Four former members of the Consumer Financial Protection Bureau (CFPB) are under congressional scrutiny after one of them launched his own private advisory firm and hired the three others to help run it, allegedly in an effort to build up a ‘cottage industry’ around the agency's new regulations.
According to a Reuters report, former CFPB deputy director Raj Date left the agency in March, saying that he wanted to focus on his family. However, in May, he incorporated an advisory and investment firm known as Fenway Summer LLC, which focuses ‘on those who do not meet the standards for qualified mortgages as set by the CFPB.’ He then hired former CFPB officials Gary Reeder, Chris Haspel and Mitch Hochburg to help staff his new consultancy.
The action has raised the ire of some House Republicans and resulted in an inquisition to determine if Date and his colleagues are devising a plan to profit from their inside knowledge of the CFPB's rules.
Last week, Rep. Darrell Issa, R-Calif., chairman of the House Oversight Committee and Rep. Jeb Hensarling, R-Texas, of the Financial Services Committee sent the CFPB a letter accusing the former key staffers of profiting from rules they helped write.
‘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,’ the Issa-Hensarling letter said. ‘This conduct raises serious questions about the integrity of the CFPB's rule-making process.
The letter points out that Date ‘helped to write a series of rules broadly affecting mortgage lending in the United States,’ but left shortly after the new rules were published. About two months later, he 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."
In their letter, Reps. Issa and Hensarling request documentation from the CFPB to determine if the former officials' actions represent any form of misconduct.
Specifically the congressmen are requesting all documents and communications between the four named employees and any other official at the CFPB referring or relating to the drafting of the qualified mortgage rule between February 17, 2011, and the present; all documents that provide an accounting of the CFPB's attrition rates on an annual basis, between July 21, 2010, and the present; all documents and communications between Date and any CFPB employee or agent referencing or relating to the conception, design or mission of Fenway Summer, between February 17, 2011, and the present; and all documents and communications between any partner or employee of Fenway Summer LLC and any CFPB employee or agent between March 11, 2013, and the present.
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.
To view a copy of the letter, click here.