A House subcommittee is investigating whether a high-ranking official at the Consumer Financial Protection Bureau interfered with a congressional investigation of workplace discrimination allegations at her agency.
The investigation was sparked by Tuesday's letter from John Dowd, a criminal defense lawyer representing Liza Strong, CFPB's employment services chief.
The letter asked the House Financial Services subcommittee on Oversight and Investigations to strike from the record the opening statement of Ali Naraghi, a CFPB whistleblower, who was scheduled to testify the next day.
“We respectfully request that Mr. Naraghi’s opening statement be stricken,” Dowd told Rep. Patrick McHenry, R-N.C., who is chairman of the subcommittee.
Dowd's letter was also addressed to Rep. Al Green, D-Texas, the subcommittee's top Democrat. Dowd had obtained an advance copy of Naraghi's statement.
In his opening remarks at Wednesday's hearing, McHenry called Dowd’s letter “deeply troubling” and “problematic.”
McHenry said he will investigate whether Dowd’s letter constituted interference with congressional oversight or an attempt to intimidate future witnesses appearing before the panel.
McHenry said Dowd's letter "is deeply troubling because it is apparently an attempt to prevent certain testimony from coming before this subcommittee and the American people.”
The letter “could be construed as an effort to intimidate other witnesses at the bureau, as well if they wish to blow the whistle to Congress. And it may interfere with this congressional oversight that our subcommittee and other committees are attempting to provide,” McHenry said.
Separately, Dowd told the Washington Examiner that McHenry's comments are "pure nonsense. I have every right, indeed an obligation, to object to erroneous and misleading testimony about Ms. Strong and the performance of her duties, and every right to reference and present the testimony and records which expose that testimony.
"If the chairman does not agree with our objection, he is free to overrule. But I am not going to stand idly and let this committee abuse Ms. Strong."
Wednesday's hearing was the subcommittee's third in recent months on the discrimination allegations. On Monday, CFPB settled with attorney Angela Martin, a whistleblower who has complained for two years of gender discrimination and retaliation.
Strong's CFPB office is tasked with reviewing and resolving employee complaints, but Martin, Naraghi and other workers contend that legitimate complaints and grievances were often ignored.
Federal law makes it a criminal matter for any person to obstruct or impede a congressional proceeding.
Conviction can result in imprisonment for up to five years or a fine, according to Morton Rosenberg of the Constitution Project.
The law makes it a crime to “corruptly” or through the use of “any threatening letter or communication influence, obstruct or impede, or endeavor to obstruct or impede” the “due and proper exercise of the power of inquiry under which any inquiry or investigation is being held by either House, or any committee of either House or any joint Committee of the Congress.”
Stanley Brand, former counsel for the U.S. House of Representatives, said Dowd's letter is “unusual.”
"There are whistleblowers all over the government," Brand said. "They show up at these hearings and committee proceedings all the time. I think it is rare that an agency goes so far as to formerly move to strike the testimony.”
But he said the subcommittee will have to go some distance to prove “obstruction” because "not every effort to control a government employee is an obstruction.” The Justice Department would have to take such a case to federal court.
Naraghi delivered his opening statement despite Dowd's objection. The whistleblower currently is an examiner in CFPB's southeast region. He previously worked for 14 years at the Federal Reserve Board of Governors.
In addition to intolerance, discrimination and retaliation, Naraghi said he found “gross mismanagement” at CFPB.
He said the agency hired many inexperienced managers and that supervisors pressured examiners like Naraghi to go on “fishing expeditions” where there was no apparent wrongdoing at a bank or at a financial institution. They would be pressured by CFPB managers to re-examine the records if they found no problems during their initial examination.
Naraghi, a naturalized U.S. citizen of Persian descent, claimed another CFPB manager called him a "f---ing foreigner."
Naraghi filed a complaint with Strong, but nothing came of it. However, the National Treasury Employees Union, which represents CFPB employees, told him Tuesday that the bureau is opening an investigation, he said.
“I soon found that voicing a professional dissenting opinion that is any way at odds with bureau management — even in the smallest ways — will result in retaliation," Naraghi told the subcommittee.
Naraghi said Dennis Slagter, CFPB's chief human capital officer, told him, “if you don’t like it, go back to the Federal Reserve Board."
“Management responded that they did not like me asking questions about the reason behind orders,” Naraghi told the subcommittee.
Strong is the lead employment relations officer at the Labor Relations Office, which is part of CFPB's Office of Human Capital.
That office “is broken and is more harmful than helpful to employees who suffer discrimination or retaliation,” Naraghi testified.
Kevin Williams, a former CFPB employee, told the subcommittee that his unit was nicknamed “The Plantation” because of its preponderance of African-Americans on the staff.
“The Plantation is where black women and white men oversee a unit of black employees who are never considered or groomed for management despite their competitive qualifications,” he said.