Rare bipartisanship blossomed at a House Financial Services subcommittee hearing surrounding allegations that a pattern of racial and gender discrimination exists at the federal Consumer Financial Protection Bureau.
A CFPB investigator charged that the bureau is a “toxic” workplace for its 1,300 federal workers, who are empowered to enforce anti-discrimination laws in consumer finance.
At the center of the hearing was whistleblower Angela Martin, a former civilian attorney in the U.S. Army's Judge Advocate General's corps and National Treasury Employees Union chapter board member whom CFPB hired three years ago to serve as the chief counsel for its Consumer Response unit.
In her testimony Wednesday before the Financial Services subcommittee on oversight and investigations, Martin described an agency where “there is a pervasive culture of retaliation and intimidation that silences employees and chills the workforce.”
CFPB managers “have adopted an authoritarian, untouchable, unaccountable and unanswerable management style,” she said.
Martin related acts of abuse and discrimination against women and minorities that continued up to the morning of the hearing, when she said she received a call for help from a distraught African-American woman who worked at the bureau.
Martin alleged that women, African-Americans, Hispanics and even naturalized American citizens suffered from the acts of a group of white managers who had created a hostile work environment.
In addition to personal abuse, she said women and minorities at CFPB experienced disparate pay, poor reviews and promotions. In CFPB's enforcement division, she contended there is a pay gap between whites and minorities with the same backgrounds that has reached as high as $60,000.
In her own Consumer Response unit, Martin said there was an exodus of women and African-Americans, only to be replaced by white males who were “cronies” of Scott Pluta, the assistant director of Consumer Response and Martin’s boss.
“If you’re a black in Consumer Response, most of the managers are white male. Women have left. They have been replaced by white males,” she told lawmakers. “Anybody who has left that office is a woman or a minority.”
The whistleblower testified that CFPB managers had hired only African-Americans to work at the consumer complaint intake unit. She confided that because only blacks worked at the unit, CFPB workers nicknamed it “the Plantation.”
“African-Americans tell me it is extremely hard to leave the Plantation,” Martin said. “You must be extremely savvy or you must be having somebody else to get you out," she claimed.
“You cannot say education is a factor because there are licensed attorneys working there. There are [people with] master's degrees there,” Martin said.
“So what you have in the performance evaluations are the white males in power in better spots, giving themselves the (top) 4’s or 5’s, giving themselves the raises and bonuses. And (with) the minorities," she said, "there’s a widening of the gap."
Rep. Maxine Waters, D-Calif., the ranking Democrat who as recently as March 28 tried to cancel the hearing, reversed herself and praised both Martin and the Republican subcommittee chairman, Rep. Patrick McHenry of North Carolina.
Waters was obviously moved by Martin's testimony. She stunned the committee by refusing to ask Martin any questions, telling McHenry, “I’d like to yield back the balance of my time to Ms. Martin so she can just continue talking to us.
“The kind of racism you described, the way you described this so plainly and so openly and the words that you used, it’s commendable,” Waters told Martin.
“The fact that you’re going to provide some leadership on this just does my heart so good. I’m so appreciative,” the Democratic lawmaker told McHenry.
Bipartisan unity on the issue may spell serious problems for the relatively new agency, which was formed in part to attack discrimination against minorities in financial matters.
Last December, for example, CFPB announced a $98 million set of fines and penalties against Ally Financial and Ally Bank for discriminating against minorities in auto loans.
That same month the agency also said it would require PNC Bank to pay $35 million in restitution for charging higher prices on mortgage loans to African-American and Hispanic borrowers.
So far, Democrats have stoutly defended the bureau. But if the charges of widespread discrimination at CFPB take hold, it could mean major changes at the agency.
Martin told the committee that on the evening of Aug. 7, Cordray personally called her and ordered her to force her lawyers to “back down.”
A congressional source confirmed to the Washington Examiner that Cordray placed the call to Martin on Aug. 7 on his cell phone.
Martin initially filed a complaint of discrimination and retaliation in December 2012 under Equal Employment Opportunity rules.
Joining Martin at the hearing was Misty Raucci, the investigator hired by CFPB to originally investigate Martin’s claims.
Raucci agreed with the whistleblower’s assessment, saying there was a “toxic workplace” environment.
“I found that the general environment in Consumer Response is one of exclusion, retaliation, discrimination, nepotism, demoralization, devaluation, and other offensive working conditions which constitute a toxic workplace for many of its employees,” she told the subcommittee.
Raucci said since taking on the Martin case, she has been a “hotline” for at least a dozen unhappy CFPB employees.
Martin herself said “scores” of CFPB colleagues told her accounts of racism, gender discrimination, even abuse of foreign-born employees.
CFPB declined to send officials to the hearing. McHenry said the committee would find ways to “compel” their appearance.
Waters and other Democrats on the committee have officially asked the Federal Reserve Board's Office of Inspector General to investigate the allegations of discrimination.
Martin told the subcommittee the hostile work environment extended to naturalized citizens.
She said she had received a call night before the hearing from a CFPB employee who is a naturalized U.S. citizen and had previously worked for the Federal Deposit Insurance Corp.
Martin said “managers refer to him in an open meeting as [a] 'f---ing foreigner.' This is unacceptable. He should not be going through this."
In another example of low morale among minorities she said, “In December, I saw another female crying in her office, suffering from the same abuses that I myself was experiencing. I said this has to end," she told the lawmakers.
Since last August CFPB employees have filed 115 official grievances with the National Treasury Employees Union, which represents the bureau workers, according to the American Banker.
The number exceeds 200 grievances if informal complaints are counted.
Confidential data obtained by American Banker also shows that CFPB managers ranked white employees higher than minorities in evaluations, which determine performance and bonuses.
Overall, whites were twice as likely in 2013 to receive the agency’s top grade than African-Americans and Hispanics.
“If it was a lender and had similar statistics, it would be written up, immediately referred to the Justice Department, sued and publicly shamed,” an anonymous CFPB employee told the American Banker.
Martin said she fully supported the bureau's mission to regulate consumer finance.
“The CFPB should represent fairness in the American marketplace with regard to discrimination, discriminatory practices or retaliation," she said.
“Instead they were committing unfair and deceptive practices against their employees."
Martin continues to work at CFPB while her Equal Employment complaint continues, but says she is "isolated" by management and handles no cases.
In a statement sent to the Examiner following the hearing, Cordray said, “I take seriously the concerns raised at [Wednesday's] hearing and deeply apologize to any member of the CFPB staff who feels that they have not been heard or treated fairly. I welcome the opportunity to appear before Congress to discuss these issues fully.”
CORRECTION: CFPB employee and whistleblower Angela Martin was a civilian lawyer with the U.S. Army's Judge Advocate General's corps. Her military affiliation was incorrect in a previous version of this story. Martin was initially hired by the CFPB as chief counsel but later became general counsel for the unit in which she worked; her title at the time of hiring was incorrect in a previous version of this story. Also, the CFPB employer whom Martin said had been referred to by managers as a "f--- foreigner" had previously worked for the Federal Deposit Insurance Corp.; his previous employer had been listed incorrectly in a previous version of this story. The Washington Examiner regrets the errors. This story was published at 6 a.m. April 3 and was updated at 8:17 a.m. to reflect these corrections.