Financial Services, Oversight Looking at CFPB Employees Profiting from Mortgage Rules
Aug 1, 2013 -
House Financial Services Chairman Jeb Henserling, R-Texas and House Oversight and Government Reform Committee Chairman Darrell Issa, R-Calif., sent a letter to Consumer Financial Protection Bureau (CFPB) Director Richard Cordray about concerns that senior employees have left CFPB in order to profit from the very rules they helped create.
“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 states. The letter is also signed by Subcommittee Chairman Shelley Moore Capito, R-W. Va., Subcommittee Chairman Patrick McHenry, R-N.C. and Subcommittee Chairman Jim Jordan, R-Ohio,
The letter continues, “This conduct raises serious questions about the integrity of the CFPB’s rulemaking process and the conduct of some of its most senior former officials. We are deeply concerned that this close relationship between the CFPB and its former officials ultimately could harm consumers.”
While at the CFBP, senior employee Raj Date “helped to write a series of rules broadly affecting mortgage lending in the United States.” Roughly a month after the CFPB’s final rule on qualified mortgages was releasedin January 2013, Date left the CFPB. Two months later, Date incorporated an advisory and investment firm focused on “those borrowers who do not meet the standards for ‘qualified mortgages’ as set by the CFPB under rules.” Several other senior employees have since left CFPB to join Date’s firm.
The letter expresses concern, stating, “Although the CFPB is now two years old, it remains ‘something of a mystery to many market participants as it ramps up operations.’ This lack of transparency has apparently incentivized [Raj] Date and other CFPB alumni to create a cottage industry unique to the Bureau’s regulatory agenda.”
Read the complete letter to Director Cordray here.