Two House committees are investigating former Consumer Financial Protection Bureau officials who now appear to be cashing in on their insider knowledge and contacts concerning mortgage underwriting rules they helped to write.
In a July 31 letter, leaders of the House Committee on Financial Services and the Committee on Oversight and Government Reform demanded documents from CFPB concerning Rajeev Date.
As previously reported by the Washington Examiner, Date was formerly CFPB's deputy director and had served at one time as its acting director. He resigned in January, then opened a consulting firm two months later called Fenway Summer that specializes in advising companies on CFPB-related matters.
Signers of the letter said they were concerned about "the appearance of impropriety in Mr. Date's planned activities for Fenway" and denounced the "lack of transparency" in the agency's rules concerning former employees.
"This lack of transparency has apparently incentivized Mr. Date and other CFPB alumni to create a cottage industry unique to the Bureau's regulatory agenda," they said.
"Simply put, it appears that former CFPB employees are now offering financial products in a market sector created by the very rules they were in a position to influence while working in senior leadership positions at the CFPB," the letter signers said.
Date raided CFPB to lure four former colleagues from the bureau to join him at Fenway Summer.
In their letter, the signers quoted a June 19 Examiner watchdog article that described Date's actions.
The story included a comment by Richard Painter, a former White House ethics chief who called the Fenway firm "an extortion racket" that "hires alumni of the agency and they'll call up their buddies in the agency to call off the dogs."
Until his last days at CFPB, Date oversaw the drafting of the agency's regulatory rule on qualified mortgages, which requires a creditor to make a good-faith determination of a consumer's ability to repay the loan.
After leaving CFPB, Date said he would oppose the rule he previously oversaw and would establish a new business to offer loans to borrowers who "fall outside of the bright line boundaries."
Date said he would have access to a $1.5 trillion segment of the loan market.
The letter signers included House Oversight and Government Reform Committee Chairman Rep. Darrell Issa, R-Calif., and House Financial Services Committee Chairman Jeb Hensarling, R-Texas.
Also signing the letter to CFPB director Richard Cordray were subcommittee chairmen Rep. Jim Jordan, R-Ohio; Shelley Moore Capito, R-W. Va.; and Patrick T. McHenry, R-N.C.
The signers asked Cordray to produce documents by Aug. 14 concerning communications between Date and his new business partners with CFPB, their prior roles in forming the mortgage regulation, as well as the agency's overall attrition rate, which has been high.