[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
ALLEGATIONS OF DISCRIMINATION AND
RETALIATION WITHIN THE CONSUMER
FINANCIAL PROTECTION BUREAU
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON OVERSIGHT
AND INVESTIGATIONS
OF THE
COMMITTEE ON FINANCIAL SERVICES
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
SECOND SESSION
__________
APRIL 2, 2014
__________
Printed for the use of the Committee on Financial Services
Serial No. 113-72
______
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88-534 WASHINGTON : 2014
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HOUSE COMMITTEE ON FINANCIAL SERVICES
JEB HENSARLING, Texas, Chairman
GARY G. MILLER, California, Vice MAXINE WATERS, California, Ranking
Chairman Member
SPENCER BACHUS, Alabama, Chairman CAROLYN B. MALONEY, New York
Emeritus NYDIA M. VELAZQUEZ, New York
PETER T. KING, New York BRAD SHERMAN, California
EDWARD R. ROYCE, California GREGORY W. MEEKS, New York
FRANK D. LUCAS, Oklahoma MICHAEL E. CAPUANO, Massachusetts
SHELLEY MOORE CAPITO, West Virginia RUBEN HINOJOSA, Texas
SCOTT GARRETT, New Jersey WM. LACY CLAY, Missouri
RANDY NEUGEBAUER, Texas CAROLYN McCARTHY, New York
PATRICK T. McHENRY, North Carolina STEPHEN F. LYNCH, Massachusetts
JOHN CAMPBELL, California DAVID SCOTT, Georgia
MICHELE BACHMANN, Minnesota AL GREEN, Texas
KEVIN McCARTHY, California EMANUEL CLEAVER, Missouri
STEVAN PEARCE, New Mexico GWEN MOORE, Wisconsin
BILL POSEY, Florida KEITH ELLISON, Minnesota
MICHAEL G. FITZPATRICK, ED PERLMUTTER, Colorado
Pennsylvania JAMES A. HIMES, Connecticut
LYNN A. WESTMORELAND, Georgia GARY C. PETERS, Michigan
BLAINE LUETKEMEYER, Missouri JOHN C. CARNEY, Jr., Delaware
BILL HUIZENGA, Michigan TERRI A. SEWELL, Alabama
SEAN P. DUFFY, Wisconsin BILL FOSTER, Illinois
ROBERT HURT, Virginia DANIEL T. KILDEE, Michigan
MICHAEL G. GRIMM, New York PATRICK MURPHY, Florida
STEVE STIVERS, Ohio JOHN K. DELANEY, Maryland
STEPHEN LEE FINCHER, Tennessee KYRSTEN SINEMA, Arizona
MARLIN A. STUTZMAN, Indiana JOYCE BEATTY, Ohio
MICK MULVANEY, South Carolina DENNY HECK, Washington
RANDY HULTGREN, Illinois STEVEN HORSFORD, Nevada
DENNIS A. ROSS, Florida
ROBERT PITTENGER, North Carolina
ANN WAGNER, Missouri
ANDY BARR, Kentucky
TOM COTTON, Arkansas
KEITH J. ROTHFUS, Pennsylvania
Shannon McGahn, Staff Director
James H. Clinger, Chief Counsel
Subcommittee on Oversight and Investigations
PATRICK T. McHENRY, North Carolina, Chairman
MICHAEL G. FITZPATRICK, AL GREEN, Texas, Ranking Member
Pennsylvania, Vice Chairman EMANUEL CLEAVER, Missouri
PETER T. KING, New York KEITH ELLISON, Minnesota
MICHELE BACHMANN, Minnesota CAROLYN B. MALONEY, New York
SEAN P. DUFFY, Wisconsin JOHN K. DELANEY, Maryland
MICHAEL G. GRIMM, New York JOYCE BEATTY, Ohio
STEPHEN LEE FINCHER, Tennessee DENNY HECK, Washington
RANDY HULTGREN, Illinois DANIEL T. KILDEE, Michigan
ANN WAGNER, Missouri STEVEN HORSFORD, Nevada
ANDY BARR, Kentucky
KEITH J. ROTHFUS, Pennsylvania
C O N T E N T S
----------
Page
Hearing held on:
April 2, 2014................................................ 1
Appendix:
April 2, 2014................................................ 45
WITNESSES
Wednesday, April 2, 2014
Martin, Angela, Senior Enforcement Attorney, Consumer Financial
Protection Bureau (CFPB)....................................... 8
Raucci, Misty, former Investigator, Defense Investigators Group
(DIG).......................................................... 10
APPENDIX
Prepared statements:
Martin, Angela............................................... 46
Raucci, Misty................................................ 49
Additional Material Submitted for the Record
McHenry, Hon. Patrick:
American Banker article entitled, ``CFPB Staff Evaluations
Show Sharp Racial Disparities,'' dated March 6, 2014....... 51
Letter from the CFPB, dated March 21, 2014................... 57
E-mail regarding Angela Martin Complaint of Retaliation-
Investigation Summary (redacted) from Misty Raucci,
Investigator, Defense Investigators Group, dated September
11, 2013................................................... 84
Investigation Report-Investigation of Discrimination and
Retaliation (redacted) by Misty Raucci, Investigator,
Defense Investigators Group, dated December 11, 2013....... 85
Maloney, Hon. Carolyn:
Letters from Democratic Members to the Inspectors General of
the FDIC, the Department of the Treasury, the Federal
Housing Finance Agency, the National Credit Union
Administration, the SEC, and the Federal Reserve, dated
March 24, 2014............................................. 114
ALLEGATIONS OF DISCRIMINATION AND
RETALIATION WITHIN THE CONSUMER
FINANCIAL PROTECTION BUREAU
----------
Wednesday, April 2, 2014
U.S. House of Representatives,
Subcommittee on Oversight
and Investigations,
Committee on Financial Services,
Washington, D.C.
The subcommittee met, pursuant to notice, at 10:10 a.m., in
room 2128, Rayburn House Office Building, Hon. Patrick McHenry
[chairman of the subcommittee] presiding.
Members present: Representatives McHenry, Fitzpatrick,
Duffy, Fincher, Hultgren, Wagner, Barr, Rothfus; Green,
Cleaver, Ellison, Perlmutter, Maloney, Beatty, and Heck,
Ex officio present: Representatives Hensarling and Waters.
Also present: Representatives Huizenga and Capito.
Chairman McHenry. The Subcommittee on Oversight and
Investigations will come to order. Today's hearing is entitled,
``Allegations of Discrimination and Retaliation Within the
Consumer Financial Protection Bureau.''
Without objection, the Chair is authorized to declare a
recess of the subcommittee at any time. And also, without
objection, members of the full Financial Services Committee who
are not members of the subcommittee may sit on the dais and
participate in today's hearing.
I will now recognize myself for 4 minutes for an opening
statement. On March 6, 2004, the American Banker published an
article entitled, ``CFPB Staff Evaluations Show Sharp Racial
Disparities.'' The article exposed serious personnel problems
at the Consumer Financial Protection Bureau (CFPB), including
evidence that, ``The CFPB's own managers have shown
distinctively different patterns in how they rate employees of
different races.'' According to the confidential agency data
reviewed by the American Banker, the article claimed that the
CFPB managers show a pattern of ranking white employees
distinctively better than minorities in performance reviews
used to grant raises and issue bonuses.
``Overall, Whites were twice as likely, in 2013, to receive
the agency's top grade than were African-American or Hispanic
employees.'' In addition to racial disparities in the CFPB's
performance reviews, the American Banker also reported that the
CFPB's management has been accused, in several cases, of
favoring Caucasian men and of creating a hostile work
environment. The article noted that CFPB employees had filed
115 official grievances, and over 85 informal complaints, with
the National Treasury Employees Union, which represents CFPB
employees.
This number is high, given that the CFPB's total staff is
roughly 1,300. But in reality, the number of aggrieved is
likely to be much higher, as our witnesses will testify to the
fact that the fear of retaliation has a chilling effect on the
employees willing to come forward with their grievances. Over
the past several weeks, and mostly since the publishing of the
American Banker article, a number of CFPB employees and former
employees have contacted this committee, as well as my personal
office, seeking to tell their story.
To be frank, having served on the House Oversight and
Government Reform Committee, in addition to this Financial
Services Committee, over the past 9 years I have never
witnessed an outpouring of employee complaints from a Federal
agency as I have seen in the past several weeks.
Unfortunately, the whistleblower who has voluntarily come
forward today to tell her story of both discrimination and
retaliation is a representative of the much broader problem
that has been presented in the American Banker article. These
allegations of discrimination and retaliation at the CFPB
underscore the need for congressional oversight. They are also
deeply disturbing to the public at large.
Members of both parties have long recognized the importance
of congressional oversight. I quote today, President Woodrow
Wilson, who said, ``Quite as important as legislation is
vigilant oversight of administration.'' Also, ``It is the
proper duty of a representative body to look diligently into
every affair of government and to talk much about what it
sees.'' And ``...; and unless Congress both scrutinize these
things, and sift them by every form of discussion, the country
must remain in embarrassing, crippling ignorance of the very
affairs which it is most important that it should understand
and direct.''
I would like to thank our witnesses for coming forward
today. Ms. Martin, it does take a lot of bravery and courage to
come forward and to speak publicly about what you have been
through. I understand the past 2 years have been a nightmare in
your work environment, and incredibly difficult for you. And I
appreciate you coming forward to share your experience.
Ms. Raucci, thank you so much. As an independent third-
party investigator, we greatly appreciate your willingness to
travel to Washington to share your knowledge in this case and,
more generally, what you saw over the 6-month investigation at
the CFPB.
Mr. Green, I recognize that we often disagree about certain
matters before our subcommittee, but I also recognize that when
these witnesses come forward, at a great personal cost, your
history as a judge is one of fairness. And I certainly
appreciate your work with me on this subcommittee.
With that, I will now recognize the ranking member of the
full Financial Services Committee, Ms. Waters, for 5 minutes.
Ms. Waters. Thank you so very much, Mr. Chairman. I am so
pleased about your interest in this issue of discrimination,
and I am very pleased about the way that you have committed to
pursuing justice for all of our employees in government who may
be discriminated against in any shape, form or fashion. Let me
begin by underscoring the seriousness with which we take
allegations of discrimination, retaliation, and racial
disparity at the Consumer Financial Protection Bureau or any
Federal agency or private institution.
As someone who has dedicated my entire career to the
principles of equality, fairness, and the rights of women and
minorities, I am, of course, deeply concerned by the
revelations the witnesses will present here today. I want
nothing but swift justice for Ms. Martin, and I want to thank
her for her service to our government and to our country as a
member of our Nation's military. I want to focus on solutions;
I want to know how serious this problem is so we can identify
ways to correct it.
I am not interested in scoring any political points on an
issue as important as discrimination and retaliation. The
record of the Democratic Party on matters such as this is
unequivocal. In the wake of the troubling American Banker
article that revealed these problems at the CFPB, Democratic
members of this subcommittee took action right away, calling on
the CFPB's Inspector General to conduct an official review of
the agencies' personnel practices and policies. We asked the
same of the IGs at all of the other Federal financial
regulators under our committee's jurisdiction.
Moreover, we have asked to learn more about the role of the
Bureau's Office of Minority and Women Inclusion in dealing with
these matters. If you recall, we created the Office of Minority
and Women Inclusion when we did the Dodd-Frank legislation for
reform to make sure that we get at problems just like this.
Mr. Chairman, while this hearing is supposed to be focused
on allegations of discrimination at the CFPB, I am concerned
about our witness today. Our witness has a pending grievance
before the Bureau, and I and the members on our side of the
aisle do not want to undercut our ability to accomplish the
objective of bringing about justice for our witness. So we
don't want to interfere in that case, but we are concerned
because we don't have the Consumer Financial Protection Bureau
senior officials here today because the nature of this hearing
has changed from what it set out to be.
And so we would like to have, in the future, an ability to
assist any and all employees who have been subject to
discriminatory practices at the CFPB, or any other agency. And
that is why we have asked the Inspector General to take a hard
look at what is happening at these agencies, not only to help
the party here before us today, but to help the others who may
have fallen victim to discriminatory practices as well.
In today's world, an unfair, discriminatory workplace for
minorities and women employees will not be tolerated, and I
would like to hear what the CFPB is doing to address this
serious problem internally.
Mr. Chairman, if you want to have a robust and thoughtful
debate on this issue, it is imperative that we do so through
the regular committee process. We will always welcome a
thorough investigation of discriminatory personnel practices
within our financial regulatory agencies. As a result, today we
are sending you and Chairman Hensarling a formal request for a
hearing with senior management of the CFPB, including its
Director, to allow members on both sides of the aisle a more
appropriate forum to evaluate and discuss the CFPB's personnel
policies and practices.
At such a hearing, it is my hope that we can learn more
about the broader problem and identify possible solutions.
Unfortunately, you have made achieving this goal impossible
today. And finally, Mr. Chairman, I hope that in the future
your commitment to, ``ensure mistreatment of employees is not
tolerated at the CFPB,'' goes even further to ensure that we
end discriminatory practices within all areas of the Federal
Government. Thank you for joining in this effort, Mr. Chairman.
I yield back the balance of my time.
Chairman McHenry. I certainly appreciate the ranking
member's words, and I will note for the record that Ms. Stacey
Bach, Assistant Director of the Office of Equal Opportunity
Employment, and Ms. Liza Strong, Director of Employee
Relations--both with the Bureau--declined our invitation. And I
concur with you that it is deeply disappointing that the Bureau
refused to be a part of this hearing.
We will now recognize the vice chair of the subcommittee,
Mr. Fitzpatrick, for 1 minute for an opening statement.
Mr. Fitzpatrick. Thank you, Mr. Chairman. And I thank the
witnesses for coming forward. It is your right to do so, and it
is our obligation to listen and to investigate as part of our
oversight responsibilities.
Discrimination on the basis of gender or race is an
anathema to American values of equality under the law, and
opportunity based on hard work and based on merit. Violating
these principles would be egregious in any workplace, but it is
especially offensive to most of it when it occurs at a
government agency. After all, government is fundamentally an
extension of all of us.
When government agencies act badly, it is an affront to all
of our constituents and anyone who supplies the work and the
money to pay those government salaries. To that end, I think it
is very dangerous to have an agency like the CFPB be exempt
from the normal oversight of most departments. No one should
disagree with more accountability. And the issue before the
committee, and the evidence of more widespread discrimination,
are proof positive that more accountability is warranted.
I yield back.
Chairman McHenry. The gentleman yields back.
We will now recognize Mrs. Maloney for 2 minutes.
Mrs. Maloney. First, I would like to thank Ms. Raucci for
her public service and for her courage. I understand that the
system for reporting and correcting discrimination is broken,
and I am glad that we are working together in a bipartisan way
to correct it. Equal employment opportunity laws are intended
to prevent gender discrimination in the workplace, whether that
discrimination is conscious or unconscious. Discrimination is
discrimination whether it was intentional or not.
For a manager, resolving complicated employee disputes is
often difficult. But is it too much to ask for the manager to
resolve the dispute in a way that does not involve
discriminatory or harassing behavior? I don't believe so.
Director Cordray has stated that the CFPB has a ``zero
tolerance policy on workplace discrimination, harassment or
retaliation,'' and I applaud that policy.
While we do not know all the facts in this case, the report
is heavily redacted, and the case is still pending. The picture
that Ms. Raucci's report paints is troubling, and I would urge
the CFPB to take it seriously.
We need to recognize that the issue of workplace
discrimination is not unique to the CFPB. In fact, my research
indicates that the CFPB is not unique at all. The other
financial regulators have struggled just as much with workplace
intolerance and diversity. That is why the Democrats on this
subcommittee have sent letters to each of the Inspectors
General of all the financial regulators asking that they
investigate whether the personnel policies at their agencies
have created an unfair environment.
I hope that the agencies will take our concerns very
seriously. I ask unanimous consent to place in the record the
letter that was sent to the IGs by Chairman Green and Ranking
Member Waters.
Chairman McHenry. Without objection, it is so ordered.
Mrs. Maloney. And I hope that the agency takes this
seriously. I look forward to the hearing. I have markups in two
other committees at the same time, so Ranking Member Waters, I
will be in and out. Thank you very much.
And I yield back.
Chairman McHenry. We will now recognize Mr. Duffy of
Wisconsin for 2 minutes.
Mr. Duffy. Ms. Martin, first I want to thank you for coming
in today, and thank the whole panel. I know the courage and
bravery that it takes to be one of the few people who are
willing to stand up and step forward, and tell some very
difficult stories about an agency that you care about. And this
committee appreciates your willingness to stand and shine some
light on what is happening at the CFPB.
Discrimination should never be tolerated in society as a
whole. But looking at our Federal Government--that it is going
on in such a profound way, we have absolutely no tolerance for
it. When we have employees who are willing to come forward and
report that discrimination, I think it is noble. And what it
does is, it gives the agency in question an opportunity to
right the wrong, to do what is right, to see there are some
places where they need to do a better job.
What concerns me, though, is instead of taking the
opportunity that you have given the agency, to hear that you
have been retaliated against, to hear the kind of treatment
that has been given to you because of your willingness to come
forward and have some very important conversations with
management and leadership of the CFPB, that retaliation is
disappointing. And that is why I am heartened that we are going
to have a bipartisan hearing to figure out what is going on and
what this oversight committee can do to make sure that it
stops, that it doesn't happen again to someone else.
And I am going to have some questions for you a little bit
later. But the bravery, coming forward, there are probably
other employees who don't have the stature, and the education--
they are not all lawyers--to come forward and do what you did.
And I think you are really showing an example for the rest of
the agency of a person who is willing to take the lead, not
just for yourself but for others who have experienced this kind
of discrimination and retaliation.
I think, as the saying goes, the best disinfectant is
sunlight. We are helping provide some sunlight today to an
agency that could use some of that sunlight to make sure we
disinfect the discrimination and retaliation that has been
going on at the CFPB.
Thank you for your willingness to step forward. Your
country is grateful and this committee is grateful.
I yield back.
Chairman McHenry. We will now recognize the ranking member
of the subcommittee, Mr. Green, for 3 minutes for an opening
statement.
Mr. Green. Thank you, Mr. Chairman. I also thank the
ranking member of the full committee, and all of the Members
who are in attendance today.
I do not see this as the end, I see it as the beginning. I
believe we are at Genesis, and I think Revelations are yet to
come. But to get to Revelations, we cannot focus solely on one
regulator. I think we have to allow Revelations to go through
the other regulators as well. It is important that we acquire
the empirical evidence necessary to ascertain whether or not
this type of behavior that we are investigating today exists in
other agencies, as well.
This is why the ranking member and I, along with other
Democratic members of the committee, submitted letters to the
Inspectors General of all of these agencies asking that they
supply us with additional intelligence. We believe that we need
this intelligence so that we may ascertain what the
circumstances are, and move forward. I also believe that we
ought to make this about headway, not headlines. We ought to
want to make sure that we get to the bottom of what is going on
in all of the agencies.
We ought to want to make sure that the hues and cries that
we have heard through the years have an opportunity to now be
heard, and that they be vetted properly. I think that there is
a process in place, but there appears to be a perception that
the process is broken. If that perception continues to exist,
the process doesn't serve us well. We have to make sure that
people believe that they are going to get a fair hearing.
To this end, I want to extend every courtesy to the
witnesses who are here today. I want to make sure that they
have an opportunity to be heard. I will probably have a few
questions, but I will be mainly interested in hearing the
testimony.
I also would like to thank the ranking member for his kind
words. And I would like to extend to him similar words, and beg
that he and I have an opportunity to visit so that we might
talk about how we can move forward and broaden this to include
other regulators, as well.
The CFPB is before our committee today for obvious reasons.
There was an article that was written. But there are so many
other people who don't have articles written about them. They,
too, have stories that are to be told and to be heard. My
belief is that working together, we can arrive at a reasonable
means by which we can find out what the circumstances are and
take appropriate action, and make sure that all persons who
have stories to tell are treated fairly.
I yield back.
Chairman McHenry. I thank the ranking member for his kind
words. And I concur that this hearing is not simply about
Angela Martin. It is for all of the Angela Martins within these
agencies, and whether there is one more or dozens or hundreds
more, it is important that we have that oversight. And I thank
the ranking member for his kind words.
Mr. Hultgren will be recognized for 2 minutes.
Mr. Hultgren. Thank you, Mr. Chairman. As the Subcommittee
on Oversight and Investigations, it is fitting and proper for
us to be here to examine allegations of age, gender, and race-
based discrimination at the CFPB. This includes a claim that
white employees have consistently received higher performance
reviews than minorities, and evidence of intimidation and
retaliation against an employee who complained about
discrimination.
These allegations absolutely deserve a full hearing, and I
am thankful that we are here to do that today. What I find
particularly disappointing about this matter is the disparity
between the CFPB employment practices and its lending standards
for community banks. As one CFPB employee put it, ``If the CFPB
was a lender and had similar statistics, it would be written
up, immediately referred to the Justice Department, sued, and
publicly shamed.''
Under CFPB regulations, community banks can be held
accountable for lending practices that have a disperate impact,
disproportionately affecting a minority group. In practice,
this amounts to a know-it-when-you-see-it legal standard that
uses statistical analysis to adjudicate legal violations
instead of evaluating, as we are doing today here, with the
CFPB if actual discrimination existed. This uncertain legal
regime contracts consumer credit, as community banks reduce
their lending in terms of risking a government lawsuit.
Of course, the CFPB is unaccountable to its own standards.
In fact, it is one of the most unaccountable agencies in
American history, escaping any meaningful form of Legislative,
Judicial or Executive Branch oversight. This is why I voted
for, and many others voted for, H.R. 3193, which would bring
more accountability and structural improvement to the Consumer
Financial Protection Bureau. Because only when the CFPB is
accountable for both its employment practices and its
regulatory agenda, will it be able to truly protect American
consumers.
With that, I yield back, Mr. Chairman.
Chairman McHenry. We will now recognize our witnesses for
today's hearing.
Ms. Angela Martin is currently serving as Senior
Enforcement Attorney at the CFPB. Before her tenure at the
CFPB, Ms. Martin was an attorney in private practice from 2002
to 2008; she served as a civilian attorney in the judge
advocate general's court; and as a civilian JAG, she was deputy
chief of legal assistance for the 18th Airborne Corps at Fort
Bragg, where she provided representation to clients on consumer
law matters. Since 2006, Ms. Martin has been an adjunct
professor of consumer law at U.S. military JAG schools.
Before becoming an attorney, Ms. Martin served for 10 years
in the U.S. Army Intelligence Corps as a Czech and Persian
Farsi linguist. Ms. Martin was honorably discharged from the
Army in 1994. Ms. Martin graduated magna cum laude from the
University of South Carolina Aiken, and received her law degree
from the University of Georgia.
Ms. Misty Raucci, since 2008, has served as an investigator
with the Defense Investigators Group (DIG). Ms. Raucci has
conducted several hundred investigations during her tenure with
DIG, including matters related to Workers' Compensation claims,
workplace investigations, disability claims, and general
liability. At DIG, Ms. Raucci has assumed positions of
increasing responsibility. Beginning in March 2012, she served
as Director responsible for managing DIG's investigative work
on a number of matters.
In her capacity as a senior member of DIG, Ms. Raucci also
trained employees concerning investigative methods and
practices. She is a graduate of the Orange County Community
College, where she studied general psychology.
Since neither of you has previously testified before
Congress, I will explain to you the lighting system you have
before you. As Members of Congress, we are simple, so we
understand that green means go, yellow means hurry up, and red
means stop. You will have 5 minutes to summarize your
statement, and without objection, your full written statements
will be made a part of the record.
And with that, I will now recognize Ms. Martin.
STATEMENT OF ANGELA MARTIN, SENIOR ENFORCEMENT ATTORNEY,
CONSUMER FINANCIAL PROTECTION BUREAU (CFPB)
Ms. Martin. Good morning, Mr. Chairman, and subcommittee
members. My name is Angela Martin. I am a Senior Enforcement
Attorney at the CFPB and a board member for the local NTEU.
However, I am not representing NTEU or the Bureau in this
proceeding. I pause a moment to thank my family and friends who
have been with me and have supported me throughout this trying
ordeal.
I am a victim of discrimination dating back to May 2012,
and I have suffered severe retaliation since December 2012,
which continues to this day. Sadly, my story is not unique. My
colleagues have also suffered and are suffering at the hands of
inexperienced, oppressive, and unaccountable managers. I am
glad this hearing is being held because, based on my
observations, I have concluded that the Bureau is sorely in
need of effective oversight, and that management needs to be
held accountable, particularly with regards to its internal
management practices.
I am a dedicated civil servant, serving the government
almost 19 years, 10 of them active duty Army. I served as a
civilian attorney with the JAG corps at Fort Bragg, and while
there, I developed and implemented the only consumer law
program that represented clients in State and Federal court.
I was honored to vindicate the rights of servicemembers and
their families, and retirees, against abusive debt collectors
and in third-party debt collection actions. My JAG experience
propelled me to become a nationally known military consumer
attorney.
During the consideration of the Dodd-Frank Act, I was
invited to be on a panel with Secretary Geithner, discussing
the importance of consumer law to military personnel and its
effect on mission readiness. At that meeting, I proposed the
creation of a separate office at the Bureau that would focus
solely on protecting military consumers. Senator Reid
introduced an amendment to the Act, and Holly Petraeus now runs
the Office of Servicemember Affairs.
While I am focused today on the broader issue of
mismanagement and abuse of authority, let me briefly tell you
about my own experience. I came to the Bureau in June 2011 with
hopes of enforcing Federal consumer laws on a national level,
and I dissolved my successful law practice to do so. The
mismanagement and abuse of authority have precluded me from
carrying out the Bureau's vital mission. Indeed, today marks
the 400th day that I have been isolated and prevented from
performing any meaningful work. I never received a fair shake,
and I have never been assigned one case.
I'm sorry.
Chairman McHenry. You can take a minute and--
Ms. Martin. In December 2012--sorry
Chairman McHenry. I ask unanimous consent that the witness
have 2 additional minutes. Without objection, we will reset the
clock so you have ample opportunity.
Ms. Martin. In December 2012, I filed a complaint of
discrimination and retaliation, and I immediately suffered
further retaliation for doing so. When my supervisor, the
Assistant Director of Consumer Response, learned that I was
asserting my rights via the EEO process, he threatened to bring
counterclaims against me if I pursued my claim. Immediately, he
isolated me, diminished my job duties, and held me accountable
for work while, at the same time, prevented me from being
involved in the preparation of that work.
On February 21, 2013, I filed a formal EEO complaint
against the Bureau. The Bureau acknowledged receipt on February
25th. And the very next day, my supervisor called me into his
office and informed me that, effective immediately, with the
approval of the human resources and legal divisions, my
subordinates would report to him, and he removed me from all of
my job duties. He told me that I should view this as an
opportunity, and that I was not to worry since I still had my
salary and the title of Chief Counsel.
During the summer of 2013, the Bureau commissioned an
outside independent agency to investigate my claims of
retaliation. To my knowledge, the Bureau received preliminary
findings in September 2013, a draft report in October, and a
final report in December. The Bureau denied access to the
report under both of my requests for the Freedom of Information
Act and the Privacy Act. Unfortunately, there is a culture of
retaliation and intimidation that silences employees from
exposing wrongdoing.
Just 2 weeks ago, another employee was retaliated against
within 2 days of filing a formal EEO complaint. Employees have
told me alarming stories of maltreatment that resulted when
they opposed the mismanagement and when they asserted their
individual rights. Certain managers have adopted an
authoritarian, untouchable, unaccountable and unanswerable
management style. It is critical for management to be held
accountable, and for the Bureau to be subject to real and
effective oversight for the sake of its duty to consumers and
its directive to protect law-abiding businesses.
My individual story is a microcosm of a larger story of
what happens and what is occurring within the Bureau when
employees step forward with complaints of wrongdoing. I hope
that the Bureau will recognize that it must foster a culture in
which employees are able to raise concerns without fear of
reprisal. I urge this committee to approach its duties of
oversight diligently and expeditiously for the sake of my
colleagues who are suffering in silence even as we speak.
Thank you.
[The prepared statement of Ms. Martin can be found on page
46 of the appendix.]
Chairman McHenry. Thank you, Ms. Martin.
We will now recognize Ms. Raucci.
STATEMENT OF MISTY RAUCCI, FORMER INVESTIGATOR, DEFENSE
INVESTIGATORS GROUP (DIG)
Ms. Raucci. Good morning. My name is Misty Raucci. Thank
you for this opportunity to respond to your questions later
this morning.
I began my investigative career 6 years ago as a field
investigator, and advanced to become a director at the Defense
Investigators Group. During my tenure, I gained experience
working several hundred cases, including workplace
investigations. At times, it became necessary for me to
determine conclusively that employers' stated concerns were
based on merit factors. And each time, I found that they were.
The Martin-Pluta investigation was supposed to be only 2 to
5 statements, and it took 6 months to complete, because as the
process started I became a veritable hotline for employees of
the CFPB who called me to discuss their own maltreatment at the
Bureau, mainly at the hands of the Assistant Director and one
of the Section Chiefs.
The sum of my findings was that retaliation was directed at
Angela Martin after she filed a formal complaint of
discrimination and retaliation.
In concert with what appeared to be at least three
facilitators, the Assistant Director of Consumer Response
effectively removed Ms. Martin from her position as Chief
Counsel of Consumer Response and, ultimately, saw her relegated
to another office in a lesser position. The Assistant Director
attempted to justify Ms. Martin's removal by expressing doubt
as to her ability to perform her duties as Chief Counsel,
however his criticisms largely occurred after she filed her
complaint.
This was an indicator that the Assistant Director's
rationale for demoting Ms. Martin was masking other motives.
The Assistant Director unilaterally determined that Ms. Martin
deserved a demotion, and did not utilize due process in
demoting her. For example, he issued a mid-year review stating
that Ms. Martin's work performance was unacceptable, despite
her prior reviews in which she was rated as a strong performer.
He neglected to place her on a performance improvement plan,
which is customary and would have allowed her an opportunity to
identify and correct those perceived deficiencies.
The Assistant Director incorporated the negative review as
part of his justification for removing Ms. Martin from her
position as Chief Counsel. Also, in less than 1 week's time
following Ms. Martin's formal complaint, filed February 21st, 2
of her subordinates filed complaints against her for
retaliation. The Assistant Director of Consumer Response not
only took those claims far more seriously than Angela Martin's,
he stated conclusively in his negative review of Ms. Martin
that she had directed retaliatory behavior at both of those
subordinates, although their claims had not yet been
investigated, much less substantiated.
The lack of vetting, together with the very timing of the
subordinates' complaints, suggests that the EEO process was
used by the Assistant Director of Consumer Response, as well as
Angela Martin's subordinates, to effectuate her dismissal. I
found that one subordinate in particular stood to benefit
directly from Ms. Martin's removal as Chief Counsel. And by the
time this case drew to a close, that subordinate was actually
poised to take over Ms. Martin's former role, albeit not in
title.
I found out Ms. Martin was subjected to relentless
hostility at the hands of a colleague, and that her supervisor,
the Assistant Director of Consumer Response, was aware of the
open bashing, bullying, and marginalization of Ms. Martin.
However, the Assistant Director did little, if anything, to
curtail that behavior. That colleague of Ms. Martin's appeared
to want more control in Consumer Response, and I believe he
felt that Ms. Martin presented a roadblock in his endeavors. I
found that the general environment in Consumer Response is one
of exclusion, retaliation, discrimination, demoralization, and
other offensive working conditions which constitute a toxic
workplace for many of its employees.
Even as I, as a representative of Defense Investigators
Group, concluded the investigation of retaliation against Ms.
Martin, the Assistant Director of Consumer Response continued
to retaliate against her and did not bother to conceal it.
Several individuals were interviewed during the course of this
investigation, and yet fewer than half of those consented to go
on the record for fear of reprisal. Those who came forward
stated openly that they were either seeking other employment or
they had no doubt that would become necessary due to their
collective lack of faith in the ability of the Human Capital
Office to protect them.
The Assistant Director of Consumer Response should not have
been able to carry out such a transparent scheme against Ms.
Martin. It was obvious what was going on. The expectation of
the Bureau's Human Capital Office should have been to uphold
the rights of its employees, and yet the Assistant Director's
willful violation of Ms. Martin's rights has been allowed to
continue despite the early written warnings in my summary
issued in mid-September of 2013, as well as a subsequent draft
report issued later that month, and then the final reported
submitted in September of 2013. The Bureau's Human Capital
Office is now in receipt of extensive documentation that I, as
a representative of Defense Investigators Group, gathered and
attached as exhibits to the report.
The evidence of the documentation suggests a pervasive
disregard for employee rights that is entrenched in the Office
of Consumer Response. Those responsible for curtailing the
Assistant Director's activities were apparently compelled to
ignore, cover or otherwise downplay them instead of taking
corrective action. The corrosive environment at the CFPB
workplace was engendered by the Bureau's perpetual failure to
uphold its own EEO policy.
Thank you.
[The prepared statement of Ms. Raucci can be found on page
49 of the appendix.]
Chairman McHenry. Thank you both for your testimony.
I will now recognize myself for 5 minutes for questions.
Ms. Raucci, based on your investigation, am I correct that you
concluded that Mr. Pluta retaliated against Ms. Martin for
filing her complaint of gender discrimination and retaliation?
Ms. Raucci. Yes.
Chairman McHenry. Ms. Martin, during your decade in the
Army did you ever experience anything like you have experienced
at the CFPB?
Ms. Martin. No, sir. I have never experienced it anywhere,
and I will go further to say that others who have military
experience at the Bureau have likewise said it. And I will say
that I was the only female in an all-male ideation unit for a
time when I was in Germany. I have never seen anything like
this, as a total disregard for our rights.
Chairman McHenry. In your capacity as a union board member,
you are privy to communication between the CFPB and the union,
are you not?
Ms. Martin. Some communications, yes, sir.
Chairman McHenry. Yes. Did the union request a demographic
breakdown of the CFPB's performance reviews?
Ms. Martin. Yes, sir.
Chairman McHenry. Okay. Did the union request a demographic
breakdown because it believed there were racial disparities in
the performance reviews?
Ms. Martin. Yes, sir.
Chairman McHenry. Why did the union believe there were
disparities?
Ms. Martin. Sir, when the initial grievances came forward,
they were filed by minority women and minority males. And so,
we had reason to believe that there might be something at
issue. I will point out, though, that the information request
was done 3 days before they nominated me to be on the board.
Chairman McHenry. Okay. But you were knowledgeable of that
request?
Ms. Martin. Yes, sir.
Chairman McHenry. Okay. When it received the demographic
information, did the union conclude that the CFPB officials
discriminated on the base of race?
Ms. Martin. Yes, sir.
Chairman McHenry. Based on your personal experience, and
what you have learned as a union board member, is there
discrimination against minorities and women at the CFPB?
Ms. Martin. Yes, sir, there appears to be. And I will go
further, and say we were very concerned, as a board, when we
saw that--when the report came out and confirmed it, and our
president said, ``Holy cow,'' in two words, and in his speech
to the bargaining members to try and embolden them and
encourage them, he said that this was over discrimination, and
the Director should apologize.
Chairman McHenry. Ms. Martin, based on everything that you
have seen, do you believe that women and minority employees at
the CFPB are compensated the same as their white male
counterparts?
Ms. Martin. No, sir. I know for a fact that they are not.
And I also know that the Bureau has been aware of this for
quite some time. There is a pay disparity, particularly in the
Office of Enforcement, where when they went--the Bureau
assessed the pay that was set when we entered into service.
They found that there was as much as a $60,000 gap for
similarly-situated employees. For example, for 2 people who
went to the same law school, studied under the same professor,
and graduated in the same year, there was a differnece of tens
of thousands of dollars. When that study was done, not one male
salary needed to be adjusted, only the salaries of women and
minorities.
Chairman McHenry. And this is information the union
received, and it was pay disclosure. They pay was disclosed.
Ms. Martin. Yes.
Chairman McHenry. Okay. So based on everything you have
seen, do you believe that white male managers have engaged in
discrimination against women and minorities?
Ms. Martin. Yes, sir. But I will back up--I know it also
because these employees have come to me personally. People have
come to me many times, on many occasions, even more so since I
came forward, and they tell me themselves. It has nothing to do
with being a member of the union.
Chairman McHenry. And why don't they come forward?
Ms. Martin. Sir, they are afraid because they know that I
have been retaliated against. And also, quite frankly, I asked
them and they don't want to make themselves subject to a public
hearing. Some of them are actively looking for other
employment, and they think to do so would inhibit them from
getting jobs.
Chairman McHenry. You have had a long and successful
career. Where were you in terms of the Bureau hiring? I know we
have--there are a lot of employees there now. Where were you in
the hiring?
Ms. Martin. Sir, I came on board when there were less than
30 members in the Office of Enforcement. Director Cordray ran
the office at that time. He interviewed me, and he hired me.
Chairman McHenry. Okay. Now, based on this experience at
the Bureau, how does it make you feel?
Ms. Martin. Emotionally, I am devastated forever. The fact
that this wasn't addressed when it happened to me has allowed
another trail of victims. This is unacceptable. I feel, at this
point, that the--and I sadly, sadly say that the Bureau should
establish its own wounded warrior program for the number of
employees who have lost sleep, are emotionally scarred, and are
in permanent counseling because of this.
I am positive even I still don't know the amount of
devastation. I know one person I heard from just last night--
somebody I had never even met--called me from a field office to
tell me, as a proud immigrant to this country, as a U.S.
citizen and having worked at the FDIC for 15 years, his
managers referred to him in an open meeting as an ``f***ing
foreigner.'' This is unacceptable. He should not be going
through this.
There are many examples. The person--a similar person that
I said who served in the military as well, she is African-
American, she is strong, she is proud, she is a sole parent.
She is fighting now against the Bureau. She wrote to me, and
she said that she read the report, the Pluta report, last
night. She said she cried immensely because everything happened
to her exactly as it happened to me. If they had stopped when I
first told them, she would be fine today. And instead, she is
out thousands of dollars fighting her case, trying to seek
justice, trying to recover from this.
Chairman McHenry. Ms. Martin, thank you for coming forward.
We will now recognize the ranking member of the full
Financial Services Committee, Ms. Waters, for 5 minutes.
Ms. Waters. Thank you very much, Mr. Chairman. This is even
more complicated than we had imagined. Ms. Martin's case is
still pending, as I understand. The retaliation portion of the
case has not been resolved at this time. So, I would like to
yield the balance of my time to Ms. Martin so she can just
continue talking to us.
Ms. Martin. Thank you. I want to tell you that I actually
think that maybe coming forward has jeopardized my case against
the Bureau. I fully believe that now they will fight me more
than ever and dig in more than they ever had just to prove
themselves right eventually. And actually, they might. Because
there is a risk in any litigation. There is a losing party. At
some time, somebody might be wrong.
But when you look at me, you must see dozens and scores of
people behind me instead. It is tragic. When I brought it to
the attention of Director Cordray, he told me that he had
inexperienced managers. But inexperienced managers ought not
hurt people and they ought not break laws. All managers, at one
point, are inexperienced. I was, myself. At the age of 20, I
was in Germany and I received a squad of soldiers. They,
incidentally, were all male. I took a whole month of an in-
residence training course in leadership before I was given
command of the squad.
At the Bureau, it appears that everybody does what is right
in their own mind, for their own motives, for their own
reasons. But unfortunately, what is in their mind and in their
heart is not necessarily what is right. I have been never as
much in cohesion with my African-American friends. I grew up in
the North, and I never saw discrimination. To me, racial
discrimination was just a story. I have never felt so
compassionate for them, having gone through this plight myself.
What I will tell you, and I think is extremely important--
because I would like this part to stop. This part can stop
right now, right this moment. Director Cordray, and others at
the Consumer Bureau, the Assistant Director of Consumer
Response, in writing, orally, in meetings, everywhere will say
we--the Office of Consumer Response, is the most diverse group
within the Bureau. And they are right.
If you look at the picture, it is extremely diverse. But
facial equality is a far cry from racial equality. And what you
have, when they say this, they say, ``Oh, we are so diverse.''
My African-American friends who serve there say that those
statements are insulting, demeaning, and only a white male
would make such a proclamation. And here is why. In Consumer
Response, most of the managers are white males. When women have
left, they have been replaced by white males.
I thought back over the whole time at Consumer Response,
and only two white males have ever left. One left early on for
another Federal agency, and one left for retirement. Anybody
else who has left that office is a woman or a minority. I am
very sad to say, but I think it really must be said: There is
an entire section in Consumer Response intake that is 100
percent African-American, even the contractors, and it is
called, ``the plantation.''
And African-Americans tell me that it is extremely hard to
leave the plantation. You must be extremely savvy or you must
have somebody else to get out. And I will note, you cannot say
that education is a factor. Because there are licensed
attorneys working there, and there are people with advanced
masters degrees working there. And it is just unacceptable that
they are put into that position.
I will tell you, as far as--because I know this started
from the performance reviews. If you also look at this, if you
have African-Americans and minorities in those types of
positions--working in a cubby, coming in day and day out--to do
your quota, it is really hard to get high marks in
collaboration. Because what chance do you have to be on a
Bureau-wide working group or interagency working group or some
of these other things?
So what you have on the performance evaluations are the
white males in power in the better slots giving themselves the
fours and fives, giving themselves the raises and bonuses, and
the minorities sitting there, cranking out, doing the work of
the government, doing the work for the American consumers. They
don't get the wages. So it is actually a widening of the gap,
and that is astonishing in a 21st Century agency.
I wanted to say one more thing. May I just finish?
Chairman McHenry. I wouldn't dare stop you.
Ms. Martin. I just wanted to point out one last thing,
because it is a 21st Century agency. And it reminded me as far
as this individual unit, if you go to the Bureau, in the
amphitheater there are, it is tiered. And in the front are the
chairs with the tables towards the stage, and in the back there
is not. My African-American friends and support staff and
intake, they stand at the back or they sit in those chairs. So
when you look at it, it really does appear to be the bus from a
long time ago, where the African-Americans are in the back.
That is unacceptable. We are a 21st Century agency, and I
am just asking for some help to get there. But the one thing
that they could stop right now is stop claiming that it is
diversity just because you have different faces on the wall.
They need diversity of opportunity, diversity of advancement,
diversity of training, and equal treatment.
Thank you.
Chairman McHenry. We will now recognize the vice chairman,
Mr. Fitzpatrick, for 5 minutes.
Mr. Fitzpatrick. I thank the chairman. Ms. Raucci, I would
like to ask you a couple of questions about a document that has
been marked for identification as Majority exhibit A. It is a
copy of an e-mail that you sent to Liza Strong, and it is dated
September 11, 2013. Can you tell us who Liza Strong is?
Ms. Raucci. Liza Strong is, to my knowledge, the Director
of Human Relations in the Human Capital Office.
Mr. Fitzpatrick. Have you had occasion to question her or
interview her during the course of your DIG investigation?
Ms. Raucci. I spoke with her several times.
Mr. Fitzpatrick. Who is Tara Gilbert?
Ms. Raucci. Tara Gilbert is--I believe she is Liza Strong's
assistant.
Mr. Fitzpatrick. Is this document, Majority exhibit A, a
true and correct copy of the e-mail that you in fact sent on
September 11, 2013, to Ms. Strong and Ms. Gilbert?
Ms. Raucci. Yes, it is.
Mr. Fitzpatrick. At the end of the e-mail, you say that
there are ``issues at the CFPB's Office of Consumer Response
relating to fair behavior and employment practices.'' What did
you mean by that statement?
Ms. Raucci. I meant that there appeared to be a disregard
for employee rights in general, and that if an employee were to
express any problems within the Office of Consumer Response,
they would be retaliated against or otherwise be subjected to
adverse employment actions.
Mr. Fitzpatrick. You also say that the CFPB is at risk of,
``undermining its own public position as an advocate for
fairness toward the American consumer, as well as stifling its
own mission to hold merchants, et cetera, to fair and equal
standards.'' What do you mean by that statement?
Ms. Raucci. By that, I mean that the CFPB represents, or
should represent fairness in the American marketplace with
regard to discrimination, discriminatory practices on the part
of lenders, or retaliation. They were to shield the American
consumers from such practices and, instead, they were
committing unfair and deceptive practices against their
employees.
Mr. Fitzpatrick. And given what you found out internally at
the CFPB, you believe--you drew the conclusion, as an
investigator, that it was impacting their mission to be fair
and equitable to the public?
Ms. Raucci. Yes. I believe that they undermined their own
mission. It is difficult to determine that the CFPB, while they
are to defend Americans in the marketplace against
discrimination and retaliation, would see fit to subject their
employees to those same unfair practices.
Mr. Fitzpatrick. Ms. Raucci, lastly, you recommended
informing Director Cordray of your findings. Why do you believe
that the Director needed to be notified?
Ms. Raucci. I believe he needed to be notified because I
felt that no one in the ranks between Liza Strong and Director
Cordray would do anything about what was going on. And I felt
that when the Bureau--with the knowledge that when the Bureau
was first formed, there was some contention as to whether there
should be a single Director or a Board of Directors to oversee
the Bureau.
And I felt that Director Cordray should be given the
opportunity to correct what was going on in the Office of
Consumer Response, lest he be held up as an example of how a
Board of Directors would have been the better option.
Mr. Fitzpatrick. Ms. Martin, you have described some very
troubling conditions at the CFPB that arguably merit an
Inspector General investigation. Are you aware which employees
have ever referred a workplace-related matter to the Inspector
General?
Ms. Martin. Yes, sir. I did, myself, recently. Others have,
as well.
Mr. Fitzpatrick. What did the Inspector General do with the
information that was brought to his attention?
Ms. Martin. When I filed an EEO complaint with--or my
retaliation complaint with the Inspector General, I received a
call from them, and I was essentially told that they don't
handle these types of complaints and there was nothing they
could do; it was a matter for the EEOC.
Mr. Fitzpatrick. Ms. Martin, are you aware whether any
other employees brought similar allegations to the attention of
the Inspector General?
Ms. Martin. I am told others have filed complaints. They
told me themselves. They also said that they have filed
complaints with the Office of Special Counsel. And some of them
have told me that they have tried to reach out for help through
their Congressmen.
Mr. Fitzpatrick. How many employees?
Ms. Martin. Sir, I can't number them. Seriously, dozens or
scores, please help them.
Mr. Fitzpatrick. Thank you.
Chairman McHenry. We will now recognize the ranking member
for 5 minutes.
Mr. Green. Thank you, Mr. Chairman. And, Mr. Chairman, I
would like to make one minor correction. I referred to you as
the ranking member earlier. I was not trying to demote you in
any way.
Chairman McHenry. I know there is an election coming up,
and they are--
[laughter]
Mr. Green. This is not a part of that, Mr. Chairman.
Chairman McHenry. I certainly thank my colleague from
Colorado. And perhaps, he is engaged in their newest trade. But
with that, we will ask to reset the time, please. The gentleman
is recognized for 5 minutes.
Mr. Green. Thank you, Mr. Chairman. And thank you, again,
witnesses for appearing today.
Ms. Martin, I am concerned and I believe you are concerned
about persons who are in all areas of government being treated
fairly. Is that a fair statement?
Ms. Martin. All areas of life, sir, yes.
Mr. Green. All areas of life being treated fairly. And my
belief is that you are not just concerned about people at the
CFPB. If there are people being treated unfairly in another
agency, you would like to see that corrected, as well. Is that
a fair statement?
Ms. Martin. Sir, here is the problem with that statement
for me personally. It is too limited. When I was in the Army,
my first general order was I will guard everything within the
limits of my post, and quit my post only when properly
relieved. I, as Angela Martin, don't have anything to do with
those other agencies. I would be concerned about them as a
person, but my responsibility is what is happening within my
borders that God has set.
Mr. Green. Agreed. Is it your testimony that if you knew
that something was happening at another agency, you would not
want to see it corrected?
Ms. Martin. Sir, I want to see injustice corrected
everywhere.
Mr. Green. Thank you.
Ms. Martin. But, yes.
Mr. Green. Thank you. I understand. And Ms. Martin, I
assure you, like you, I am interested in making sure that all
people are treated fairly, regardless of the agency. Have you
had an opportunity to review the circumstances that--well,
strike that. You are not here today to ask that the CFPB be
eliminated. Is that a fair statement?
Ms. Martin. Oh, no, sir. Never. Not even close.
Mr. Green. Okay. You want to see consumers protected. Is
that a fair statement?
Ms. Martin. Yes, sir. But not only that, also businesses
that abide by the law ought not be disadvantaged.
Mr. Green. Consumers and businesses.
Ms. Martin. Yes, sir.
Mr. Green. Protected. And you would not want your testimony
today to be used to weaken the CFPB, would you?
Ms. Martin. I would like it to be used to weaken managers--
Mr. Green. Managers.
Ms. Martin. --who are in power who ought not be. I would
like to see it weakened in various ways, but as far as its
power to protect the American consumer, it would be a tragedy
if it was weakened.
Mr. Green. Thank you. And I am very much concerned about
what is happening at the CFPB. But in my position as the
ranking member on the Oversight Subcommittee, I am also
concerned about the other agencies. And I trust that you can
understand that in my post, I have to look at the entire
picture, which is why I am concerned that we don't limit this
to just one agency. We may now have an opportunity to try to
take corrective action wherever injustice exists. Do you agree
that is a pretty good thing to do?
Ms. Martin. It is a very good thing to do, sir. Because the
Notification and Federal Employee Antidiscrimination and
Retaliation Act of 2002 (No FEAR Act) itself recognizes that no
Federal agency can run as long as it tolerates discrimination
within it. Your own letter to the IGs recognizes the same
thing. And what I thought was important about your letter is
that it said, ``in perception or practice.'' Even the mere
perception of discrimination has the potential to weaken the
internal workings of an agency. And when any agency is weakened
internally, it necessarily can't focus on its external missions
to the public.
Mr. Green. And do you think that the employees are trying
to do the very best job that they can at the CFPB?
Ms. Martin. Some aren't, sir.
Mr. Green. The employees in general. I am trying to make
sure that the agency itself is--we want to look at the
management, we want to examine the circumstances you have
called to our attention. But I am talking about those rank and
file employees. Are they trying to do a pretty good job?
Ms. Martin. Sir, I would say many employees, the
overwhelming majority of employees believe in the Bureau's
mission. Even ones who have been aggrieved, even seriously
aggrieved like I have, we are not leaving the Bureau. The
Bureau plays a vital mission. We have fought for its existence,
we want to protect its existence.
People think that I am here to destroy the Bureau or that I
am doing something bad for the Bureau. I will say this is a
dark day for the Bureau, no doubt. But it is by shining the
light that we can fix these things and we can make it a
stronger Bureau. It is kind of like when you prune something,
then it can grow better.
Mr. Green. That is exactly the point, and I am proud that
you made that point, that you are not here to destroy the
Bureau. You want consumers and businesses protected, and you
want to strengthen the Bureau, but you do want to make sure
that any injustices are corrected. Agreed?
Ms. Martin. Yes, sir, solidly.
Mr. Green. Thank you very much.
I yield back.
Chairman McHenry. I now recognize Mr. Duffy from Wisconsin.
Mr. Duffy. Thank you, Mr. Chairman.
My friends across the aisle have acknowledged abuses in
other agencies, other discrimination. And I would agree, there
has to be discrimination throughout government and we have to
go after it. But today is a hearing about discrimination at the
CFPB, and I want to focus on the allegations that have been
made specifically about the CFPB. And from here, maybe we can
go to other agencies, as well. But this is a hearing about what
has happened to you and to others at the agency.
And I again want to thank you for your courage, your
bravery, but also your leadership. If you look at other people,
as you have mentioned--scores of other people who have been
discriminated against or retaliated against--your leadership
gives them, I think, courage to come forward and tell their
story, as well. And I have some specific questions that I want
to ask.
But before I do that, I just want to comment that I am
disappointed that you have given the CFPB an opportunity to
change its ways, to actually see that a problem exists and that
they have a chance to change course. And instead of taking the
opportunity that you have given--and actually even showing up
today to say, ``Listen, we are going to talk about it, we are
going to be open about what has happened, we are embarrassed by
what has happened at the CFPB, but we believe in fixing it. And
we are going to come and we are going to open our doors, and we
are going talk and have a conversation about how we can be
better, how we can learn from this and how we can improve.''
But instead of coming here today, they said, ``We are not
going to show up.'' What frustrates me even more is, I read an
article in Politico which gave a statement about Ms. Raucci's
report. And they said--and this was the quote from Politico--
``The CFPB is aggressively pushing back on the findings''--
which were your findings, Ms. Raucci.
``A spokesman said the report is not valid or credible, in
part because it took unsworn statements by anonymous witnesses
and failed to give those accused a chance to properly
respond.'' For me, that tells me the problem still exists. They
are not embracing what you are sharing. That this is not a
point of a new beginning. You are still engaged in the fight to
get them to see what they have done, the wrong that they have
been engaged in, and to make it right.
I want to be clear about our willingness to work with you
to make sure that they are accountable for what has happened,
and that they change behaviors. I have to just ask, how has
this affected you personally, Ms. Martin? What has happened
with the discrimination and retaliation?
Ms. Martin. On a personal level, I have never had such
emotional stress in my life. The fact that you can't eat and
can't sleep--I heard about it from my clients all the time
because they were victims of abusive debt collectors, but I
never quite understood it. And like I said as well, members of
minorities--I have never had such a unity with them. But I will
tell you, the continued pain of hearing their stories is far
worse, almost exponentially worse, that it continues.
Mr. Duffy. You have made a comment about a reference. Was
it intake workers that--did you say they are almost 100 percent
African-American?
Ms. Martin. They are 100 percent African-American, except
some of them may be biracial or multiracial. I will tell you,
in 8th grade I heard that as a race, we could all be human. And
so, that is what I choose. If there is ``other'' with a line, I
choose human. So I am not sure what they would refer to
themselves as--I know that some refer to themselves
differently, and they might be from somewhere else. But just by
looking at them, and from what people tell me they are.
Mr. Duffy. They use a phrase in management to reference
these intake workers who are 100 percent minority. What was
that phrase again? What do they refer to this intake group as?
Ms. Martin. Actually, it is my understanding that it
originated in intake itself. And it is ``the plantation.''
Mr. Duffy. The plantation.
Ms. Martin. And actually, sir, when they had a chance--
Consumer Response recently had a chance to fill two manager
positions, and they hired two white male contractors over that
section, and did not promote from within.
Mr. Duffy. Is there any other slang that you are aware of
that is used at the CFPB besides ``the plantation?''
Ms. Martin. I have heard Consumer Response called ``a
cesspool.'' I have not heard any other names for offices.
Mr. Duffy. Ms. Raucci--and I am jumping all over here,
but--talking about the CFPB asking for sworn statements and
this report, your report, as invalid because there weren't
sworn statements. By the way, you did this report and this
investigation based on the request of the CFPB, right?
Ms. Raucci. Yes.
Mr. Duffy. You don't have a dog in this fight; you just did
the investigation independently.
Ms. Raucci. That is correct.
Mr. Duffy. Are you surprised that they are now pushing back
on your report because there weren't signed statements?
Ms. Raucci. Based on my findings, I am not surprised.
Mr. Duffy. Did they ask that you obtain sworn statements
from those whom you interviewed?
Ms. Raucci. Originally, that was the plan. However, due to
monetary--what we were told were monetary constraints, in the
interest of avoiding travel, it was determined that conducting
the investigation by telephone and corroborating and having the
witnesses verify their statements by other means was
acceptable.
Mr. Duffy. The CFPB said that was acceptable.
Ms. Raucci. Yes.
Mr. Duffy. Okay.
I yield back.
Chairman McHenry. Mr. Cleaver is recognized for 5 minutes.
Mr. Cleaver. Thank you, Mr. Chairman. Just for the record,
actually there is a Federal department that has worn the title
of ``the plantation'' since about the 1960s. Many of us here
have dealt with them over the years. And I am pleased to say
that they are turning things around in that particular Federal
department that has been known ``the Federal plantation.''
So I am hoping that the same thing can happen in every
department. I am not an attorney. I am sitting between two
attorneys, one judge on my left, a former judge. I feel awkward
trying to ask a question of somebody who is an attorney. But
what I am interested in, because it may give some cause for
hope, is that we found out that this Federal department that we
all used to talk about as ``the plantation'' began to try to
turn things around.
But they had to first recognize that, over the years, a
culture of exclusion and discrimination had been created. A
culture. It didn't mean people woke up in the morning, or had
meetings, and said, ``Let's get Martin.'' But it is about the
very fabric of what the department has become, at least in this
other instance.
So I am wondering, from either of you, if I gave an
adequate definition of the culture, of culture, if you believe
that is what is there. That it is happening because this is
what we do. And that the intentionality is not something as a
result of some guys having a Thursday meeting at 4:30 to pick
out people to whom they will issue discriminating mandates.
Ms. Martin. I will tell you that the actions and words I
have seen and heard from certain managers indicate to me that
they are racist and they are sexist. I will tell you, as a
victim and hearing other stories, their intent doesn't matter.
I will give you an example in Consumer Response. They will
schedule trainings and not invite women and minorities. And
when they bring it to their attention, the managers say, ``my
bad.''
They are not allowed to go to training, they are not
allowed to go to opportunities. It is really interesting--its
an interesting dichotomy. It is a culture, and the culture
needs to change.
Mr. Cleaver. Yes, that is what I understand. It didn't
matter if it was unintentional. We used to play baseball, and
we would say, you are automatically out if you sling your bat.
Because whether somebody hits you intentionally, or whether it
slipped out of their hand, it still hurts. So I am not saying
that if it is not intentional, it feels better.
But I am saying that sometimes a culture just bubbles and
then it feeds itself. And I am wondering if that is what is
taking place. I don't have any other questions.
Mr. Chairman, I yield back the balance of my time.
Chairman McHenry. We will now recognize Mr. Fincher of
Tennessee.
Mr. Fincher. Thank you, Mr. Chairman, and Ms. Martin, and
Ms.--is it ``Raucci?'' Is that how you pronounce it?
Ms. Raucci. That is fine.
[laughter]
Mr. Fincher. I am heartbroken to hear the testimony today.
In 2014, you do hear stories like this. But in the Federal
Government, where smart people are supposed to work and where
people are supposed to handle themselves in a way that is the
proper way, for this to happen to you, it is just unacceptable.
And, hopefully, this hearing today--and I appreciate the
chairman and the ranking member taking time for us to look into
this. It is very important.
A couple of questions to Ms. Martin. You were a civilian
JAG attorney after law school, correct?
Ms. Martin. Yes, sir.
Mr. Fincher. What were your duties as a JAG attorney?
Ms. Martin. I served the servicemembers. We had 250,000
eligible clients for our office. I was responsible for training
the JAGs for--in the Army duties, as well as in the practice of
law. We did 47 areas of law, primarily wills and family law.
And then, we developed a consumer law program. I will tell you
that at one point, it was just me and a brand-new lieutenant,
because the rest of the office had deployed.
Mr. Fincher. Wow, I appreciate your service. After your
time, after the JAG Corps, you were a solo practitioner working
on consumer law matters also, correct?
Ms. Martin. Yes, sir. And that came because I set up a
program at Fort Bragg for consumer law, and I realized that my
duties and services to the consumers would be better served
outside the gate. Because that way I could effectively serve
all five military installations, as well as North Carolina
civilians.
Mr. Fincher. Outside of the law practice, have you done any
teaching or public advocacy concerning consumer law issues?
Ms. Martin. Yes, sir. I frequently--I will speak any time
about consumer law issues. I feel that it is so important
because of the way that money matters and consumer matters
affect the stability of families in general. And how if you fix
the money matters, you might be able to stop divorces and save
families. Or in the case of home foreclosures, you could save
neighborhoods, you could save schools.
Mr. Fincher. And again, you are--to reiterate what a couple
of my colleagues said a few minutes ago--not saying that the
CFPB needs to be eliminated. You just want the problems fixed
that are within the agency and, up until now, this was a
problem.
Ms. Martin. Yes, sir. And I don't even care how you fix it,
how anybody fixes it from whatever manner. I just want it--it
has to stop. I have been suffering since May of 2012. And when
I went forward formally in December, even then it was not for
myself. In December, I saw another female crying in her office,
suffering from the same abuses that I myself was experiencing.
I said, this has to end. In a weird time fashion, when I
stormed out of the office in tears to head to Human Capital to
file my complaint, I was met on the way by Dennis Slater, who
is the Chief Human Capital Officer. He escorted me, in tears. I
said it had to end, in December of 2012. I got a call just this
morning that it is continuing.
And I wanted to add, anybody that I speak about, I have
their permission to speak about. I am very much aware of the
thwarting of the EEO process and the right to personal privacy.
Somebody has authorized me to tell you that they have been
medically diagnosed as suffering from PTSD from a hostile work
environment at the Bureau. I don't know how many more victims
somebody needs to make it stop, but I am asking you to do so.
Mr. Fincher. Look, one--a couple of more questions to wrap
up. After Ms. Raucci's report was finalized, did you ask the
CFPB for a copy of the report?
Ms. Martin. Yes, sir. And I did it intentionally and firmly
from my residence, which is out-of-State. I live in North
Carolina. I drive 325 miles to work here. I filed two requests,
as well, so that they wouldn't be confused whether it was FOIA
or whether it was the Privacy Act. And they were both denied
summarily.
Mr. Fincher. You would think you could get the report. You
asked for it. You asked for it more than once. But they
wouldn't let you have it.
Ms. Martin. No, sir. I wasn't even allowed a redacted copy
about the part of it that pertained to me.
Mr. Fincher. Unbelievable.
With that, I yield back, Mr. Chairman.
Chairman McHenry. Ms. Martin, in the American Banker
article, Director Cordray said that they will have, ``an open
dialogue about--and promise to resolve some of these
problems.'' Is that going to suffice?
Ms. Martin. Sir, that is more than surprising. It is
incredibly sad for me, and it is one of the reasons that I came
forward as a whistleblower. I love the idea of an open
dialogue. Who can fault transparency? That is one of the
reasons I am here is to shine light. But the culture of the
Bureau, and the retaliation and intimidation, will make your
numbers hopelessly underreported. An open dialogue without a
safe access to engage in that conversation will be for naught.
And that is the sole reason I came forward as a
whistleblower, to let you know the problem is bigger than any
report that you will see or hear.
Chairman McHenry. The time has expired.
I now ask unanimous consent to include in the record the
paragraph from Ms. Raucci's e-mail dated September 11, 2013. It
says, ``The environment at the Office of Consumer Response
appears to be one of exclusion, retaliation, and collusion
spearheaded by the Respondent, and furthered by at least two of
his reports, resulting in what appears to be benefits received
by at least one of them in return for their complicity.''
Mr. Green. Point of clarification, Mr. Chairman. Is that
the paragraph only?
Chairman McHenry. Yes, yes. And without objection, it is so
ordered.
We will now recognize Mr. Perlmutter from Colorado.
Mr. Perlmutter. Thank you, Mr. Chairman. And thank you two
for your testimony today. I appreciate the fact that you are
here, standing up for the agency in one respect, and really
bringing some serious complaints about the agency. So, it is a
difficult spot for both of you to be in.
I just have some basic questions about the office and the
size of the office and that kind of stuff. So, Ms. Raucci, the
Office of Consumer Response, how big is that? How many people
are in that?
Ms. Raucci. I don't know exactly.
Mr. Perlmutter. Ms. Martin?
Ms. Martin. Sir, it is 160-plus full-time employees, with a
budget of $73-plus million.
Mr. Perlmutter. Okay, 160. How many managers?
Ms. Martin. Sir, I don't know.
Mr. Perlmutter. Okay. And are you still in that office? Or
are you in another office now?
Ms. Martin. No, sir. As part of the settlement, I moved
back to the Office of Enforcement.
Mr. Perlmutter. Okay. And how many people are in the Office
of Enforcement?
Ms. Martin. Sir, I don't know the numbers. I am excluded
and isolated. No kidding, I honestly don't know the numbers.
Mr. Perlmutter. Okay. I am just trying to gauge the Office
of Consumer Response against the entire agency. Is it a quarter
of it, half of it? What would you say?
Ms. Martin. I am not sure, sir, because I don't know the
numbers of employees. But I think we might be at 1,300 members.
And if that is 160, then there would be your math.
Mr. Perlmutter. Okay, thank you. Ms. Skinner and Ms. Hume,
what is their status? Because I--and, Ms. Raucci, you refer to
them in your testimony. Are they still with the Office of
Consumer Response, or do you know?
Ms. Martin. Sir, they are still with the Office.
Mr. Perlmutter. Did either one of them take your position?
Ms. Martin. Yes, sir. But I am reluctant to speak about--
Mr. Perlmutter. Just--yes, I am not trying to cross-
examine. I am just trying to understand the status of--what is
the status of your EEOC case?
Ms. Martin. Oh, sir, the--I settled with the Bureau in
August. While this investigation was going on, I had a valid
settlement agreement. The only thing I am fighting with the
Bureau on is that they did not give me the position that they
said that they would give me. That sole clause that I am
supposed to have a job that Director Cordray and somebody else
gave to somebody else, that is the issue at the EEOC. Or will
be. I didn't even file it yet, but that will be the issue.
Mr. Perlmutter. Do you know whether there are any other
EEOC investigations ongoing?
Ms. Martin. Yes, sir. It is a confidential process. But at
least the one that I told you about, the person who was a
foreigner. I know his is pending at the EEOC. I don't know the
number.
Mr. Perlmutter. Okay.
Ms. Martin. But I want to be clear. I really--I am careful
about this. My employees have an absolute right to use the EEO
process. They had an absolute right to file complaints. And
they should be free to file those. What is not acceptable is
what I believe has happened is that a manager is colluding with
employees to do so because that undermines the entire process
and ends up thwarting the rights that they ought to be
protected.
Mr. Perlmutter. I agree. I guess I am trying to figure out
at--on one hand, we are here and--in this committee you are
testifying here. On the other hand, there are other authorities
kind of looking into these allegations, I hope.
Ms. Martin. Yes, sir. But there is a huge problem with
that.
Mr. Perlmutter. Okay, and that is what?
Ms. Martin. It is called the slow, deliberate pace of
justice. The time that it takes and the emotional toll on all
these employees, when somebody can simply say no, it ends here,
it is unacceptable. We are a Federal agency, we proudly serve
consumers. It has to stop. The fact that I have an individual
claim, great. I am not here for that, but somebody has to stop
this. And incidentally, I don't even--I am not here to relieve
anybody from their jobs.
I am telling you that there is a problem, and I want two
things: I want people to abide by the laws; and I want people
to stop hurting other people. And that needs to happen now, not
in an adjudication in another forum. It has to stop now.
Mr. Perlmutter. And at the end of the day, by people being
treated properly, as you see it, in this agency, and rebuilding
the Office of Consumer Response, are we going to have a better
agency to protect the consumers of the United States of
America?
Ms. Martin. Sir, one would hope so. But I have to be clear.
Mr. Perlmutter. Would that be one of your goals in all of
this?
Ms. Martin. Sir, my biggest goal is a restoration of the
EEO process and grievance process itself. I am telling you
stories from Consumer Response because that is where some of
the stories lie. But this is a Bureau-systemic problem and the
EEO process itself is unhealthy and needs to be fixed.
Mr. Perlmutter. So the EEOC, is their investigation
proceeding appropriately, or not?
Ms. Martin. I don't have--sir, I don't have knowledge of
the EEOC. I am only talking the EEO within the Bureau.
Mr. Perlmutter. Okay, thank you.
Chairman McHenry. We will now recognize the chairman of the
full Financial Services Committee, Chairman Hensarling, for 5
minutes.
Chairman Hensarling. Thank you, Mr. Chairman. Committee
members know it is not my custom to speak at subcommittee
hearings. Today is clearly an exception. As have most Members,
I have been moved by what I have heard. And, again, let me add
my voice to the voices you have heard congratulating both of
you ladies for the courage that you exhibit and for coming
forward today.
I was but a child when Martin Luther King gave his, ``I
have a dream'' speech. I was but a child when the civil rights
movement was finally achieving its victories. So, an America of
Government-sanctioned discrimination is one that I am mostly
familiar with in the history books, from television
documentaries, and frankly, from some who have actually lived
through it.
And to think, again, that in 2014 we are hearing evidence
of Government-sanctioned discrimination is beyond the pale. And
I hope that my colleagues who had requested that this hearing
be canceled now see the value in this testimony. I think this
committee would be negligent, would be in dereliction of duty,
had we not heard this testimony today.
And as chairman of this committee, if this was merely
restricted to Ms. Martin's story, as compelling as it is, I
would not have allowed this hearing to go forward. But instead,
regrettably, shamefully, this appears to be the tip of the
iceberg. I so wish that the CFPB were here today. As Chairman
McHenry has stated, they were invited. This wasn't about trying
to hear one story. This was about hearing both sides of the
story.
We are not here to be judge and jury, but we are here to
investigate. It is our job, it is our duty, it is our
responsibility from those who elected us and have given us
these great offices of trust and responsibility. So we will
have our debates about what is good public policy, and what is
not good public policy. But the question before us is,
notwithstanding Ms. Martin's story--and that is a very
important issue for us to investigate--is there a pattern of
intimidation of whistleblowers at the CFPB?
Has it risen to the level of unlawful action? Is there a
pattern of discrimination at the CFPB? Has it risen to the
level of unlawful discrimination? Is the CFPB, when it comes to
disparate impact, attempting to impose a standard on others
that they seemingly are unable to meet themselves? Where is the
equal protection under the law?
There is a reason, perhaps, that the CFPB is historically
the least accountable, most powerful, Federal agency we have
seen. And I am hoping that Members on both sides of the aisle
may revisit the necessity of this agency being accountable to
the American people.
I have a couple of questions. What was compelling--there
are many things that have been compelling to me, but Ms.
Raucci, you said in your testimony that when you appeared, you
became ``a veritable hotline for employees at the CFPB who
called to discuss their maltreatment.''
Ms. Raucci. That is true, sir.
Chairman Hensarling. Approximately how many contacted you?
Ms. Raucci. Approximately 12.
Chairman Hensarling. Approximately a dozen. And speaking of
context, Ms. Martin, because we do not have a commission, we
have one Director, did Director Cordray ever contact you
personally with respect to your complaint?
Ms. Martin. Yes, sir. Like many of the early arrivals in
Enforcement, because we were so small, we had an ability to
speak to the Director and approach him. He is very approachable
and kind.
Chairman Hensarling. When he contacted you, was this with
respect to your formal EEO complaint?
Ms. Martin. Yes, sir. On August 7th, Director Cordray
called me at night and told me that I should get my--that I
have to tell my attorneys to back down.
Chairman Hensarling. I'm sorry, Ms. Martin. You are saying
that Director Cordray personally reached out to you and told
you to have your attorneys back down?
Ms. Martin. Yes, sir. On August 7th, at 8:54 p.m., in a 2-
minute conversation he told me to tell my attorneys to back
down because he was trying to secure me a position in
Enforcement. The next day--that was the final--my reporting
structure was the last thing to be settled, and I settled it
the next morning. Everything was fine, and I was coming back to
work. We actually signed the settlement agreement on August
14th.
But what I did not know was, on August 8th, after I thought
that it was settled, Director Cordray and somebody else gave
that position to somebody else. And that is what the fight is
about now, currently, with the Bureau, that I don't have a
position. But yes, he told me that.
Chairman Hensarling. We will fight to not let you and the
other employees down.
I yield back, Mr. Chairman.
Chairman McHenry. I thank the chairman.
I will now recognize Mrs. Beatty for 5 minutes.
Mrs. Beatty. Thank you, Mr. Chairman, and Ranking Member
Green. I also thank the witnesses for being here during this
serious and very emotional testimony. I certainly appreciate
it.
Let me first say that whether we are talking about public
service or the private sector, I am certainly against any form
of discrimination. And certainly, there should be no place for
retaliation. Thus, I signed this document, along with my other
Democratic colleagues, to ask the Inspectors General of the
Federal financial regulators to look at whether discrimination
exists in those agencies. Let me also say that I am committed
to fairness to those in the workplace, and I am also committed
to fairness of the workplace.
So as we move through today's hearing and the questions, I
have a great appreciation for your saying that you would like
to increase the slow pace that the agency is going at, to bring
some resolve. To my colleagues' comments about culture change,
you would like to see the culture change, and you want people
to stop being hurt. But you also support the purpose of the
CFPB and you don't want to see the Bureau's purpose undermined.
So can you share with us, if you have any specific resolve,
to what you would like to see if it were up to you? What would
be the culture change, and what specifically would you like to
see happen? I believe you said you didn't want to see people
lose their jobs. But talk to us a little more about what you
would like to see so we can be more helpful.
Ms. Martin. Thank you. The first thing I would say is that
I would like to see people lose their jobs if they have engaged
in unlawful activities. And they ought not be in leadership
where they can hurt people or break laws. So I don't want to
say people ought not be removed. People are removed all the
time. They should be removed with due process. I was removed in
an instant, without it. So, there is a difference.
You said many things, and I was wondering if you could
break down your questions. I don't know what to respond to
next.
Mrs. Beatty. No, thank you very much. Due process, people
removed from their jobs. Are there any specific categories?
Because you talked about not only what your case is and why we
are having it. But you spent a lot of time, which I
appreciated, also highlighting that there are some issues that
seem to be more in a category that I am going to call racist:
the reference to the derogatory statements about the
plantation, the back of the bus, et cetera.
What would you like to see, as it results into removing the
racist comments that were made? And also, of the 12 people who
contacted you, how many of those individuals were African-
American? So those two questions: the racism issue; and how
many of the 12 people were African-American?
Ms. Raucci. Of the 12 people, I know that one was African-
American. But their particular issue was not discrimination.
They actually had contacted me to alert me about discrimination
against other African-Americans in the Office of Consumer
Response.
Mrs. Beatty. And Ms. Martin, to you, I think you referenced
12 people had contacted you, when my colleague asked. When you
said you had been--the bank of phone calls are flooded with the
calls. I think your number was 12, if I am not mistaken. How
many of those individuals who contacted you specifically about
the CFPB and what was happening were African-American?
Ms. Martin. Ma'am, I didn't have 12 people call me. I can't
count the number of people who called me. I would actually have
to sit down and figure that out. Overwhelmingly, they are
African-American or other minorities. I have had no white male
complain that I am aware of, except one from a long time ago on
an age discrimination matter.
Mrs. Beatty. Okay. Thank you.
And I yield back.
Chairman McHenry. We will now recognize Mr. Hultgren for 5
minutes.
Mr. Hultgren. Thank you, Mr. Chairman. And thank you both
very, very much for being here, for your courage, for letting
us know about this and how important this is now to take the
next steps, to get all the information we can.
Ms. Raucci, if I could ask you, was Mr. Pluta aware of the
requirements of the EEO process?
Ms. Raucci. Yes.
Mr. Hultgren. In your opinion, did Mr. Pluta knowingly
violate the EEO process in Ms. Martin's case?
Ms. Raucci. Yes, he did.
Mr. Hultgren. Continuing on, did the CFPB ever object to
the findings of your investigation?
Ms. Raucci. No.
Mr. Hultgren. Based on your investigative work, do you
believe that the current head of Consumer Response, Scott
Pluta, has created an environment in which all employees feel
free to utilize the EEO process?
Ms. Raucci. No. In fact, he discourages, openly discourages
the use of the EEO process.
Mr. Hultgren. Do you believe that Scott Pluta acted as he
did in Ms. Martin's case because he simply was not aware of the
requirements of the EEO process?
Ms. Raucci. No, I don't believe that. I believe it was a
willful disregard for the EEO process.
Mr. Hultgren. Did witnesses interviewed by you express an
opinion as to Mr. Pluta's career ambitions in connection with
the Office of Consumer Response, and what did the witnesses
tell you, if they did?
Ms. Raucci. Yes. Witnesses told me that Mr. Pluta was
interested in developing his own empire within the Office of
Consumer Response. And one witness in particular told me that
was offered as an explanation for what was perceived as
cronyism, in which Mr. Pluta would plant ``yes'' men in the
Office of Consumer Response who would simply be glad for the
opportunity that he presented to them to work in the Office of
Consumer Response, and would therefore abide by his directives,
whatever they may be.
Mr. Hultgren. Mr. Pluta issued Ms. Martin an unacceptable
performance rating of one in April of 2013. Is that correct?
Ms. Raucci. Yes.
Mr. Hultgren. Before receiving the one rating, Ms. Martin
had a record of strong performance at the CFPB. Isn't that
correct?
Ms. Raucci. Yes, that is correct, sir.
Mr. Hultgren. Mr. Pluta did not place Ms. Martin on a
performance improvement plan after assigning a one rating? Is
that correct?
Ms. Raucci. No, sir, he did not.
Mr. Hultgren. Wouldn't it have been customary to place Ms.
Martin on a performance improvement plan?
Ms. Raucci. Yes, it would have.
Mr. Hultgren. As a result of Mr. Pluta's actions, you
determined that Mr. Pluta used the performance rating system to
retaliate against Ms. Martin. Is that correct?
Ms. Raucci. Yes.
Mr. Hultgren. Again, I thank you so much, both of you, for
being here today, for helping us in this initial, very eye-
opening hearing.
Mr. Chairman, I have completed my questions. I would be
happy to yield back to the chairman the remainder of my time.
Chairman McHenry. I appreciate my colleague for yielding.
Ms. Martin, you have dealt with the CFPB's Office of Human
Capital in connection with this case, have you not?
Ms. Martin. Yes, sir.
Chairman McHenry. And this was in connection with the
retaliation claim. Is that correct?
Ms. Martin. Yes, sir. And earlier discrimination. I engaged
them early, in the hopes of getting a resolution.
Chairman McHenry. Based on this experience, does the Office
of Human Capital adequately protect employees of the CFPB?
Ms. Martin. No, sir. It is actually sad because when you
first go to--when an employee first--and I have heard this from
others, as well. When you first engage the Office of Human
Capital, the employee relations liaison sounds sad, sounds like
she is empathetic, tells us that we have good cases, and ends
up agreeing with us. But as time goes on, you realize that it
is just an arm of management. What you say is going to be used
against you, and it is a stalwart defense from that office.
It is hard for people to receive resolution through that
office at all. It is just an extension of management and
mismanagement, I would add. And it is sad because a lot of
these could be resolved by reasonable minds just looking at it
and determining who is right and putting a good fix in place so
that we can finish and get on with the Bureau's vital mission,
particularly in my case.
Chairman McHenry. Ms. Raucci, just to have the timeline
correct here, Ms. Martin filed a claim of discrimination and
retaliation against Scott Pluta. And then following that, she
filed that claim through the Equal Employment Opportunity
office. Is that correct?
Ms. Raucci. Yes.
Chairman McHenry. So following that, her two direct reports
were removed from her by Mr. Pluta.
Ms. Raucci. Yes, almost immediately.
Chairman McHenry. And so you find, in your 29-page report,
that is as a result of her filing that discrimination claim?
Ms. Raucci. Yes. May I back up just a little bit on that?
Chairman McHenry. Certainly.
Ms. Raucci. On February 21st, when she formalized her
complaint--the EEO complaint, that night, or that evening,
there was a meeting scheduled by Mr. Pluta exclusively with Ms.
Martin's direct reports. It was scheduled for 4:30 that
evening. And then the first of the two complaints made by the
subordinates was filed a couple of days later.
Chairman McHenry. So you are contracted to detail the
retaliation piece?
Ms. Raucci. Yes.
Chairman McHenry. And you find that there was retaliation.
Because not only did they remove the report, they then used the
EEO process against the person who filed the discrimination
claim?
Ms. Raucci. Yes.
Chairman McHenry. And that would be Ms. Martin.
Ms. Raucci. Yes. And not only did he remove her direct
reports, but he equalized them with her. They were no longer--
these subordinates were now treated as though they were ranked
with Ms. Martin.
Chairman McHenry. The time has definitely expired.
I now recognize Mr. Heck for 5 minutes.
Mr. Heck. Thank you, Mr. Chairman. I will be very brief.
Thank you very much for your presence here today, Ms. Martin.
Thank you for your service in the U.S. Army. And in particular,
I want to call out how impressed I am that you played a role in
the early advocacy of the creation of the Office of
Servicemember Affairs. Our office has had occasion to work with
them multiple times. I hope you take some pride in that because
they have done an awful lot of good work, and I thank you for
that.
And lastly, I want to be very presumptuous here and speak
on behalf of all the members of the committee in wishing you
well and wishing you satisfaction at the end of this journey,
however long it takes you, and that you find justice in this
journey. And with that, I would like, Mr. Chairman, to yield to
the ranking member of the full committee, the gentlelady from
California, Congresswoman Waters.
Ms. Waters. Thank you very much. Mr. Chairman and Members,
I mentioned early in my testimony that I created the Office of
Women and Minority Affairs (OWMA), to get at racism and
discrimination, particularly in the financial services arena.
And today, what you have done is, you have opened up the
opportunity for us to pursue these accusations, not only in the
CFPB, but throughout all of our Federal Government. And I want
to thank you for that.
What we heard today about racism and about the way that
employees are being treated is a story that I have been trying
to tell. And we have this whole argument that we are dealing
with on disparate impact. I know that Members on the opposite
side of the aisle have dismissed this as a legal theory. And I
know that some in industry have called on you to dismiss this
as a legal theory. But now you can see why it is so important
to understand both intentional and unintentional racism and
discrimination.
And because of Ms. Martin being here today, what you have
done is open up the discussion and the opportunity for us now
to get this committee to not only deal with the Consumer
Financial Protection Bureau, but all of these other agencies. I
think, Ms. Martin, you said you received a call from the FDIC.
Is that right?
Ms. Martin. From somebody who used to work there, ma'am.
Ms. Waters. Was that an African-American?
Ms. Martin. No, he is from Iran.
Ms. Waters. He is from Iraq?
Ms. Martin. Yes, ma'am.
Ms. Waters. Whether it is Iraq or African-Americans or
people on the plantation, as you have described, what you have
done is you have confirmed, especially for the opposite side of
the aisle, that there is a real problem that needs to be
addressed. So I hope that your testimony today that says we are
not--you are not talking about doing away with the Consumer
Financial Protection Bureau. You are not talking about trying
to undermine their ability to do what their mission calls for.
All you want--you don't want to end it, but you certainly
want to mend it. And make sure that the kind of racism--and the
way that you describe this so plainly and so openly, and the
words that you use, is commendable. Because for many years, as
we have tried to deal with this issue, we were accused of
playing the race card. And so you are being here today gives us
the opportunity to say to this committee and to my chairman,
let's get going with these hearings.
That this is the tip of the iceberg. That this is proof
that there is disparate impact. And it is proof that there is
intentional and unintentional racism and discrimination. And
the fact that you are going to provide some leadership on this
just does my heart so much good. I am so appreciative. Because,
again, I don't think we will ever get to these kinds of
hearings without what you have led with today.
And so, I am going to ask you to look at the letter that I
am sending you, to follow up, to talk about continuing. Let's
deal with this, and let's deal with it throughout all of the
other agencies.
Chairman McHenry. Will the gentlelady--
Ms. Waters. And I am very appreciative, and I thank you so
very much for focusing on racism, discrimination, disparate
impact, and intentional discrimination.
Chairman McHenry. Will the gentlelady--
Ms. Waters. I am very appreciative of that.
Chairman McHenry. I would be happy to answer her question,
if she would yield.
Ms. Waters. Yes, I will yield to the gentleman.
Chairman McHenry. I thank you. And this is markedly
different than the tone of your letter and Mr. Green's letter
from late last week demanding that we cancel this hearing. I
welcome your new tone, and I am very grateful for it. And the
claim today is about discrimination and retaliation--
Ms. Waters. Reclaiming my time, let's be clear. Reclaiming
my time--about cancellation. Here is what happened. You started
out to design a hearing in a much different way. And so, when
the Consumer Financial Protection Bureau said, this is
different than what we thought it was--if it is going to be
another kind of hearing--we need to have the kind of hearing
where all of the parties are involved. We agreed with that, and
we say let's have the kind of regular order that we would
normally have with credible oversight.
And so because you changed the emphasis and it became one
person in this hearing, we thought it should be more
comprehensive. But since it has turned out to be what it is, I
agree with you it should be held. I like what happened here
today. I like your leadership on racism and discrimination. And
this draws in disparate impact that so many people have been
against. And this gives us an opportunity to really air these
problems in a comprehensive way.
Thank you so very, very much for what you have accomplished
here today. And I thank Ms. Martin and her attorney for being
here. We are delighted. And the reason that I gave you my time
was because you just opened up a conversation in a way that we
never have before. And thank you so very much.
I yield back the balance of my time.
Chairman McHenry. And I am grateful for the thanks and the
praise, and I will--that changes the tone of the hearing, makes
it much more bipartisan. I will restate for the committee that
the title of this hearing is, ``Allegations of Discrimination
and Retaliation Within the Consumer Financial Protection
Bureau.''
I will also note for the record that the witness list was
provided in advance to the Democrats on this committee, far in
advance of anything we have done in previous hearings, and far
in advance of what the House rules and precedents set for both
the full House and the subcommittee, and the full Financial
Services Committee.
We will now recognize Mrs. Wagner for 5 minutes.
Mrs. Wagner. Thank you, Mr. Chairman. And I would also note
that the Bureau, the CFPB, is absent from this hearing.
Ms. Martin, Ms. Raucci, I cannot thank you enough for being
here today and for coming forward. And for your, again, courage
and leadership. We have heard words today like,
``heartbroken,'' ``alarmed,'' ``stunned,'' ``moved.'' I am
outraged, is what I am. As a woman, as a legislator, and as an
American, I am outraged at what you have been through. You will
have justice, Ms. Martin. And we as a Congress, in your own
words, must make it stop.
The CFPB must have oversight, it must have accountability,
and it must have transparency. This is absolutely egregious.
Now, I have some questions that I would like to get on the
record here. Ms. Raucci, at the very beginning of your
investigation, I think before you had a chance to review the
whole record, you told Liza Strong--who is, I will state, the
Director of Employee Relations for the CFPB Human Capital
Office--that Mr. Pluta may have acted properly in connection
with Ms. Martin. Is that correct?
Ms. Raucci. That is correct.
Mrs. Wagner. What did Ms. Strong say after you told her
about your preliminary views of the Pluta-Martin matter?
Ms. Raucci. She very happily said, ``That is what we think,
too.''
Mrs. Wagner. Was any of this of concern to you, or a red
flag?
Ms. Raucci. The fact that she stated that is what she
thought or what they thought also wasn't so much the red flag
as her demeanor. She was very gleeful, she was very happy to
hear that had been what I initially had considered.
Mrs. Wagner. And in dealing, in fact, with Ms. Strong, you
came to believe that she wanted to find that Mr. Pluta had done
no wrong? Is that correct?
Ms. Raucci. That is correct. I believe she wanted Mr. Pluta
vindicated. I believe that was her objective in assigning this
case.
Mrs. Wagner. Is it true that Ms. Strong asked you to
complete your investigation quickly?
Ms. Raucci. Yes.
Mrs. Wagner. When you began the investigation, wasn't Ms.
Martin unavailable to be interviewed because she was in the
midst of settlement negotiations for her claim?
Ms. Raucci. Yes, that is correct. And that was, in fact, my
first indication that perhaps the objective was to vindicate
Scott Pluta.
Mrs. Wagner. In your view, did Ms. Strong know that it
would be hard for you, in fact, to obtain an interview and an
exchange with Ms. Martin?
Ms. Raucci. Yes, it is pretty common knowledge that when
someone is in the middle of settlement negotiations, and is
represented by attorneys for this same matter, it is very
difficult, if not impossible, to have them participate in an
investigation simultaneously.
Mrs. Wagner. In your opinion, did the Human Capital Office
try to sweep things under the rug?
Ms. Raucci. Yes, that is my opinion.
Mrs. Wagner. Did you think that Ms. Strong had preordained
the outcome of your investigation perhaps?
Ms. Raucci. Yes, I felt that she preordained that Angela
Martin was going to be implicated as the party at fault and
having precipitated this investigation. And I felt that my
interaction with her on that day, when she very happily said
that she felt that Scott Pluta had acted appropriately, that to
me, was a very strong indication of that.
Mrs. Wagner. After completing your investigation, as you
sit here with us today testifying before this committee, is
there any doubt in your mind, Ms. Raucci, that Mr. Pluta in
fact retaliated against Ms. Martin?
Ms. Raucci. No, ma'am, there is no doubt in my mind that
Scott Pluta retaliated against Angela Martin.
Mrs. Wagner. I thank you both.
I yield back my time, Mr. Chairman.
Chairman McHenry. Will the gentlelady yield?
Mrs. Wagner. Yes.
Chairman McHenry. Ms. Martin, is Scott Pluta still in the
employ of the CFPB?
Ms. Martin. Yes, sir. He is the Assistant Director.
Chairman McHenry. Just as he was before Ms. Raucci's
report?
Ms. Martin. Yes, sir.
Chairman McHenry. Has he received any promotions?
Ms. Martin. Not that I am aware of, sir.
Chairman McHenry. Do you know if he has received any
bonuses?
Ms. Martin. No, sir. And I would tell you the Privacy Act
would forbid me from knowing that stuff, and I wouldn't seek it
out.
Chairman McHenry. Okay, thank you.
I will now recognize Mr. Ellison.
Mr. Ellison. I yield 30 seconds to Mr. Green.
Mr. Green. I thank you, Mr. Ellison. Let me say briefly
that this hearing, for many of us, appears to be a good old-
fashioned revival. And it is pretty obvious that some of us
have been born again. The question is, is it a temporary
condition? Is it a temporary condition, or are we going to
pursue this to the end? Is this going to be Genesis without
Revelations, or are we going to go all the way with it and make
sure that all people receive justice?
I yield back to the gentleman.
Mr. Ellison. I want to thank the gentleman for his remarks.
And I want to thank the chairman and the ranking member of the
subcommittee.
First of all, I would like to point out that the Financial
Services Committee or a subcommittee thereof had, several
months ago, a hearing on the issue of disparate impact, in
which the committee chairman, leadership, Republican Majority
cast negative treatment on the legal theory of disparate
treatment. Simultaneously, there has been a relentless
onslaught against the Consumer Financial Protection Bureau. We
have literally had to hear everything at the same time when the
mission and the goals of the CFPB have actually been serving
the American people.
We then learn that within the CFPB, as in every agency in
every firm all across America, there is racial discrimination
going on. Which, of course, is wrong and could never be
excused. And full accountability has to be made to all
responsible people. All victims have to be compensated
properly. Systems need to be in place to make sure that does
not happen again.
But then we see within the context of the CFPB being under
relentless attack by the Majority in this committee and then
the Majority also say, ``Well, we don't like disparate
treatment,'' then some Members of the Majority then find out
about this case and say, ``Aha, we can use this case to tarnish
the damage of the CFPB and to really open up questions about
the CFPB generally,'' which might explain why some Members--not
myself, but some Members of the Democratic caucus--thought that
this hearing may be different from what it has turned out to
be.
It has turned out to be a good hearing. It has turned out
to be good information. We actually see light being shined on a
person who is a victim of discrimination, which we all believe
is desperately important. In the time that I have watched this
hearing on TV and sat here, I have been impressed with your
presentation, Ms. Raucci and Ms. Martin, and think that the
information you have shared is very important.
We hope that the Majority will continue to be as serious
about fighting discrimination in this case as it--across the
work that we do, including consumers who are victims of racial
discrimination which the CFPB is responsible for addressing.
I don't believe--and I would like to get your opinion--that
anything you have said today would justify the CFPB not going
after banks and other financial institutions who take action
which has a negative, disparate impact on protected classes. Am
I right?
Ms. Martin. Sir, I wouldn't even begin to comment on that.
Mr. Ellison. Okay.
Ms. Martin. I'm sorry. I have--businesses should abide by
the law. The Bureau should fulfill its important mission. It
should do as Elizabeth Warren said, `` We will enforce these
laws judiciously and responsibly, but never timidly.''
Mr. Ellison. Okay. Would you like to comment, Ms. Raucci?
Ms. Raucci. I concur. I agree that it should be evenhanded,
an evenhanded application within the Bureau and with the
American marketplace, like lenders.
Mr. Ellison. Right. So if anybody is here to try to use
your case as evidence to weaken the CFPB or besmirch the
reputation of the CFPB, the real lesson that I am picking up
from you is that discrimination is wrong all the time, even if
it happens in the CFPB, and must be addressed there as well as
everywhere. And nothing here would justify sort of undermining
the CFPB's overall mission, but the CFPB has to have a clean
house just like every institution. Would you agree with that?
Ms. Raucci. I would agree with that.
Ms. Martin. Sir, may I comment please?
Mr. Ellison. Yes, ma'am.
Ms. Martin. I could not agree with you more. And I wanted
to say, because there is a duplicity at the Bureau, and
particularly white males the most in power, I have taken severe
retaliation even for coming forward as being a whistleblower. I
will tell you that African-Americans and aggrieved people have
commented that I am their champion, I am their hero, and they
feel vindicated just because I am speaking here.
The thing I want to make clear is, by me coming forward
today, it is not against the Bureau. The Bureau will be
stronger because of this. I am sorry these things occurred. I
am sorry they are happening. But the light from the CFPB logo
that goes forward must come back, as well. And we just need to
fix these things.
Mr. Ellison. No way I could improve on that.
I yield back.
Chairman McHenry. We will now recognize Mr. Barr of
Kentucky for 5 minutes.
Mr. Barr. Thank you, Mr. Chairman. Thank you to Ms. Martin
for your testimony here today. And, Ms. Raucci, thank you for
your investigatory work.
In your written testimony, Ms. Martin, you stated that
there is a pervasive culture of retaliation and intimidation
that silences employees and chills the workforce from exposing
wrongdoing. And you also testified that your individual story
is a microcosm of a larger story of what happens to individuals
within the Bureau when they step forward with complaints of
wrongdoing. Can you elaborate a little bit more about others
who have faced similar discrimination and retaliation within
the Bureau?
Ms. Martin. I have already given you some of them, sir. But
I will back up to the person who was called the name. He was
brought to the Bureau from the FDIC, after 15 years. The Bureau
actually paid him a bonus. He competed. He wasn't a transferee.
He competed for his position, he came over, and he received a
bonus. What happens when somebody comes forward is,
immediately--like to any wrongdoing. You don't even have to
file an EEO complaint. It doesn't have to get that far.
In the beginning, when I started pointing out things that
were wrong, immediately there was resistance. For some reason,
managers take that personally. And it is not just the Office of
Consumer Response. It is almost systemic that these managers
just resist the exposure of that. And so, you will face the
taking away of your duties, you will be marginalized, you will
be isolated. It is just--it is a culture.
Mr. Barr. And, Ms. Raucci, based on your investigation you
also concur that there is a toxic work environment. And it is
your conclusion also that others are victims like Ms. Martin,
within the Bureau?
Ms. Raucci. Yes, sir.
Mr. Barr. And when you testified that you became a
veritable hotline for other complaints, can you elaborate a
little bit about others? And how pervasive is this, in your
judgment, based on your investigation?
Ms. Raucci. Thank you, sir. Word spread around that an
investigation was being conducted, and several employees
obtained my contact information. They contacted me, and they
would discuss their own stories with me. But then they would
also tell me stories of one or two other people whom they knew
to be going through discrimination and retaliation issues. And
they spoke on behalf of those employees because they felt that
these people were unable to come forward for fear of
retaliation.
Mr. Barr. Okay. And in your written testimony, you stated
that those responsible for curtailing Mr. Pluta's activities--
again, Mr. Pluta is Ms. Martin's supervisor, who is the target
of this investigation--were apparently compelled to ignore,
cover or downplay them instead of taking corrective action. Who
does Mr. Pluta report to?
Ms. Raucci. Mr. Pluta reports to Sartaj Alag, I believe.
Mr. Barr. And what action did that individual take in
response to this situation?
Ms. Raucci. As far as I know he took no action.
Mr. Barr. And who does that individual report to?
Ms. Raucci. That is a good question. I don't recall.
Mr. Barr. Okay. Were any supervisors or any other
individuals in management--did they take any action in response
to your investigatory report that was delivered to Ms. Strong
on September 11, 2013? Was any action taken whatsoever, any
corrective action?
Ms. Raucci. In referring to the summary that I sent on
September 11th?
Mr. Barr. Yes.
Ms. Raucci. I don't--
Mr. Barr. And the final report in December. Has any
corrective action been taken whatsoever?
Ms. Raucci. I don't believe so. I am not necessarily privy
to that information, but I haven't heard.
Mr. Barr. And Ms. Martin's testimony was that it has to
stop now. That is, I believe, what her quote was. Has
management, in your assessment, taken any steps to stop this
retaliatory activity?
Ms. Raucci. No.
Mr. Barr. In the American Banker article, an anonymous
agency employee, a Bureau employee, says--this is reported in
the American Banker--``The level of hypocrisy at this agency is
shocking. If it was a lender and had similar statistics it
would be written up, immediately referred to the Justice
Department, sued and publicly shamed.'' Has anyone been written
up or publicly shamed as a result of Ms. Martin's situation?
Ms. Raucci. I don't believe so.
Mr. Barr. Ms. Martin, what does it tell you that the CFPB
refused to permit three officials with direct knowledge of this
matter, and the EEO complaint process, to testify here today?
Ms. Martin. Sir, I will tell you that the Bureau equips and
sanctions the wrongdoing. And actually encourages--or not
encourages, but facilitates the ongoing treatment of its
employees. And I will tell you, if I may, please, just recently
in regard to me coming forward as a whistleblower, I did not
give the union report to the American Banker. I did not provide
the Pluta report to anybody. In fact, I have not even read it.
I am a witness. I am somebody who is trusted at the Bureau
that other people have confided in. I am somebody that
something happened to. But on March 31st, and in the press last
week, the Assistant Director of Consumer Response, Scott Pluta,
was able to malign me in the press and in front of the entire
Office of Consumer Response specifically on my integrity, and
saying that I am patently false. And for them to do that, when
I have not made any public statements--and, indeed, I do not
lie. Because there is a higher authority that does not sanction
me lying.
But for the Bureau to stand there, with Sartaj Alag--who
actually started my own problems when he told me that I would
get along better in Consumer Response if I allowed a male
colleague to think that my ideas were his. And that is the
Bureau. Actually, this has been facilitating it. And it has a
chilling effect on people coming forward. Because why would I
want to be called a liar in the press?
And they are allowing him to do this, they are allowing him
to speak. Director Cordray sent out a note on March 21st saying
what they intended to do because of the American Banker
article. And one thing he did is put Sartaj Alag in charge of
finding out what is happening, setting up an action plan, doing
various things. These are the people who have discriminated
against me, and these are the people who retaliated. And I
don't know how you get the results that are needed when you put
people like that in charge.
Chairman McHenry. We will now recognize Mrs. Maloney.
Mrs. Maloney. Thank you, Mr. Chairman, and Mr. Ranking
Member, for calling this hearing. And thank you, Angela Martin,
for your public service and your truly compelling testimony.
I firmly believe that gender discrimination complaints
should be treated with the utmost seriousness. I can remember
when I first started working, discrimination was considered
part of the job. There was no way you could complain, it was
part of the job, just shut up. And I think your testimony and
your speaking up is--I find it inspirational, quite frankly.
You mentioned in your testimony that the CFPB has the wrong
culture when it comes to the equal employment opportunity
process. I think that is terribly unfortunate. In your opinion,
what can the CFPB do to change this culture? What would you
like to see put in place to protect other men and women who may
confront the same troubling situation that you are confronting
now?
Ms. Martin. The first thing that the Bureau needs to do is
even admit that it has a problem and recognize that. It needs
to recognize the gravity of the problem. It needs--and I don't
quite--I have been thinking a long time about how these
employees, any aggrieved employees, anybody who even witnesses
it, can come forward safely. The Bureau has a culture also of
duplicity, in that they say--Richard Cordray has said in public
that discrimination is evil. And we all know that.
But at the same time, there is rampant discrimination in
the ranks. The Bureau says that there is due process, and yet
there is not for some. So unless there is a safe way for people
to come forward--one thing that I particularly read about
recently was the fact that some places have a whistleblower
ombudsman. In the March 21st letter, Director Cordray said he
was going to use the OWMA Office and the EEO, and we should
feel free to come.
The Bureau would not come here today, and one of the
reasons they said was because it discussed a personal matter.
And yet, the managers--Mr. Pluta, Consumer Response--they walk
around the halls openly discussing open EEO matters. By point
of fact, Mr. Pluta told my own employees that I had a matter
pending. And they came to me wondering and demanding why I
wasn't settling so that I could move someplace where I am
happy.
So until we find a safe place--and honestly, I don't know
of any safe place in the Bureau besides myself. I would not--I
have been in counseling. I have learned not to trust them, even
as much as I want to. And that is everybody, that is even my
fellow employees, because it is such a distrusting place. So, I
don't know. It is a mammoth undertaking in front of you. I
don't envy your job.
But I will tell you this. If you want to know the truth, if
you want to know it without any political hype, because I am
truly a registered independent, if you want somebody who just
cuts to the chase and tells you exactly how it is without fear
or intimidation, you can ask me. I can be reached at the
Bureau. I will work there for 11 more years, until 30 years of
retirement, and I will work with you together on this issue. I
will work for employees inside the Bureau, and I will work for
consumers outside the Bureau.
All I want is a chance to work.
Mrs. Maloney. You mentioned an ombudsman, a whistleblower
ombudsman. You feel like the chain of command, reporting in the
chain of command was used against you. You can't trust it. Do
you think an ombudsman, appointed in these agencies, would be
helpful?
Ms. Martin. My understanding from the Whistleblower
Protection Enhancement Act--which, incidentally, is a law I
never intended to read, like many of the other laws--I came
here to do consumer work. But the Whistleblower Protection
Enhancement Act, which my attorney actually helped draft, I
believe, includes a provision within Federal agencies that
there is supposed to be a whistleblower ombudsman inside the
Inspectors General offices. I have never heard of one
affiliated with the Federal Reserve Inspector General that we
use. I don't know if it exists.
But the employees need to be aware of their rights and they
need to be protected, and their personal matters ought not be
discussed in hallways. And that is something the Consumer
Bureau can do right now. Stop discussing these things in the
halls. If you won't discuss them here in Congress, definitely
don't discuss them in the halls.
Mrs. Maloney. Do you think there is time for the Bureau to
correct their culture, since it is a new agency? And do you
believe that culture exists in other Federal agencies and other
offices?
Ms. Martin. Yes, ma'am, I am sure it exists everywhere. And
wherever it is, we need to stamp it out. There are so many good
people at the Bureau. They brought on an enormous amount of
talented individuals. But just because you are skilled or
expert in one area of law, like you are just a technical
expert, that doesn't mean that you should be a leader or a
manager. I am hesitant to call anybody at the Bureau a leader.
There are managers, there are supervisors, and there are
bosses. But based on the leaders that I served under in the
military, these people are a far cry from that. They are
supposed to provide purpose, direction, motivation. We are
supposed to be mission-oriented, and we are supposed to--
especially because we are the Bureau--seek out fairness,
justice, and equality in the Bureau, as well as we do outside.
But I do have great optimism. And I cautiously say that.
Because my story, inside the Bureau as I walk around moping is,
well, I was optimistic, then I became cautiously optimistic.
And now I am just cautious. But I do believe that people can
change, that this is a great way to get the debate--or not the
debate, but the resolution started. And I look forward to
helping people. Because the employees need to be helped.
Chairman McHenry. I will now recognize our last questioner,
Mr. Rothfus.
Mr. Rothfus. Thank you, Mr. Chairman. I have been listening
to the questions today and the testimony here, trying to think
how I would start my line of questioning. Number one, thank you
for coming forward. Thank you for the long and distinguished
career you have, and for serving our country in uniform.
I hope my daughter is watching this. I hope that your
family is watching this. Because they should be incredibly
proud of you. And I think of my daughter, who is just beginning
her career, and the leadership that you are showing today. You
just talked about there not being leaders at the CFPB. There
are leaders at the CFPB. I think I am looking at one. So, thank
you for coming forward.
And we are not talking, I don't think, about disparate
impact here. We are talking about intentionally sweeping issues
under the rug. We are talking about intentional acts by
individuals at the CFPB. We are talking about a willful
disregard for the law. We are talking about a culture that
results when such actions happen. And we are talking about a
dedicated public servant who is blowing the whistle here, and
the treatment she has received and the treatment others at the
Bureau are receiving.
Ms. Martin, the No FEAR Act requires the CFPB to inform its
employees, former employees, and applicants for employment of
the rights and protections available under Federal
antidiscrimination whistleblower protection and retaliation
laws. Retaliation against an employee or applicant for making a
protected disclosure is prohibited by law. Do you think you
have been retaliated against?
Ms. Martin. I know I have, sir, and I am still being
retaliated against in many ways. And if I may, I know that
they--that originally this was thought that it was just my case
or that I am seeking justice. Honestly, what I want is a chance
to work for the consumers. I will tell you, I have asked my
supervisor if I could help with military matters. I was told
no. I asked if I could serve on a case. I told them I didn't
even have to be first chair, second chair, or fourth chair. I
will sit on the floor. I was told no.
I have asked if I could do anything at the Bureau that
would be commensurate with my pay, my skills, and my abilities.
And they won't let me, and I can't explain that outside of
retaliation.
Mr. Rothfus. You had a conversation with Director Cordray
on August 7, 2013?
Ms. Martin. Yes, sir.
Mr. Rothfus. He asked you to have your attorneys back down.
Ms. Martin. To tell them to, yes, sir.
Mr. Rothfus. So therefore, he knew that you were
represented by counsel.
Ms. Martin. Yes, sir. But in fairness to him, he was
represented by counsel as well, the OGC. We are both lawyers,
so we weren't speaking as represented parties to each other or
violating that. It was more we are the clients of each.
Mr. Rothfus. Do you know whether he called your attorneys,
though, to tell them that he was going to offer some
alternative employment?
Ms. Martin. I'm sorry, sir?
Mr. Rothfus. Do you know whether he called your attorneys
to let them know that he was going to offer you some
alternative employment?
Ms. Martin. No, sir. He didn't offer me any alternative
employment.
Mr. Rothfus. I thought he was talking about--maybe I
misunderstood--when that conversation that you had with him,
that he--
Ms. Martin. Yes, sir. It was to solidify my reporting
scheme in my new position was determined when I won a contest.
I won a contest that was called, ``Pitch Rich.'' And this
contest gave me the right to implement the program, aside from
my EEO claims. I had two reasons why I should have that job
that they gave to somebody else.
Mr. Rothfus. Do you think your presence here today weakens
the CFPB?
Ms. Martin. I know it doesn't. And the laws say that. And
Ms. Waters said it, that the agency must work well internally
in order to perform its vital mission. I will tell you, if an
employee cannot eat, and cannot sleep, they cannot focus on
their work. Not for 1 minute, let alone 8 hours a day. We have
crippled employees at the Bureau who need to be fixed and
healthy so that they can do the jobs that the American people
have hired us to do, so we can stand watch for the American
consumer.
Mr. Rothfus. Do you think the CFPB should be more
accountable?
Ms. Martin. Oh, yes, sir.
Mr. Rothfus. Do you think the CFPB should be more
transparent?
Ms. Martin. Yes, sir.
Mr. Rothfus. Do you think that a more accountable and more
transparent CFPB would weaken the CFPB?
Ms. Martin. No. Accountability and transparency are always
a good thing. And I will add one thing that is interesting, and
I just want to be sure to get this in. One reason that the
Bureau discounts Ms. Raucci's report, they say, is because it
relies on unidentified anonymous data. And therefore, we will
just hide the whole report. I don't want to know--the question
that should be asked is, what did they do instead?
They saw what appears to be a very damning report. Did they
report that to the IG to hold their own investigation? Did they
hire another person to look into it? Because obviously, they
thought it was bad enough to get Ms. Raucci in the first place.
But about the anonymized data, because that feeds into your
PMRs that started this whole discussion being made openly. The
Bureau relies on anonymized information from feedback that
feeds into the employee's permanent evaluation. And the
employees don't have a right to speak against whatever was said
to them during this anonymous feedback on which the managers
rely.
So in one sense, they say anonymous feedback is fine, it is
reliable, we are going to use it against the employees in their
performance evaluations. But then when something comes up
against the Bureau, they say, ``Oh, it is anonymized and we are
not going to rely on it.'' See, that can't be. You can't have
duplicity like that. It is either one or the other, and I argue
that anonymized data, if there is a fear of reprisal, then it
is obvious why they are not coming forward.
And I will also tell you that a person who had what I would
perceive to be a relatively good manager was told by that
relatively good manager that before you go forward and file
this complaint, make sure that you are very careful. Because
look what happened to Angela.
Mr. Rothfus. Thank you.
I yield back.
Chairman McHenry. I thank my colleagues. And I thank them
for the respect and compassion that you showed to our witnesses
today.
Before I dismiss the panel, I would like to thank you both.
Ms. Raucci, I have read and heard of your story of success in
your life. And the position you grew and attained to as an
investigator, and it is an encouraging one. And I am grateful
for you taking time out of your schedule to make the trip to
Washington to tell this story. I also appreciate the integrity
you put into the report and the compassion you showed in a very
challenging environment.
Ms. Raucci. Thank you.
Chairman McHenry. And I want to thank you, Ms. Martin, for
your bravery, for your fortitude, and for your strength. The
story you have told today is difficult for us to hear. The
report was difficult to read. But even more difficult is
knowing that you have had to live it. And so, I thank you for
your willingness to come forward. And this panel is dismissed.
The Chair announces that the second panel, as the witnesses
refused to cooperate--I would note that three CFPB employees
who were invited to testify, who are a part of this process and
could further illuminate the discussions we had on this first
panel, refused to participate. We will have a discussion and
consider compelling their testimony to get to the bottom of
this.
I want to thank the ranking member for his cooperation. My
staff and I encourage whistleblowers to contact my office so
that we can tell your stories. The Angela Martins who don't
have her legal background or her counsel should still be
allowed to come out from the shadows and tell their story. And
we are going to see to it that they can.
The Chair notes that some Members may have additional
questions for this panel, which they may wish to submit in
writing. Without objection, the hearing record will remain open
for 5 legislative days for Members to submit written questions
to these witnesses and to place their responses in the record.
Also, without objection, Members will have 5 legislative days
to submit extraneous materials to the Chair for inclusion in
the record.
And without objection, this hearing is adjourned.
[Whereupon, at 12:30 p.m., the hearing was adjourned.]
A P P E N D I X
April 2, 2014
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