Rajeev Date may have given new meaning to the phrase "revolving door" when he left the Consumer Financial Protection Bureau on January 31 to start a new bank and mortgage "advisory firm."
The former CFPB second-in-command was ultimately joined at his new enterprise -- Fenway Summer, registered in Delaware on March 11 -- by several key CFPB colleagues.
Fenway Summer's quick incorporation appeared to contradict a CFPB spokeswoman who told reporters Date had "no current plans for his career after the CFPB, other than to spend more time with his family."
Date raided the agency of its chief of staff, senior counsel and other key CFPB officials, actions that are now raising eyebrows among ethics specialists.
As deputy director, Date actually ran CFPB from August 2011 to January 2012 when its founder, Elizabeth Warren, left to seek a Senate seat and before President Obama appointed Richard Cordray as its new director.
In his position, Date crafted a slew of regulations for banking and mortgage companies mandated under the federal Dodd-Frank law.
In an interview with the Washington Examiner, Date described his new company as a "strategic advisory firm" that touches on all of the of the bureau activities.
"Think of it really as sort of a strategic and financial advisory practice focused exclusively on U.S. consumer finance," he said.
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.
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.
"It gets me pretty upset," Painter told the Washington Examiner. "It's almost like a protection racket. You hire the alumni of the agency and they'll call up their buddies in the agency to call off the dogs."
Painter added that "if I were the head of the agency now, I would tell the banks to hire a different consulting firm."
Michael Smallberg, an investigator for the non-partisan Project on Government Oversight shared Painter's concerns.
"I would say there's a heightened concern when you have a concentration of so many former officials coming to the same place," he told the Examiner. "It seems to me there is a heightened risk the firm could play an influential role in lobbying their former colleagues."
Apprised of Raj Date's company, Sen. Charles Grassley, the Iowa Republican who drafted a revolving door amendment to the Dodd-Frank bill that was rejected by the Senate, said, "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."
Raj refused to disclose his current client base, saying only that "we have clients that are 'very, very big.' And then we have venture-backed startups."
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."
Painter says the loophole has created "an ethics free-for-all" because "if you have a big loophole in the law that allows this, it will happen."
Asked about the issue, Date said he believes he should be exempted as a businessman. "I'm not unsympathetic in general that people are just using public service as a means by which kind of create opportunities for themselves. But the reality is we're business people here."
Ethics watchdog groups called upon CFPB in 2011 to impose tough post-employment restrictions and a two-year "cooling off period" before taking a job with a regulated company.
Date disagrees. "Now it just so happens I am in the middle of my career," he explains. "At some point, I did have to go back to work in the private sector. That's just life."
Date's 2012 salary at the CFPB was $243,075, according to fedsdatacenter.com.
Smallberg says he is disappointed the Bureau has adopted no reforms on post-employment conflicts of interest.
He also said POGO hoped CFPB would adopt a Securities and Exchange Commission rule requiring former employees to file disclosure statements about their work. The agency did not.
Citing privacy laws, a CFPB spokesman declined to address Date's post-government employment conduct.
But an agency spokesperson told the Examiner "CFPB does have a robust ethics program and advises both current and former employees on the government ethics rules that apply to them."