Is a federal agency charged with rooting out racial discrimination against borrowers discriminating against its own minority employees?
An investigation conducted by the banking industry news outlet American Banker suggests so.
Internal employee evaluations at the Consumer Financial Protection Bureau show that managers at the agency rated minority workers lower than their white peers, despite the agency’s focus on fighting discriminatory lending.
On a five point scale, 20.7 percent of white employees, 10.5 percent of black employees and 9.1 percent of Hispanic employees received the highest job evaluation score, according to confidential documents obtained by American Banker.
Approximately 42 percent of blacks, 35 percent of Asians and Hispanics and 24 percent of whites received scores of 3 on their evaluations. A miniscule number of staffers of any race received scores of 1 or 2.
The evaluations, given to over 1,100 staffers, are important. Evaluation scores help determine employee raises, benefits and bonuses. High-scoring employees were dubbed “role models,” according to American Banker.
“The level of hypocrisy at this agency is shocking,” one CFPB employee told American Banker. “If it was a lender and had similar statistics, it would be written up, immediately referred to the Justice Department, sued and publicly shamed.”
CFPB was born out of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the weighty bill that was created in the aftermath of the 2007-08 financial crisis. The agency’s first special adviser was Elizabeth Warren, the Democratic senator from Massachusetts.
Part of the agency’s job has been to thwart discriminatory lending practices.
Last year, CFPB and the Department of Justice issued a $98 million disparate impact judgement against Ally Financial. The order accused Ally of bilking 235,000 minority car buyers out of millions after some of Ally’s car dealership partners allegedly discriminated by charging minority customers higher interest rates.
Ally agreed to pay the fine while denying that it discriminated against minority borrowers.
“We want consumers to avoid the marketplace’s silent pickpocket—discrimination,” said current CFPB director Richard Cordray in 2012. “We cannot afford to tolerate practices, intentional or not, that unlawfully price out or cut off segments of the population from the credit markets.”
The CFPB also posted a “Compliance Bulletin” to address an anti-discrimination mandate created under the Equal Credit Opportunity Act.
“Consistent with other federal supervisory and law enforcement agencies, the CFPB reaffirms that the legal doctrine of disparate impact remains applicable,” read the Compliance Bulletin, issued in 2012.
Disparate impact is a concept used in labor law and various discrimination cases. It is generally considered an unintentional form of discrimination and shows up when minority groups are underrepresented in terms of jobs, income, or educational representation compared to their percentage share of the general population.
CFPB spokesman Sam Gilford responded to American Banker on the employee evaluation report.
“We hold ourselves to the standards of fairness that we expect of our regulated entities,” Gilford told American Banker. “That’s why we have undertaken a robust compliance management approach to ensuring our internal policies result in the fair treatment of our employees.”
Gilford said the agency would be proactive in taking corrective measures.
“The charge of discrimination is a serious one, and I have repeatedly asked Director Cordray for specific information on the accuracy of the data that led to the CFPB’s conclusion that this discrimination exists in the auto lending industry,” Kansas Republican Sen. Jerry Moran told The Daily Caller News Foundation. “To this day, the CFPB has refused to answer my multiple inquiries, and the absence of any formal Congressional oversight capabilities enables them to do so.”
“The American Banker article alleging that the CFPB’s own personnel are experiencing a racial bias in the workplace reinforces the need to rein in this bureaucracy and allow Congress to properly oversee its operations,” Moran added.
In 2011, Moran proposed a bill that would create a five-person commission to oversee the agency rather than a sole director. That would have brought the CFPB in line with the practices of other independent federal agencies and prevent the domination of the agency by one person. Moran re-submitted the bill last year.
It is unclear how much money minority employees may have lost through their lower scores. The CFPB did not respond to The Daily Caller News Foundation’s request for comment.
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