By Brandon Moseley
Alabama Political Reporter
Wednesday, July 22, Congressman Gary Palmer (R-Alabama) announced that he is an original co-sponsor of HR3118, the Repeal CFPB Act, that was introduced this week by Rep. John Ratcliffe (R-Texas). Palmer said in a press release that this bill would repeal the misleadingly named Consumer Financial Protection Bureau (CFPB), a federal agency fundamentally unaccountable to Congress, the President, and the Courts.
US Representative Palmer said, “I support repealing the CFPB because it has too much power and is insufficiently accountable. It’s accountability to the President is limited, as the head of the agency can be removed only for cause. It has little accountability to Congress, because it is not subject to Congressional funding, and instead funded directly by the Federal Reserve. It is also insulated from accountability to the courts, as the laws governing it specifically grant its interpretations of consumer protection law deference over other interpretations. History teaches us that power which is not held accountable, no matter how well intentioned, is often abused.”
Rep. Palmer’s office alleged that whistleblowers confirm that the unaccountable nature of the CFPB has created a situation where regulators have moved from cooperatively working with banks and bank customers to an increasingly antagonistic relationship between the government, regulated industries, and the customers they serve.
According to Rep. Palmer’s office Mr. Ali Naraghi, a career Bank examiner in the Southeast Region of CFPB, the region that oversees Alabama, testified before Congress that he was instructed that he did not do his job appropriately if he did not find violations, and that members of his team were instructed to increase their sample size of the documents they reviewed if they didn’t find a violation. This was contrary to the established procedure.
Naraghi testified to the House Financial Services Committee on June 18 that after questioning procedures he was targeted by CFPB management: “After being subjected to disparate treatment, I asked my management in May 2012, about the reason for being treated like this. Management responded that 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. I did my best to work within the Bureau’s management and oversight structure to address these issues; however, once management started to retaliate, I filed an EEO complaint against Southeast Region’s management. I immediately became one of the targets of my Regional Director Mr. Jim Carley and the Assistant Director of Supervision Mr. Paul Sanford at CFPB Headquarters as a result of questioning examination management and filing a formal case about abuse and disparate treatment. They proceeded to make my professional and personal life a living hell by repeated retaliation and creating a hostile work environment. Examples of the retaliations include: Immediately after filing an EEO complaint in May of 2012, management issued me a reprimand letter for not attending training class which I was registered for by management without my knowledge; Removing me from being EIC, and requiring me to attend training to serve as an EIC, a requirement only for me and no others at my grade. In fact I have not been assigned an EIC role since filing my EEO case, despite it being a requirement in my Position Description, which is the highest examiner grade for the Bureau; Reporting me AWOL for an entire week for requesting sick leave, despite having a doctor’s note requiring bed rest to avoid getting pneumonia due to sever bronchitis; Accused of asking bank management to show me how to do my job when in fact I was trying to protect the integrity of the Bureau by helping the field manager recover from answering questions that demonstrated his incompetence and lack of knowledge about mortgage banking; Being wrongfully accused and written up for falling asleep at a meeting with an institution’s president. The fact (as reported by the EEO independent investigator) that I was awake and the most active participant was confirmed by several colleagues and a CFPB Enforcement Attorney who were present; however, Mr. Carley insisted that my Field Manager issue a written warning with threat of disciplinary action; Issued the lowest performance evaluation rating in 2012 when in fact at mid-year I was rated commendable. This was my punishment for raising concerns about my manager during the last 3 months of evaluation period; and in February 2014 my Field Manager informed me that he knows I am well qualified, but the orders that I cannot be an EIC come from above the assistant regional director level. Like Ms. Martin, the retaliation against me continues to this day. Like Ms. Martin, my story is a microcosm and when you look at me you should see dozens and even scores of employees in addition to me.”
HR 3118 would return authority from CFPB back to the seven agencies previously tasked with such duties, allowing for more accountability to the President, Congress and the Courts. It would not remove any authority that existed in the agencies prior to the creation of the CFPB.
Congressman Ratcliffe said in his own statement, “The CFPB’s regulatory zeal has stripped American consumers and businesses of their freedom of choice and has limited their access to capital – all in the name of a ‘we know best’ attitude from Washington. It seems like every time I go home to Texas and spend time with people across our district, I hear stories about community banks having to choose between closing their doors or consolidating into larger institutions to handle the increase in compliance costs.”
US Senator Ted Cruz (R-Texas) is introducing the legislation in the Senate. Cruz said, “Don’t let the name fool you, the Consumer Financial Protection Bureau does little to protect consumers. The agency continues to grow in power and magnitude without any accountability to Congress and the people. The only way to stop this runaway agency is by eliminating it altogether. The legislation that Rep. Ratcliffe and I are introducing today gives Congress the opportunity to free consumers and small businesses from the CFPB’s regulatory blockades and financial activism, which stunt economic growth. While there’s much more to do to scale back the harmful regulatory impositions of Dodd-Frank, this legislation takes a critical step in the right direction. So today let’s celebrate the CFPB’s fourth and final anniversary.” Cruz is one of 16 Republican presidential contenders.
The Consumer Financial Protection Bureau was created by the passage of the Dodd–Frank Wall Street Reform and Consumer Protection Act in 2010 when the Democratic Party controlled both Houses of Congress. Critics view the Agency and Dodd-Frank as an overreaction to the market correction that led to the 2008-2009 Great Recession.
In 2012, US Senator Richard Shelby (R-Alabama) said in a statement to reporters that, “The Dodd-Frank Act intentionally designed the Bureau to be free of even the most basic checks and balances…Mr. Cordray has indicated that he will exercise the full authorities of the Bureau…Because of the structure of the Bureau, this means Mr. Cordray will have unfettered power over the operation of the Bureau. His decisions alone will determine how the Bureau approaches its work. If he so chooses, he does not have to answer to anyone. This is not a choice any bureaucrat should have. Since his appointment, Mr. Cordray has indicated that he intends to proceed cautiously and prudently when he exercises his authority. The real test, however, will be whether this caution finds its way into the Bureau’s actions. Unfortunately, the Bureau’s early history is not encouraging.”
Senator Shelby said back then, “The Bureau is budgeted to receive a total of $329 million in funds from the Federal Reserve Board this year (in 2012). This could grow to well over a half a billion dollars as early as next year. By design, these payments are made directly to the Bureau without any oversight through the congressional appropriations process…It is also my understanding that the Bureau has already hired 800 people, and it has been reported that the Bureau hopes to hire as many as 1,000 people by the end of this year, some making more than $225,000 per year. How have my Democrat colleagues in the Senate responded to this incredible bureaucratic expansion? They have resisted every Republican effort to make the Bureau more accountable to the American people by changing its structure.”
US Representative Gary Palmer represents Alabama’s Sixth Congressional District. He serves on three Congressional committees: Oversight and Government Reform, Budget, and Science, Space and Technology.