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Singletary: A broad alliance is deservedly coming to our consumer watchdog’s defense

By Michelle Singletary
Published: March 1, 2017, 6:00am

In a pre-emptive 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.

From its very inception, Republicans have been critical of the Consumer Financial Protection Bureau, which was created under the 2010 Dodd-Frank law. 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 stymie or slow down 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 detractors of the agency are urging Trump to dismiss him early. Under existing law, the president can only remove Cordray “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 only be removed for cause and why the Federal Reserve, not Congress, controls its budget.

Last year, 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 the ruling.

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 spokesperson 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. Following the disclosure, the House Financial Services Committee began 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 issues 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 Committee on Financial Services 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.

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 during 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.

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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.

Michelle Singletary welcomes comments and column ideas. Reach her in care of The Washington Post, 1150 15th St. N.W., Washington, DC 20071; or singletarym@washpost.com.