Three of the top four officials at the Consumer Financial Protection Bureau have jumped from CFPB to lucrative posts representing financial services industry firms their former agency regulates, according to a Daily Caller News Foundation investigation.
The latest of the departures is Quyen Truong, formerly deputy general counsel, who accepted a position this month with the law firm Stroock & Stroock & Lavan.
Truong’s new law firm represents banks such as Citigroup, Bank of America Merill Lynch, Barclays Capital, Credit Suisse and Deutsch Bank. The company also assists high-flying hedge funds including Carlyle Group, JP Morgan Asset Management and Goldman Sachs, according to its website.
Truong was preceded out the door by her former boss at CFPB, General Counsel Meredith Fuchs, who left in February to join Capital One.
At the time of her departure, Fuchs was also the bureau’s acting deputy director, having replaced Steven Antonakes who left to join Eastern Bank last summer as a senior vice president and chief compliance officer. Eastern Bank is the largest and oldest mutual bank in the country.
The rapid-fire exits of top consumer officials to the financial industries sparked condemnation from many sides, including long-time supporters of the agency that was first proposed by President Barack Obama in 2009.
Craig Holman of Public Citizen, a Ralph Nader-founded government reform group and a supporter of the bureau, told TheDCNF he considers the departures “alarming.”
Holman said “the revolving door is one of the most pernicious influence-peddling tools that can undermine the integrity of governmental agencies.”
Scott Amey of the non-profit watchdog Project on Government Oversight also denounced the defections, telling TheDCNF he was upset by “the decision to go work for an agency that was supposed to protect consumers and then land in the private sector now potentially opposed to those interests.”
John Berlau, a senior fellow at the Competitive Enterprise Institute, a conservative free-market think tank, told TheDCNF, that “consumers suffer when only well-connected firms can get the breaks when dealing with an agency like the CFPB.”
Obama and Sen. Elizabeth Warren, the Massachusetts Democrat who was then a Department of Treasury official, worked together to create the bureau under the Dodd-Frank Act. The bureau is viewed as unconstitutional by critics who point out that Congress has no oversight or budget authority over CFPB because it is part of the Federal Reserve System.
Berlau said the lack of accountability has “created a culture more favorable to cronyism that even those of other government agencies.”
The original purpose of CFPB was to represent consumers against unscrupulous banking and financial service practices.
But CFPB has instead become a breeding ground for bureaucrats becoming highly paid executives in the very industry the bureau was created to regulate. The CFPB has an unusually high turnover rate for a government agency as nearly 50 top CFPB officials have abandoned the agency since its creation to take high-paying jobs in the industry.
Truong makes no bones about having insider information that will help her new firm’s clients.
“Our clients include, among others, commercial and consumer banks, residential lenders, student lending companies, automobile finance companies, credit card issuers, payment processors, investment banks, e-commerce companies, telecommunications companies and insurance companies,” the Stroock web site boasts. All the sectors fall under the CFPB’s regulatory review.
“I decided to come to Stroock because I think of my insider knowledge of how the CFPB operates,” she told TheDCNF. She said she would be “combining that knowledge with the great client base that Stroock has, which includes most of the industry leaders.”
“That is making use of her connections with the CFPB,” noted Holman. “And that I consider as a conflict of interest.”
Amey added Truong’s move “is a perfect example of switching sides. They do have inside knowledge, and it looks good for their clients.”
Fuchs, Truong’s previous boss at CFPB, has the title at Capital One of financial services regulatory counsel and senior vice president.
Amey was particularly critical of Fuchs, who once worked at an advocacy group that fought for government integrity and transparency.
“It is a little odd that someone in a few years would go from working for government transparency and protecting the public interest and now she’s spun it off for a lucrative banking industry,” he told TheDCNF.
Antonakes had replaced Raj Date as CFPB’s number two official. Date left the bureau after a brief tenure and raised eyebrows when he took five other top officials with him to create a new Washington consulting firm for financial industry special interests.
Date has since joined the board of directors of Prosper, an online lending company that is an unregulated financial services company. CFPB officials say they may seek to regulate online lending as consumer abuses have come to its attention.
The Hill estimated last year that at least 45 top CFPB officials had left the bureau to join banking, mortgage and financial services firms.
Holman said federal anti-revolving door regulations, which are enforced by the Office of Government Ethics, are inadequate and CFPB had to strengthen its ethics rules. The rules include a one-year ban on former high-ranking officials who wish to lobby their previous agency or in any legal representation before their previous agency.
“Given the fact we’ve seen some 45 people leave and go back to the financial services industry, which is a high number, it would be prudent for the bureau to develop a revolving door ethics policy for its employees,” Holman said. “This is something the agency is free to do, to set up its own ethics rules on revolving door.”
But Sam Gilford, a CFPB spokesman, told TheDCNF “CFPB has no authority to promulgate additional ethics rules for its former employees, beyond those promulgated by OGE.”
Gilford claimed CFPB “has a robust ethics program and advises both current and former employees on the government ethics rules that apply to them.”
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