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House holds second hearing on discrimination at the CFPB

Posted in CFPB General

On Wednesday of last week, the House Financial Services Committee held another hearing on alleged CFPB employee discrimination. At the hearing, which was titled “Allegations of Discrimination and Retaliation within the Consumer Financial Protection Bureau, Part Two,” Committee members questioned CFPB witnesses who had been subpoenaed after declining to attend the first hearing in April.

The subpoenaed witnesses who testified were Liza Strong, Lead of Employee Relations at the CFPB and Benjamin Konop, Executive Vice President of the National Treasury Employees Union (NTEU). A third subpoenaed witness, M. Stacey Bach, the Assistant Director of the CFPB’s Office of Equal Opportunity Employment, did not appear due to a medical condition. Ms. Bach must submit a transcribed interview with committee staff within a month of the hearing.

We have previously reported on reports of discrimination at the CFPB, but the hearing focused on the third-party report that was conducted by Deloitte and presented to the CFPB back in September 2013. The report concentrated on the diversity issues at the CFPB, including the over-representation of minority and women in the lower pay scale groups.  According to their testimony, neither Ms. Strong nor Mr. Konop had looked at or been aware of the report until a few days before the hearing. Several committee members expressed their disbelief that the CFPB’s Lead of Employee Relations had not known about the report for months, or that Mr. Konop, in his role at the NTEU, had not been made aware of the report. In particular, committee members questioned how Ms. Strong could effectively participate in overhauling the employee review system without knowing the full extent of the discrimination at the agency.

In her opening statement, Ms. Strong pushed back on Angela Martin’s claims of gender discrimination and retaliation, stating that Ms. Martin’s testimony at the Committee’s previous hearing was not consistent with what she has seen. Ms. Strong also outlined the steps taken by the CFPB in light of Ms. Martin’s allegations, including an offer of mediation with the peer against whom Ms. Martin had alleged discrimination. Ms. Martin’s peer accepted the offer of mediation, but Ms. Martin did not.

Mr. Konop testified that the remedial measures outlined by Director Cordray in an internal email to all CFPB employees were a “good first step,” but that there was more work to be done. Mr. Konop mentioned that all reviews should be deleted from an employee’s file, as they can have an impact on future raises and bonuses, and can affect job opportunities at other federal agencies.

Regardless of whether these hearings are motivated by an animus against the CFPB, as some Committee members implied, it is clear that there are issues at the CFPB that must be addressed.  In the words of Chairman McHenry: “These findings are particularly troubling as the Bureau in its role as policeman of the consumer credit markets has embraced a disparate impact theory, under which lenders can be held liable if their practices have a disparate impact on members of protected classes, even in the absence of direct evidence of racial discrimination. If the CFPB were a private company, the mere existence of disparities in key metrics relating to its treatment of employees would be ample grounds for enhanced supervision and costly enforcement actions.”