example, the son of Equatorial Guinea’s dictator, Teodoro Obiang, purchased a $30 million mansion in Malibu and a jet using shell companies based in California and the British Virgin Islands; Hezbollah financed its activities in part by using shell companies in North Carolina to smuggle cigarettes to finance terrorism; and Russian arms trafficker Viktor Bout used at least a dozen shell companies in Delaware, Texas and Florida to operate his global arms smuggling operation.  Shell companies have also been used to bribe Russian officials, defraud the E.U., and evade Iranian sanctions.
  • The growth and increasing sophistication of the international financial system has enabled illicit actors to place and move money, hide assets and conduct transactions anywhere in the world, exposing financial centers to exploitation and abuse in an unprecedented way.  The United States has seen a wide variety of terrorist groups, including al Qaeda and its affiliates, Al-Shabaab, Hamas and Hezbollah, use banks to place and transfer funds, along with cash transportation provided by cash couriers.
Topline Quotes from Witnesses:

“Indeed, shell companies doing business in New York can be used to disguise the activities of entire foreign governments. In 2006, my office was investigating the Alavi Foundation, a non-profit organization which owned a 60 percent stake in a 36-story office building in midtown Manhattan. The remaining 40 percent was owned by the Assa Corporation, a New York-incorporated entity, and by Assa Company Limited, which was incorporated in the Channel Islands. We ultimately determined that the Assa entities were merely shells being used to disguise the building’s actual owner, a bank called ‘Melli.’ Bank Melli, as you may be aware, is wholly owned by the government of Iran.”

- The Honorable Cyrus Vance, Jr., New York County District Attorney

"The current cyber threat environment continues to evolve and intensify. Each day, cyber risk grows as attacks increase in number, pace, and complexity. Our members constantly adapt to this changing threat environment. We are no longer in the days wherein the threat was confined to individual hacktivists and fraudsters. We are now in an era of attacks by not only organized crime syndicates, but also nation-states and entities affiliated with terrorist operations."


- John Carlson, Chief of Staff, Financial Services Information Sharing and Analysis Center

"Illicit financing networks, like the business of most enterprises, almost always implicate more than one financial institution. Whether in the process of raising, moving, using or laundering funds associated with illicit activity, such networks almost invariably transact across multiple financial institutions. For the illicit financing networks of most pressing concern, transactions also often cross multiple jurisdictions. Identifying, tracking and tracing these networks therefore depends critically upon information-sharing across financial institutions and across borders."

- Chip Poncy, Senior Counselor, Center on Sanctions and Illicit Finance at the Foundation for Defense of Democracies Read More

Whistleblowers to Testify About Race, Gender and Age Discrimination at the CFPB

2015/06/24

WASHINGTON - For more than a year, the House Financial Services Committee has investigated serious allegations of discrimination and retaliation against employees at the Consumer Financial Protection Bureau (CFPB). 

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.

  • “Ironically, the agency that was created to provide comprehensive consumer protections and strong remedies for consumer harm has unequivocally failed to protect its own employees and remedy the harms we have suffered…”
  • “The level of unprofessional treatment and dysfunction that I have observed and endured has not only hurt me, but has hurt countless CFPB employees who would naturally look to an Office of Civil Rights for protection against discrimination.”
  • “I am frequently approached by colleagues who tell me they are being subjected to maltreatment and discrimination but who fear they will face reprisal if they seek help through OCR’s EEO process. I cannot adequately describe the pervasive and chilling atmosphere that prevails throughout the CFPB.”

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.

  • "....actions speak much louder than words. Director Cordray’s inaction over the past year has created a more discriminatory, challenging, and intimidating workplace for CFPB employees.”
  • “When employees file complaints, the CFPB reaches into their past to dig up irrelevant information and use it against them.”
  • “The fear of retaliation is palpable. Even managers are scared to come forward. As long as this cesspool of poor behavior, discrimination, and retaliation continues, the CFPB will never be one of the best places in government to work.”

Hearing Details:

What:

  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,
jeff.emerson@mail.house.gov
David Popp (House Financial Services Committee) – 202-225-7502,
david.popp@mail.house.gov
Cassie Smedile (Rep. Sean Duffy’s Office)  -- 816-726-1290,
cassie.smedile@mail.house.gov

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Chairman Hensarling Announces Fed Semi-Annual Monetary Policy Report to Congress

2015/06/24

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 maria.kim@mail.house.gov to RSVP.

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Hearing entitled “Examining Continuing Allegations of Discrimination and Retaliation at the Consumer Financial Protection Bureau”

2015/06/19


FSC Majority | Week in Review

2015/06/19

Washington Policies Like Dodd-Frank Threaten U.S. Financial Stability


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 Small Business Credit Availabiltiy Act, sponsored by Rep. Mick Mulvaney (R-SC), is geared toward updating regulation of Business Development Companies.  “We've heard that in other hearings BDCs have played an increasingly important role in our economy," said Chairman Garrett.


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.
 

“The use of the IMF as a backstop for advanced European countries calls into question, in my mind, whether this institution has become an enabling crutch instead of a helping hand,” Subcommittee Chairman Bill Huizenga (R-MI) said.

MEMBER SPOTLIGHT

Rep. Randy Neugebauer | Lawmaker Calls Round Table on Bond Trading Challenges

A top lawmaker is inviting a bevy of Wall Street regulators and large financial institutions to a round table next month to discuss how regulations may be contributing to challenges in bond trading, the latest sign that officials are paying increased attention to the issue in Washington.

Weekend Must Reads


Washington Post | Obama wants to reengineer your neighborhood

This is what you get when you put a community organize in the White House – he tries to reorganize your community from Washington. The answer is not to force local governments to build affordable housing in affluent communities. The answer is to restore upward mobility in the United States so that more people can afford housing in affluent communities.

Real Clear Markets | The U.S. Is Defined By Expanding Government, Retreating Economy

Where once there was a limited government and unlimited economy, today there is a comparatively unlimited government and a limited economy. Following this progression, at what point do we begin to seriously measure, regulate and mitigate the impact of government's increasingly destructive impact upon the economy?

Wall Street Journal | Washington’s Illegal Bailout
 

Fed officials are upset that Congress wants to rein in their emergency and regulatory powers. Congress might have less cause to act if the Fed showed more respect for the law.

    On the Horizon 

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"

  In the News

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

Politico | HUD aid for its own workers includes $100k move

HousingWire | TRID, Discrimination and Accountability: The Appalling CFPB Double Standard

Wall Street Journal | Small Firms Aim to Raise Capital More Easily Under New Rules

MarketWatch | Lew, Hensarling Spar Over Bond Market Liquidity

Bloomberg | Risk Panel Will Divulge Why AIG, MetLife Are Too Big to Fail

Washington Times | Obama-Elizabeth Warren payday lender rules slammed by Florida Democrats

Read More

MEDIA ADVISORY: Committee Schedule for the Week of June 22

2015/06/19

Financial Services Committee Chairman Jeb Hensarling (R-TX) today announced the committee’s hearing schedule for the week of June 22.

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/.

Read More

Hearing entitled “Evaluating the Security of the U.S. Financial Sector”

2015/06/17


Hearing entitled “The Impact of the International Monetary Fund: Economic Stability or Moral Hazard?”

2015/06/10


Hearing entitled “The Annual Report of the Financial Stability Oversight Council”

2015/06/10


Hearing entitled “Legislative Proposals to Modernize Business Development Companies and Expand Investment Opportunities”

2015/06/09


Hearing entitled “A Global Perspective on Cyber Threats”

2015/06/09


Hearing entitled “Examining Legislative Proposals to Preserve Consumer Choice and Financial Independence”

2015/06/04


Contact Information

2129 Rayburn HOB
Washington, DC 20515
Phone 202-225-7502
Fax 202-226-0471
financialservices.house.gov


Membership

Andy Barr

KENTUCKY's 6th DISTRICT

Robert Dold

ILLINOIS' 10th DISTRICT

Sean Duffy

WISCONSIN's 7th DISTRICT

Stephen Fincher

TENNESSEE's 8th DISTRICT

Mike Fitzpatrick

PENNSYLVANIA's 8th DISTRICT

Scott Garrett

NEW JERSEY's 5th DISTRICT

Frank Guinta

NEW HAMPSHIRE's 1st DISTRICT

Jeb Hensarling

TEXAS' 5th DISTRICT

French Hill

ARKANSAS' 2nd DISTRICT

Bill Huizenga

MICHIGAN's 2nd DISTRICT

Randy Hultgren

ILLINOIS' 14th DISTRICT

Robert Hurt

VIRGINIA's 5th DISTRICT

Peter King

NEW YORK's 2nd DISTRICT

Mia Love

UTAH's 4th DISTRICT

Frank Lucas

OKLAHOMA's 3rd DISTRICT

Blaine Luetkemeyer

MISSOURI's 3rd DISTRICT

Patrick McHenry

NORTH CAROLINA's 10th DISTRICT

Luke Messer

INDIANA's 6th DISTRICT

Mick Mulvaney

SOUTH CAROLINA's 5th DISTRICT

Randy Neugebauer

TEXAS' 19th DISTRICT

Steve Pearce

NEW MEXICO's 2nd DISTRICT

Robert Pittenger

NORTH CAROLINA's 9th DISTRICT

Bruce Poliquin

MAINE's 2nd DISTRICT

Bill Posey

FLORIDA's 8th DISTRICT

Dennis Ross

FLORIDA's 15th DISTRICT

Keith Rothfus

PENNSYLVANIA's 12th DISTRICT

Ed Royce

CALIFORNIA's 39th DISTRICT

David Schweikert

ARIZONA's 6th DISTRICT

Steve Stivers

OHIO's 15th DISTRICT

Marlin Stutzman

INDIANA's 3rd DISTRICT

Scott Tipton

COLORADO's 3rd DISTRICT

Ann Wagner

MISSOURI's 2nd DISTRICT

Lynn Westmoreland

GEORGIA's 3rd DISTRICT

Roger Williams

TEXAS' 25th DISTRICT

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