The Consumer Financial Protection Bureau was aware of race and gender disparities under its employee performance ratings system as early as September 2013, but failed to acknowledge the problem until recent media reports and congressional scrutiny brought the issue to light, Republicans said during one of two CFPB-related House subcommittee hearings last week. Lawmakers also heard testimony from Liza Strong, the CFPB’s director of employee relations and Ben Konop, executive vice president of the CFPB’s employee union, both of whom received subpoenas to appear.
Stacey Bach, assistant director of the CFPB’s Office of Equal Employment Opportunity, was also subpoenaed. However, she requested that her testimony be postponed due to a medical condition.
The House Financial Services Oversight and Investigations Subcommittee has been probing claims of employee discrimination and retaliation at the bureau since American Banker reported in early March that internal agency data showed a “a pattern of ranking white employees distinctly better than minorities in performance reviews used to grant raises and issue bonuses.”
“It’s now apparent that the CFPB was aware of the racial disparities in key metrics well before the March 6 American Banker article,” said Rep. Patrick McHenry, R-N.C., referencing a CFPB-commissioned report that was completed by Deloitte Consulting and delivered to the bureau in September 2013.
He said the Deloitte report noted sharp racial disparities in performance ratings, pay, hiring and other areas. Committee leaders also said the report corroborated the previous testimony of Angela Martin, a CFPB attorney who told lawmakers last month that there have been problems with the CFPB’s hiring, staff promotions, performance reviews and employee pay since the bureau’s inception.
During an April 2 hearing, Martin also told the subcommittee that “there is a pervasive culture of retaliation and intimidation that silences [CFPB] employees and chills the workforce from exposing wrongdoing.” At that same hearing, the subcommittee heard from Misty Raucci, an outside investigator hired by the CFPB to examine Martin’s claims. Raucci concluded after an investigation that Martin’s claims of retaliation were valid.
Strong, who manages investigations of individual employee grievances at the CFPB, told lawmakers that Martin’s claims and Raucci’s report are “not consistent with what I have observed during my time at the bureau.” She added the bureau took Martin’s grievances seriously and “went to great lengths to help Ms. Martin get to a place where she could be happy and productive.”
“For nearly a year-and-a-half, I kept an open-door policy with respect to Ms. Martin, and always made myself available to assist her however I could,” Strong said. “I have never witnessed management be anything but professional and accommodating to her.”
Strong also said Raucci’s report was an “incomplete work product” that resulted from an investigation that “did not meet even minimal standards.”
Konop testified that the union frequently claimed that the CFPB’s women and minority employees were being underpaid when compared to similarly-situated white male colleagues.
“To date, the bureau has denied each of these grievances at all stages, often using inconsistent reasoning, despite what I feel is convincing evidence of low pay for numerous women and minority workers,” Konop said. “In the last several weeks, however, there does appear to be recognition by management that we ought to be doing better as a bureau.”
Konop noted, for example, that the CFPB and the union recently reached a tentative agreement on a new performance review system that largely abandons the system that yielded the disparities. CFPB Director Richard Cordray also recently released a directive acknowledging that “there were broad-based disparities in the way performance ratings were assigned across [the CFPB’s] employee base in both 2012 and 2013.”
“As a result of this directive, which retroactively compensates the majority of employees harmed by the [Performance Management Review] system, it appears that the bureau has made a solid first step in the process of holding itself accountable,” Konop said.
Rep. Sean Duffy, R-Wis., a vocal proponent of CFPB transparency legislation, linked the bureau’s changed approach to the subcommittee’s oversight of the issue.
Rep. Maxine Waters, D-Calif., ranking member of the Financial Services Committee, said the CFPB’s recent efforts to remedy pay disparities are “extremely impressive.” She also lauded Cordray for his attention to the matter.
“He took on this issue; stopped everything that he was doing [and] took on this issue,” Waters said. “He’s done a fantastic job.”
She said employees at other agencies are starting to come forward with claims of discrimination, and she urged the subcommittee’s Republican leaders to “tackle this in the same way.”
“Hopefully we can get these kinds of results from all of the other agencies where … discrimination has been going on for years,” Waters said.
Konop agreed that discrimination is likely an issue in other government agencies and throughout society. He also said the CFPB should take additional steps to address inequality.
“We have to remedy past wrongs, and that will mean, in some cases, financial remedies,” Konop said. “I think Director Cordray’s memorandum takes a good step forward on that matter, but we still have pay equity issues that have not been addressed that effect dozens of woman and minorities at the bureau.”
He also said the CFPB should take steps to hold managers accountable.
“We’ve always acknowledged certainly union members make mistakes, and we get held accountable. We just want that same accountability applied to managers,” Konop said.