Patrick McHenryChairman

Washington, June 17, 2014 -

Note:  The Financial Services Committee will hold two hearings about the CFPB on Wednesday, June 18.  At 10 a.m., the full committee will hear from CFPB Director Richard Cordray.  At 2 p.m., the Financial Services Oversight and Investigations Subcommittee will hear from CFPB whistleblowers during its third hearing on allegations of discrimination and retaliation within the CFPB.  Both hearings will take place in room 2128 Rayburn House Office Building and will be webcast at /.

POLITICO PRO:  CFPB employee’s charges of retaliation to be aired at hearing

6/16/14

A Consumer Financial Protection Bureau employee will testify before Congress this week about a “culture of intimidation and retaliation” at the agency and raise allegations of mistreatment in the workplace — including that he was referred to as an “F-ing foreigner” by someone in management.

Ali Naraghi, an examiner with the division of supervision, fair lending and enforcement for the CFPB’s Southeast region, is one of two witnesses set to appear before the House Financial Services Oversight Subcommittee on Wednesday as a part of the panel’s ongoing investigation into allegations of discrimination and retaliation within the agency.

Naraghi — who is of Persian heritage — does not specify who in management allegedly called him an “F-ing foreigner” in his opening remarks, which were obtained by POLITICO.

“Like many others, I feel fortunate to have immigrated to the United States, and do not deserve to be referred to in derogatory terms by Bureau management,” Naraghi says in prepared testimony. Naraghi claims that several people at the agency made his life “a living hell” through repeated retaliation and hostile behavior.

Naraghi and Kevin Williams, a former CFPB employee who was a quality monitor at the bureau’s Office of Consumer Response, were issued subpoenas by the Oversight Subcommittee last week and are set to testify in a hearing Wednesday afternoon. The committee’s Republican staff said both individuals requested they be subpoenaed so that they could share their stories without risking further retaliation.

It is the second time this year that the committee exercised its subpoena powers to compel the testimonies of people connected to the CFPB, and Wednesday will mark the third hearing where witnesses discuss alleged mismanagement across the agency.

The CFPB has come under congressional scrutiny this year after it was first reported in March that white employees received higher ratings than minorities on a rating scale that the agency uses to determine employee benefits, including raises and bonuses. An internal review found disparities in the ways employees were evaluated in recent years based on factors like race ethnicity, age and pay, and the bureau announced last month that it would compensate workers who may have received unfair performance ratings as a part of the CFPB’s “corrective actions.”

The recent charges that have dogged the agency are also expected to be at the center of CFPB Director Richard Cordray’s testimony before the Financial Services Committee Wednesday morning.

Republicans opposed the creation of CFPB and have been critical of the agency since it opened for business in 2011, arguing it represents a government overreach and will make it harder for consumers to get credit. They have seized on the recent allegations of discrimination and retaliation at the agency. Democrats have expressed concerns about the charges as well but have urged panel Republicans to broaden the inquiry to all financial regulators rather than focus only on the bureau.

Naraghi, who formerly worked at the Federal Reserve, says in his opening remarks that his experience at the CFPB has demonstrated that “voicing a professional dissenting opinion that is any way at odds with Bureau management — even in the smallest of ways — will result in retaliation.”

“Unfortunately, the Southeast Region examination program is run by intimidation and, like a dictatorship, there are significant consequences for disagreeing and/or disobeying the King,” he says.

He directs criticism at several CFPB employees, including chief human capital officer Dennis Slagter. Naraghi alleges that when he offered feedback to Slagter about the large bank supervision program, the response he received was: “If you don’t like it, go back to the Federal Reserve Board.”

When he raised concerns to management about unfair treatment in 2012, Naraghi says he was told “they did not like me asking questions about the reason behind orders and what my rights may be, and how I raised questions about certain aspects of CFPB management practices.” And after he filed a complaint with the office of Equal Employment Opportunity, Naraghi claims he quickly became “one of the targets” of Regional Director Jim Carley and Assistant Director of Supervision Examination Paul Sanford.

A bureau spokesperson declined to comment directly on Naraghi’s testimony. They pointed to a March report from CFPB’s inspector general that made recommendations on how the bureau can improve its supervisory activities. CFPB officials told the IG they have taken steps to address the audit’s findings, according to the report.

The opening statement also details what Naraghi says was his attempt to appeal to Liza Strong, a labor and employee relations official at CFPB, in July 2012. When he sent her an email detailing concerns about mistreatment and flagged what he considered to be “unprofessional” and “possibly illegal” conduct by field manager Jerome Uberu, Naraghi says Strong responded nearly three months later and did not investigate the complaint.

“Ms. Strong’s outright dismissal of my own legitimate concerns of mismanagement has caused Mr. Uberu to become more brazen in his intimidation and abuse of my fellow examiners,” he said.

Strong was one of the witnesses subpoenaed by the Financial Services Oversight Committee earlier this year. In a May hearing, Strong came under fire from House Republicans on whether the bureau acted promptly to address concerns raised in a September report about its hiring practices and employee diversity and whether the agency tried to sweep its findings under the rug during negotiations over a new employee evaluation system.

Strong’s lawyer, John Dowd, said Monday that the email Naraghi cites was directed to the head of the EEO and that Strong was cc’d on the note. Dowd said Strong offered “courteous advice” despite being “swamped with work and short of staff at the time,” and that Naraghi’s testimony “appears to be a deliberate, unfounded, and baseless leak of erroneous information about Ms. Strong’s responsibilities and obligations at the CFPB to cast her in a false light as earlier testimony before this Committee attempted to do.”

“Ms. Strong’s job is to investigate complaints, not become engaged in the EEO process,” Dowd added. “The EEO process is separate from her job. Indeed, it would be improper for her to become involved in the EEO process.”

The CFPB declined to make Slagter, Carley, Sanford and Uberu available for comment.

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