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Topics: CFPB

EDITOR'S NOTE: American Banker and 'drive-by journalism'

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Business,Mark Tapscott,Watchdog,Lobbying,CFPB,Ethics

Trade journalism is sometimes viewed as the red-headed stepchild of the media business because some of its precincts depend for their existence upon the very subjects they cover. That reality can make independent reporting all but impossible.

Even so, many trade journalists can and often do provide important and informative work. Others, not so much.

Consider the Aug. 5, story in American Banker titled "Why ethics charge against CFPB vet Raj Date is weak," by Rob Blackwell.

At issue is the propriety of the prospective relationship between a consulting firm established by Raj Date and the government agency he formerly led, the Consumer Financial Protection Board.

Here's the key graph in the American Banker story:

"Yet some of the panels' concerns appear to be based on faulty information. The charge that Date and others at the firm, Fenway Summer, will lobby the CFPB for clients, is erroneous, based on the services the company says it provides. And many observers view Date's new role as normal and acceptable practice for a former regulator."

Blackwell claims the "erroneous" view that Date's firm would "lobby the CFPB" came from a June 19 Washington Examiner article by the Watchdog investigative reporting team's Richard Pollock.

Blackwell then said of Date:

"In an interview, Date made it clear the firm does not intend to deal with the CFPB directly, or help others work out issues with the agency.

"'I can't influence what the CFPB does,' Date said. 'To influence the agency, you would have to lobby the agency, or represent clients before the agency. And we do neither.'"

In fact, the Pollock story wasn't about lobbying CFPB or representing clients before the board, it was about former CFPB executives profiting from their experience in government and gaming the regulatory process by advising clients on how they can best to deal with a regulator.

Sen. Charles Grassley, the Iowa Republican who tried unsuccessfully to insert an anti-revolving door provision in CFPB's founding legislation, told Pollock the problem is "a weak revolving-door policy that allows former employees to profit from their employment and advise firms with business before the agency could be harmful to consumers."

The Pollock story — titled "Revolving door spinning at Consumer Financial Protection Board, raising ethics issues" — quoted Date's description of Fenway Summer: "Think of it really as sort of a strategic and financial advisory practice focused exclusively on U.S. consumer finance."

Pollock then listed those Date hired away from CFPB to staff Fenway Summer: "Date hired Garry Reeder, the agency's chief of staff; Chris Haspel, the bureau's senior advisor for mortgage servicing and securitization; Mitchell Hochberg, the CFPB's regulatory senior counsel; Sean O'Mealia from CPFB's Office of Research, Markets, and Regulations; and Alison Miller, the agency's deputy executive secretary."

The word "lobbying" didn't even appear in the Pollock story until it was mentioned by Michael Smallberg of the Project on Government Oversight.

As Pollock reported:

"Federal law bars former CFPB and other former government officials from contacting individuals with whom they worked who are still with the government, but ethics experts contend a huge loophole is the fact former officials are free to share their insider knowledge with clients.

"That loophole worries Smallberg. 'We call it behind-the-scenes lobbying when someone doesn't personally appear before the agency, but they can tell their private sector colleagues, Here's who you need to call, here are the arguments you need to make to be most persuasive. This gives their clients a pretty big heads-up with the agency."

Similarly, Pollock quoted a former White House ethics officer:

"Richard Painter, the former top White House ethics officer under President George W. Bush, called Fenway Summer nothing more than 'an extortion racket' or a 'protection racket' to shake down regulated companies now vulnerable to the federal rules Date oversaw or authored while at the agency."

Note, again, Pollock's focus on former agency officials using their knowledge to advise regulated clients, not to lobby the government.

Even so, Blackwell then quoted Painter and Blackwell saying Pollock told them Date's firm would be lobbying CFPB.

If Blackwell wasn't clear on the issue, he should have called Pollock and asked for clarification, but he didn't.

Taking shots at somebody but not giving them an opportunity to respond is journalism's equivalent of the drive-by shooting.

After reading Blackwell's story, I reviewed Pollock's interview notes and listened to his recordings of those interviews. His questions were about the revolving door, as described by Grassley, not about lobbying CFPB.

So I emailed American Banker editor Neil Weinberg about Blackwell's story:

"That story was brought to my attention yesterday and, after reviewing our reporter's recordings of his interviews with Painter and Smallberg, I am, quite frankly, at a loss to understand why your reporter framed the story as he did. We will be correcting the record but I would like to hear your side of the story before we do so."

I waited 11 days with no response from Weinberg. So, Wednesday I called him. Said he never got my email. I resent it. He suggested Pollock call Blackwell. LOL.

So readers can decide who provided the most accurate reporting on Raj Date, Fenway Summer and the CFPB, Pollock or Blackwell.

On Aug. 19, American Banker sat down with CFPB Chairman Richard Cordray and hit him with zingers like this: "Since you've been at the CFPB, what would you say are the greatest accomplishments to date?"

Mark Tapscott is executive editor of the Washington Examiner.

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