The Consumer Finance Protection Bureau was seemingly custom-designed, remember, to have virtually unlimited power over the financial services industry while being accountable to no one. Thus, the agency is funded not by annual Congressional appropriation, the way every other federal agency is, but rather via a direct pipeline to the annual profit of the Federal Reserve. Nor is it governed by a bipartisan board the way other regulators are, but rather by a single individual who can’t be fired.
This appears to have been a recipe for disaster. Given that, no one should be surprised that the CFPB’s default management style seems to have quickly devolved into a mixture of incompetence, gall, and abuse. The latest example: news that a top CFPB bureaucrat, an HR official there named Liza Strong, is trying to muzzle a CFPB whistleblower who testified to a Congressional subcommittee. The arrogance of these people seems to know no bounds.
Here’s what happened: Ali Naraghi is a field examiner for the CFPB and isn’t happy with how the agency is treating him. The Washington Examiner has the story:
In his testimony . . . Naraghi claims a CFPB manager used disparaging language about Naraghi’s nationality. The CFPB manager allegedly called Naraghi, an examiner and former Federal Reserve employee who is of Persian descent, an “f’ing foreigner.” Another manager told him he was “untrainable.”
Naraghi says the bureau’s Labor Relations Office, a part of the Office of Human Capital where Strong is the lead employee representative, “is broken and is more harmful than helpful to employees who suffer discrimination or retaliation.”
He charges, “Ms.Strong is failing to adequately protect Bureau employees and, in fact, causes us further harm by holding herself outas the point of contact for us to address our concerns when actually she is just another arm of management.” [Emph. added]
This is precisely the sort of alleged abuse that prompted Congress to enact whistleblower protection laws in the first place. You’d think the people who run the CFPB (whose job is to protect consumers, remember) would be jumping through hoops to address these allegations as soon as they surface. You’d apparently be wrong. Instead, bureaucrat Strong has hired herself a lawyer who wants lawmakers to bar Naraghi’s opening statement in his testimony to a House subcommittee. And this is the woman inside the CFPB, don’t forget, who’s supposed to be the one standing up for employees.
This is beyond outrageous, in my view. But it’s apparently totally consistent with the way the CFPB is being run. From the exploding cost of is Taj Mahal of a headquarters, to its purported racial discrimination against employees, to its ham-handed response to said alleged discrimination, the CFPB seems to be an agency that can’t do anything right. And now we find out that when word of its apparent incompetence and malfeasance comes to light, the agency seems to prefer silencing its critics rather than fixing the problem.
This is apparently often what happens when you give an institution lots of power and lots of money with no oversight. It can become a monster. Even by Washington standards, the CFPB seems to be displaying management ineptitude on a massive scale. It’s one thing for the agency to treat its own people this way. But can you imagine the effect this same m.o. might have as it’s inflicted on the banking system broadly? I said from the beginning the CFPB was a bad idea. It turns out I might have been more right than I knew.
What do you think? Let me know!