[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]





                   ALLEGATIONS OF DISCRIMINATION AND
                     RETALIATION WITHIN THE CONSUMER
                 FINANCIAL PROTECTION BUREAU, PART TWO

=======================================================================

                                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

                               __________

                              MAY 21, 2014

                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 113-81
                           
                           
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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
STEVE STIVERS, Ohio                  PATRICK MURPHY, Florida
STEPHEN LEE FINCHER, Tennessee       JOHN K. DELANEY, Maryland
MARLIN A. STUTZMAN, Indiana          KYRSTEN SINEMA, Arizona
MICK MULVANEY, South Carolina        JOYCE BEATTY, Ohio
RANDY HULTGREN, Illinois             DENNY HECK, Washington
DENNIS A. ROSS, Florida              STEVEN HORSFORD, Nevada
ROBERT PITTENGER, North Carolina
ANN WAGNER, Missouri
ANDY BARR, Kentucky
TOM COTTON, Arkansas
KEITH J. ROTHFUS, Pennsylvania
LUKE MESSER, Indiana

                     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
SPENCER BACHUS, Alabama              KEITH ELLISON, Minnesota
PETER T. KING, New York              CAROLYN B. MALONEY, New York
MICHELE BACHMANN, Minnesota          JOHN K. DELANEY, Maryland
SEAN P. DUFFY, Wisconsin             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:
    May 21, 2014.................................................     1
Appendix:
    May 21, 2014.................................................    53

                               WITNESSES
                        Wednesday, May 21, 2014

Konop, Benjamin, Executive Vice President, the National Treasury 
  Employees Union (NTEU), Chapter 335............................     9
Strong, Liza A., Lead of Labor and Employee Relations, the 
  Consumer Financial Protection Bureau (CFPB)....................     6

                                APPENDIX

Prepared statements:
    Konop, Benjamin..............................................    54
    Strong, Liza A...............................................    57

              Additional Material Submitted for the Record

Green, Hon. Al:
    The CFPB's Fiscal Year 2013 Performance Management Analysis: 
      Snapshot of Findings, dated May 2014.......................    61

 
                   ALLEGATIONS OF DISCRIMINATION AND
                    RETALIATION WITHIN THE CONSUMER
                 FINANCIAL PROTECTION BUREAU, PART TWO

                              ----------                              


                        Wednesday, May 21, 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 10:04 a.m., in 
room 2128, Rayburn House Office Building, Hon. Patrick T. 
McHenry [chairman of the subcommittee] presiding.
    Members present: Representatives McHenry, Fitzpatrick, 
Duffy, Fincher, Hultgren, Wagner, Barr, Rothfus; Green, 
Cleaver, Ellison, Maloney, Beatty, Heck, Kildee, and Horsford.
    Ex officio present: Representatives Hensarling and Waters.
    Chairman McHenry. The Subcommittee on Oversight and 
Investigations will come to order. Witnesses will take their 
seats. The title of today's subcommittee hearing is, 
``Allegations of Discrimination and Retaliation Within the 
Consumer Financial Protection Bureau, Part Two.''
    The Chair will now recognize himself for 5 minutes for an 
opening statement. On March 6th of this year, the American 
Banker published an article titled, ``CFPB Staff Evaluations 
Show Sharp Racial Disparities.'' The article exposed serious 
personnel problems at the Consumer Financial Protection Bureau, 
including evidence that, ``the CFPB's own managers have shown 
distinctly different patterns in how they rate employees of 
different races.''
    It is now apparent that the CFPB was aware of the racial 
disparities in key metrics well before the March 6th American 
Banker article. A study on diversity and inclusion commissioned 
by the Bureau and conducted by Deloitte Consulting was provided 
to the Bureau in September of 2013. That study noted sharp 
racial disparities in performance ratings, pay, hiring, and 
other areas.
    In addition to racial disparities in the CFPB's performance 
reviews, the American Banker also reported that, ``the 
management has been accused in several cases of favoring 
Caucasian men and of creating a hostile work environment.''
    The article noted that the CFPB's employees had filed 115 
official grievances with the National Treasury Employees Union, 
their union at the CFPB, and over 85 informal complaints, most 
of which pertain to allegations of unequal pay and raise 
questions about the recent performance reviews. These findings 
are particularly troubling as the Bureau, in its role as 
policeman of the consumer credit markets, has embraced a 
disparate impact theory, under which lenders can be held liable 
if their practices have a disparate impact on members of 
protected classes, even in the absence of direct evidence of 
racial discrimination.
    If the CFPB were a private company, the mere existence of 
disparities in key metrics relating to its treatment of 
employees would be ample grounds for enhanced supervision and 
costly enforcement actions. Now, at the Bureau, we have both 
examples of disparate impact and actual real cases of 
discrimination and retaliation.
    On April 2nd of this year, the subcommittee held a hearing 
which addressed these allegations of discrimination and 
retaliation at the Bureau and featured the testimony of Ms. 
Angela Martin, a current CFPB employee and whistleblower, and 
Misty Raucci, an investigator hired by the Bureau to examine 
Ms. Martin's claims of retaliation.
    Also invited to the hearing that day were three individuals 
with key roles in the union grievance and workplace complaint 
process. Unfortunately, the Bureau and the union refused to 
make these witnesses available. Only under force of subpoena 
are two of the three witnesses here today. I would note for the 
witnesses, it was a bipartisan, unanimous vote of this 
subcommittee to issue these subpoenas.
    Liza Strong serves in the Bureau as a lead employee 
relations manager. All formal and informal workplace complaints 
are processed through Ms. Strong's office. In addition, Ms. 
Strong negotiates on behalf of the Bureau with the union on 
changes to workplace conditions as part of the collective 
bargaining process.
    Ben Konop serves as the executive vice president of the 
union and is the highest ranking union official who actually 
works within the Bureau headquarters here in Washington. Mr. 
Konop has represented the union in negotiations with Ms. Strong 
on workplace conditions as well as disputes regarding the 
Bureau's troubled performance management review systems.
    The fact is that discrimination on the basis of race, sex 
or other prohibitive factors is destructive, morally repugnant, 
and against the law. All government agencies, including the 
Consumer Financial Protection Bureau, must continue to combat 
discrimination in employment and punish those responsible for 
discrimination. And yet, during my time in Congress, I have 
never witnessed this much of an outpouring from any one agency 
or actually any agency added up across the government in terms 
of the number of employee complaints we have seen and calls 
that we have had to talk about these conditions.
    Nevertheless, I join my colleagues in announcing to all 
employees of agencies under the jurisdiction of this committee 
who are experiencing discrimination or fear of retaliation at 
the hands of their supervisors to reach out to this committee. 
It should be recognized that in the past few days, the Bureau 
has announced changes to their employee performance system that 
revealed ``broad-based'' statistical disparities in the 
employment ratings system.
    In fact, Director Cordray reached out to me personally, and 
called to inform me of the changes and acknowledged the role 
that the public attention and congressional oversight played in 
the Bureau's decision to make adjustments to the performance 
management system, however inadequate they are.
    While the CFPB's funding and structure afford Congress an 
extremely limited ability to influence the Bureau's operations 
and policies, the allegations of discrimination and retaliation 
at the Bureau further underscore the significant need for real 
congressional oversight of this Bureau. It is my hope that 
through today's testimony, we will gain a better understanding 
of the issues of discrimination laid out in the American Banker 
article and the Deloitte report as well as the day-to-day 
handling of employee grievance and complaints.
    And with that, I will now yield 6 minutes to the ranking 
member of the full Financial Services Committee, Ms. Waters.
    The ranking member has just informed me they would like 
additional time, so I yield 5 minutes to the ranking member of 
the full committee.
    Ms. Waters. Thank you very much, Mr. Chairman.
    Today, we will hear the testimony of two subpoenaed 
witnesses regarding allegations of discrimination and 
retaliation at the Consumer Financial Protection Bureau.
    Mr. Chairman, I again want to thank you for your interest 
in addressing discrimination issues at the CFPB. And I want to 
reiterate my sincere hope that you will commit to addressing 
similar issues that may be occurring in the private sector and 
at all Federal financial regulators with the same due diligence 
as you have at the CFPB.
    As you know, subcommittee Democrats have called on the 
Inspectors General at all of the financial regulators under our 
committee's jurisdiction to assess whether any personnel 
practices and policies within these agencies have created an 
unfair or discriminatory workplace for minorities and women. 
Since our last hearing, my staff has had productive 
conversations with staff from the offices of the Inspectors 
General discussing the scope of this review and the use of 
uniform criteria to ensure their investigations are conducted 
in a thorough, meaningful, and consistent manner.
    Mr. Chairman, once they have been completed, I certainly 
hope you will join us in using the full weight of this 
committee to take a close look at the findings of, and any 
recommendations from, the Inspectors General.
    However, I remain disappointed that pay disparities among a 
wide range of classifications occurred at the Bureau as was 
outlined in a report that the CFPB released on Monday.
    It is good that the CFPB is taking steps to try to achieve 
a fair, inclusive workplace, by among other things, ensuring a 
more direct, ongoing interaction between the CFPB's Office of 
Minority and Women Inclusion (OMWI) and the Director's office. 
I am so pleased that CFPB is engaging in negotiations with the 
National Treasury Employees Union to develop a new employee 
evaluation system that will address these pay disparities and 
compensate employees.
    I am hoping that today's witnesses will shed additional 
light on the inner operations of the CFPB, but as I and Ranking 
Member Green wrote to you over a month and a half ago, I remain 
interested in hearing from the Bureau's top leadership. The 
CFPB has offered both Director Richard Cordray and the head of 
its OMWI, Stuart Ishimaru, to testify before the committee, as 
has the national president of the NTEU.
    To date, they have not been invited to discuss this issue 
before the committee. Despite the fact that the Bureau's senior 
leadership is not here with us today, I hope that in today's 
hearing we can still learn more about what steps the Bureau is 
taking to identify the root causes of the pay disparities as 
well as additional details about the Bureau's plans to evaluate 
and adopt new policies and procedures to ensure these types of 
problems do not happen again.
    Mr. Chairman and Members, I had an opportunity to talk with 
Mr. Cordray to better understand what steps he has taken, and 
we are going to hear more about that today. But I must share 
with you that, based on what I have learned, I am impressed 
that Mr. Cordray has taken this problem head on, that he has 
identified where the weaknesses are and he has moved in a very 
direct and concrete way to do something about it.
    So in addition to having learned more about whether 
disparities were taking place or had occurred at the CFPB, the 
way that he has addressed it and the remedies that he has put 
in place already are extremely impressive. And I am impressed 
with the way that, despite the fact that he is such a good 
public policymaker and a great Director who has moved the CFPB 
forward, that he took on this issue, stopped everything that he 
was doing, and took on this issue. And I joked with him a bit 
and told him he became his own human resources manager, and he 
has done a fantastic job.
    And I would just like to put that up front because I have 
had the opportunity to review what he has done. And so, Mr. 
Chairman, as we look at all of these other agencies, where we 
now have people who are coming forward telling us stories about 
discrimination, that you will tackle this in the same way and 
hopefully we can get these kind of results from all of the 
other agencies where many of these discrepancies and 
discrimination have been going on for years.
    I am so pleased about the direction that you are taking and 
the progress I already see, and I yield back the balance of my 
time.
    Chairman McHenry. I will now recognize the ranking member 
of the subcommittee, Mr. Green, for 5 minutes.
    Mr. Green. Thank you, Mr. Chairman.
    I thank you for your comments about your desire to deal 
with discrimination in all agencies.
    I would also like to thank the ranking member of the full 
committee. I would like to associate myself with your comments, 
Madam Ranking Member, and I would also like to thank you for 
the leadership that you have shown in insisting that we have 
the IGs look into these matters. I think it is exceedingly 
important that they do so, and I welcome the results of their 
investigations.
    I would also like to thank the witnesses for being here 
today. I read your statements, and I assure you that I want to 
get to the bottom of what is going on. I think it is 
exceedingly important that we not only deal with accusations 
but that we also get the solutions.
    We have to get to the bottom of this. I want you to 
understand that I view this the way I view a police department 
that is being investigated. At the end of the day, with the 
police department, if there are bad actors, if there are bad 
circumstances, they are dealt with. But you don't eliminate a 
police department. The police department still functions. You 
still have your police department. The CFPB is our police 
department. It is the cop on the beat.
    At the end of the day, after all is said and done, after 
Mr. Cordray has had his opportunity to appear, we still will 
have a CFPB. And I want to make it very clear to all of my 
colleagues that attempts, if they should manifest themselves, 
to let this metamorphose into, ``let's do away with the CFPB'' 
will be resisted, they will be fought, and they are going to be 
dealt with, because America deserves a Consumer Financial 
Protection Bureau. We must fight to keep it. We must also fight 
discrimination wherever it exists.
    And this is a great opportunity for us to set the paradigm, 
to make it very clear that on this side we, too, are going to 
fight to make sure that we get rid of discrimination. The 
ranking member and I are committed to it. She has a history of 
fighting invidious discrimination. And I am going to support 
and work with her every inch of the way as well as with all of 
my other colleagues.
    There are times when it is important to be on the right 
side of politics, and there are times when it is important to 
be on the right side of history. But this is one of those times 
when it is important to be on the right side of right. We want 
to be on the right side of what should be happening, of what 
should take place, of remedies that ought to be proposed.
    This is our opportunity to make sure that we treat this 
agency and all agencies the same way. So when we move on, Mr. 
Chairman, and we find that there are some complaints at some 
other agency, we will have the same desire to investigate that 
we have with the CFPB.
    I supported the subpoenas, and I want you to know that I am 
ready to do whatever is necessary to make sure that we get to 
the bottom of it, not just to the top but to the bottom. And I 
want you to know that if you think we need more subpoenas, you 
and I need to discuss this first, if you would be so kind as to 
discuss it. But let's talk about it. Let's see where we need to 
go.
    I will quote a great and noble American, one known to some 
of you, Marvin Gaye. Some of you are smiling. You know who 
Marvin Gaye is. I want to quote Marvin Gaye. His words were, 
``Let's get it on.'' So Mr. Chairman, let's get it on. Let's 
get to the bottom of it, and let's not let this be the last 
time that this committee embraces the notion that we are going 
to deal with invidious discrimination, whether it is in the 
CFPB or the FDIC, we should treat it all the same as we move 
forward from this point.
    I thank you for appearing today, witnesses, and I look 
forward to your testimony.
    Chairman McHenry. I trust that the ranking member's context 
for that song is significantly different this morning than this 
hearing.
    Mr. Green. It absolutely is, Mr. Chairman.
    Chairman McHenry. I appreciate it.
    Mr. Green. I thank you for inviting me to respond, and I 
will let you know that it clearly is different in that this is 
all about people in a different kind of way.
    Chairman McHenry. With that, we will now recognize the 
witnesses for their opening statement. Ms. Liza Strong has been 
the Lead of Labor and Employee Relations at the CFPB since July 
2011. Previously, she held human resources positions at the 
Office of Thrift Supervision and the Federal Aviation 
Administration. Ms. Strong is a graduate of Oklahoma City 
University School of Law and the University of Texas at El 
Paso.
    Mr. Ben Konop is an enforcement attorney within the CFPB's 
Office of Supervision Enforcement and Fair Lending. He is also 
the Executive Vice President of the National Treasury Employees 
Union chapter that represents the CFPB employees. Before 
joining the CFPB, Mr. Konop taught law and was an associate 
attorney at a large law firm. He served as a county 
commissioner in Lucas County, Ohio. Mr. Konop is a graduate of 
the University of Michigan Law School and Emery University.
    Finally, Ms. Stacey Bach, the Assistant Director of the 
Office of Equal Employment Opportunity at the CFPB, was 
subpoenaed by the subcommittee to appear at this hearing. 
However, through her legal counsel, Ms. Bach requested that her 
testimony be postponed due to a medical condition. Accordingly, 
Ms. Bach's testimony has been postponed.
    The witnesses will now be recognized for 5 minutes for 
their oral presentation of their written testimony. You will 
see the lights in front of you: green means go; yellow means 
hurry up; and red means stop. Once you are finished with your 
presentation, Members will then have 5 minutes to ask 
questions.
    And without objection, the witnesses' written statements 
will be made a part of the record.
    The final note is that these microphones are directionally 
sensitive and, let's just say, less than good. So if you will 
bring them close to you, that will be very helpful. And with 
that, we will now recognize Ms. Strong.

    STATEMENT OF LIZA A. STRONG, LEAD OF LABOR AND EMPLOYEE 
   RELATIONS, THE CONSUMER FINANCIAL PROTECTION BUREAU (CFPB)

    Ms. Strong. Thank you. Good morning, Chairman McHenry, 
Ranking Member Green, and members of the subcommittee. My name 
is Liza Strong, and I am the Lead of Labor and Employee 
Relations at the Consumer Financial Protection Bureau. I have 
held that position since July of 2011.
    Prior to joining the Bureau, I worked in the Office of 
Thrift Supervision and, prior to that, at the Federal Aviation 
Administration. I have significant experience in Federal 
Government personnel matters. I am appearing today to make this 
brief statement and to answer your questions pursuant to the 
subcommittee's subpoena dated May 8, 2014.
    It has been and continues to be my pleasure to work as a 
public servant. In particular, I am proud of the work that the 
Bureau is doing to protect American consumers. I believe the 
Bureau's mission to make markets for consumer financial 
products and services functional and safe is very important. 
That is why I am deeply troubled by allegations about 
discrimination at the Bureau.
    On March 6, 2014, the American Banker published an article 
alleging racial disparities in the Bureau's performance 
evaluations. Additionally, on April 2nd, this subcommittee 
heard testimony from Ms. Angela Martin, a Bureau employee, and 
Ms. Misty Raucci, a contractor, alleging discrimination. Those 
allegations are not consistent with what I have observed during 
my time at the Bureau.
    The performance review information reported by the American 
Banker was compiled by the Bureau at the request of the 
National Treasury Employees Union, the union that represents 
the Bureau employees. It is part of my job to facilitate 
responses to NTEU's request for information, which I did in 
this case.
    It is not part of my job to actually collect the 
information or evaluate or assess the data requested. Instead, 
my office serves as a conduit for the request. Although I have 
not been involved in the Bureau's assessment of the data, I am 
aware that the Bureau was analyzing the performance review 
information for signs of disparate impact even before the 
American Banker published its story.
    I do not have a role in addressing any performance review 
process issues that may have occurred in the past. My role in 
revising the performance review process is limited to helping 
negotiate the Bureau's collective bargaining agreement with the 
NTEU going forward. In that context, Director Richard Cordray 
asked me to facilitate an open dialogue with the NTEU about its 
vision for performance management, which I have done.
    During recent contract negotiations, the NTEU presented its 
own plan for the performance review process, which the Bureau 
has now accepted. Our cooperative efforts with the NTEU will 
continue through our working group focused on ensuring that the 
performance review process at the Bureau is fair and effective.
    In addition to working with the NTEU, I also manage 
investigations of individual employee grievances. Employee 
grievances are separate from EEO complaints, which are handled 
by a different office. My office is currently handling numerous 
employee grievances. The grievances involve a variety of issues 
with a relatively small number alleging any sort of 
discrimination. We take all grievances very seriously and fully 
investigate each one.
    Angela Martin's grievance was no different. When Ms. Martin 
first alleged mistreatment by one of her peers, my office 
undertook a thorough investigation that included numerous 
interviews and the collection of signed statements. We did not 
find evidence to corroborate Ms. Martin's allegations, but 
still took a number of proactive steps to address Ms. Martin's 
concerns.
    These included providing a coach for Ms. Martin's coworker, 
which he readily accepted, recommending roles and 
responsibilities be clarified, and encouraging Ms. Martin and 
her coworker to engage in mediation. While Ms. Martin's 
coworker was willing to engage in mediation, it is my 
understanding that Ms. Martin declined that opportunity.
    Meanwhile, two of Ms. Martin's direct reports raised 
serious concerns about Ms. Martin's management style. They 
complained of abuse that justified their temporary reassignment 
to another supervisor. When Ms. Martin alleged retaliation by 
her manager, in part because two of her reports were 
temporarily reassigned, we took that complaint equally 
seriously.
    I engaged with what I thought at the time was a competent, 
independent third party to investigate Ms. Martin's retaliation 
claims, the Defense Investigators Group (DIG). What I received 
in return from DIG, and Ms. Raucci specifically, was an 
incomplete work product that did not meet the goals set forth 
in DIG's own statement of work.
    Ms. Raucci's investigation did not meet even minimal 
standards. For example, she failed to obtain signed statements 
from the people she interviewed, did not provide Ms. Martin's 
supervisor a full opportunity to respond to the allegations 
made against him, and did not provide sufficient documentation 
to support her conclusions.
    The president of DIG, Misty Raucci's supervisor, conceded 
that Ms. Raucci's work was unacceptable and in many ways did 
not address the allegations she was supposed to investigate. 
After giving Ms. Raucci a second chance to correct the issues, 
I received a second investigative report that was no better 
than the first one. Ms. Raucci and DIG failed to address any of 
the problems with the previous report.
    The Bureau is working to fill in the gaps left by the DIG 
report. Throughout this time, the Bureau worked very hard to 
accommodate Ms. Martin's demands. In addition to paying Ms. 
Martin a monetary settlement on at least two occasions, the 
Bureau essentially created positions for her in two different 
divisions at the same pay and grade. We put significant effort 
into designing each position according to Ms. Martin's 
specifications. She declined one of them outright and is now 
dissatisfied with the other.
    I feel that the Bureau went to great lengths to help Ms. 
Martin get to a place where she could be happy and productive. 
For nearly a year and a half, I kept an open-door policy with 
respect to Ms. Martin and always made myself available to 
assist her in any way I could. I have never witnessed 
management be anything but professional and accommodating to 
her.
    I was surprised when during the April 2nd hearing, it was 
alleged that I attempted to influence DIG's conclusions. I have 
never done that. And in fact, this allegation does not make 
sense. Had I wanted to predetermine the outcome of the 
investigation, I would not have outsourced it. Although these 
allegations against me are not true, in order to maintain the 
integrity of the investigation into Ms. Martin's claims, I 
recused myself after the April 2 hearing and turned over my 
investigation file to a coworker. I am no longer involved, but 
it is my understanding that the investigation remains ongoing.
    As a woman and as a minority, I am sensitive to issues that 
have been raised about discrimination at the Bureau, but I 
honestly believe that the Bureau cares about treating its 
employees fairly. I know I do. My team and I work very hard to 
give each grievance the attention it requires to achieve a good 
and just outcome for everyone involved.
    I also know that the Bureau is taking these allegations 
very seriously. The Bureau is focused on correcting any 
problems that may have occurred in the past and is dedicated to 
preventing any discrimination, either intentional or 
unintentional, in the future.
    In addition to the previous submission and supporting 
documentation I provided to the subcommittee, I look forward to 
the opportunity today to deliver a more complete picture of the 
issues. I am happy to answer any questions you may have. Thank 
you.
    [The prepared statement of Ms. Strong can be found on page 
57 of the appendix.]
    Chairman McHenry. Mr. Konop, you are now recognized for 5 
minutes.

  STATEMENT OF BENJAMIN KONOP, EXECUTIVE VICE PRESIDENT, THE 
     NATIONAL TREASURY EMPLOYEES UNION (NTEU), CHAPTER 335

    Mr. Konop. Thank you. First, I would like to thank the 
committee for taking the time to examine the important issues 
of race and gender discrimination, as well as other issues of 
equality, which are a problem not only at the CFPB but 
throughout our society. For the last 3 years at the CFPB, I 
have served as an enforcement attorney in the Office of 
Supervision, Enforcement, and Fair Lending. I am honored to 
enforce our Nation's laws with a group of talented, 
hardworking, and passionate colleagues who dedicate their 
professional lives to fighting for fairness in the financial 
marketplace.
    In late 2012, I also helped organize a chapter of the 
National Treasury Employees Union at the CFPB. In May of 2013, 
workers voted overwhelmingly for the union, with 80 percent of 
those casting ballots voting in favor of organizing. Shortly 
after the election, I was asked by NTEU's national 
representative to serve as the interim Executive Vice President 
of the chapter and was eventually elected by our members to 
that position for a 2-year term.
    As the Executive Vice President, I represented the chapter 
in negotiations for our 2013 pay and advocated for dozens of 
employees in grievances and EEO proceedings, and I currently 
serve on the bargaining committee charged with negotiating the 
first collective bargaining agreement in the Bureau's history.
    During my time at the Bureau, I have witnessed great 
accomplishments by our unionized workforce. For example, 
members in Enforcement have led cases that resulted in $3.5 
billion being returned to American consumers. Union members and 
supervision have traveled thousands of miles every week to 
ensure that banks and other financial institutions are 
following the law.
    Members in Consumer Response have overcome significant 
obstacles to staff a robust complaint system that helps give 
the American consumer a fair shake. And union members in Fair 
Lending have made sure that financial institutions throughout 
our Nation are held accountable if they discriminate on 
impermissible factors like race and gender.
    Unfortunately, I have also witnessed Bureau management 
struggle at times to live up to the mission, ideals, and 
achievements of the CFPB as a whole, notably in regards to 
performance management review (PMR). PMR ratings are vitally 
important for our workers, as they determine pay raises and 
bonuses and make up the permanent employee record that is 
relied upon by the Bureau to award promotions and other 
benefits. These ratings can also be accessed by potential 
future employers when former Bureau members apply for a job 
outside the agency.
    In August and early September of 2013, just weeks after the 
union was recognized, the chapter asked for and was given the 
2012 PMR ratings distribution between labor and management. The 
2012 data that we requested revealed managers were far more 
likely to receive the highest ratings and less likely to 
receive the lowest ratings than bargaining unit employees.
    To me, this seemed like managers were, in essence, 
receiving coach-of-the-year awards while their employees had 
only a mediocre winning percentage. I, along with other members 
of the bargaining team, repeatedly raised these fairness 
concerns during September of 2013 and were assured by 
management that these inequities would be remedied. Sadly, this 
was not the case.
    In November 2013, employees were given their new PMR rating 
for the proceeding year, after which our fledgling chapter was 
overwhelmed with members seeking to file grievances over their 
ratings. Several chapter stewards and board members observed 
that the bulk of potential grievances were being reported by 
minority and female employees.
    In addition, it appeared that employees over 40 years of 
age were also adversely impacted by the rating system. In 
response to our members' concerns, the chapter filed a 
comprehensive information request on November 22, 2013, seeking 
from management a detailed PMR breakdown by categories such as 
race, gender, age, and bargaining unit status. It was this 
request, and the agency's response to it nearly 2 months later 
in mid-January, that I believe led to this hearing today.
    The 2013 ratings showed marked disparities for minority 
employees. For example, a White employee was twice as likely to 
receive the highest rating at the Bureau as compared to a Black 
or Hispanic employee. The odds were similarly stacked against 
workers over 40. And ratings continued to be badly skewed in 
favor of management when compared with the ratings of the 
bargaining unit, who do the bulk of the work at the Bureau.
    Immediately upon receiving this data on January 15, 2014, 
our chapter's leadership made our members aware of these 
troubling disparities and called on management to make 
wholesale changes in PMR going forward while compensating those 
who were adversely affected in the past. In response, 
management was largely silent.
    We then entered into collective bargaining negotiations in 
late January. Throughout the first several months of 
bargaining, the union raised these issues with management 
representatives sitting across the table and called on them to 
discard the current system. And once again, surprisingly, 
management refused to acknowledge the documented unfairness in 
the system and instead defended PMR.
    In fact, at one point during negotiations, a management 
representative asked me unironically whether by advocating for 
a new rating system, ``I did not believe in meritocracy.'' 
While the chapter was raising PMR issues through grievances and 
bargaining, we also pursued approximately 15 pay equity 
grievances. In these filings, we alleged that women and 
minority employees were being underpaid when compared to 
similarly situated White male colleagues.
    To date, the Bureau has denied each of these grievances at 
all stages often using inconsistent reasoning, despite what I 
feel is convincing evidence of low pay for numerous women and 
minority workers.
    In the last several weeks, however, there does appear to be 
recognition by management that we ought to be doing better as a 
Bureau. For example, we recently reached a tentative agreement 
on a new PMR system that in large part accepts the union's 
proposal and scraps the system that yielded the disparities. In 
addition, just days before this hearing, Director Cordray 
issued an important directive for the first time acknowledging 
that, ``there were broad-based disparities in the way 
performance ratings were assigned across our employee base in 
both 2012 and 2013.''
    He confirmed the union's belief that, ``these differences 
indicate a systemic disadvantage to various categories of 
employees that persisted across divisions, offices, and other 
employee characteristics.'' In particular, Director Cordray 
agreed with the union findings that there was ``broad-based, 
statistically significant disparity in many areas, including 
race, ethnicity, age, and bargaining unit membership 
eligibility.''
    As a result of this directive, which retroactively 
compensates the majority of employees harmed by the PMR system, 
it appears that the Bureau has made a solid first step in the 
process of holding itself accountable. This is what the Bureau 
is in the business of doing in the financial marketplace, and 
that is all the union has asked of Bureau management since our 
chapter's inception.
    I look forward to a productive discussion on these and 
other important issues at the CFPB. Thank you.
    [The prepared statement of Mr. Konop can be found on page 
54 of the appendix.]
    Chairman McHenry. I now recognize myself for 5 minutes.
    Mr. Konop, on Monday, Director Cordray outlined some 
remedial measures to address alleged discrimination against 
women and minorities in the Bureau. Are you familiar with that?
    Mr. Konop. Yes.
    Chairman McHenry. As you said in your statement.
    Mr. Konop. Yes.
    Chairman McHenry. What is the union's position on these 
remedial measures that the Director is taking?
    Mr. Konop. I think it is a productive first step. We were 
pleased to see acknowledgment of the positions that we had been 
advocating for close to a year at this point in some cases. We 
think there is more work to be done certainly, and we look 
forward to continuing to engage the Director and all interested 
parties in making sure the entire--
    Chairman McHenry. Is your union planning to file 
grievances?
    Mr. Konop. I believe actually a mass grievance was filed. 
It came out of the national office, so I am less familiar with 
it, but it did allege that there were certain other steps to 
remediate the problem that needed to be taken care of, in 
essence, scrubbing people's records of the previous grievance.
    Chairman McHenry. So the union requested a report on the 
CFPB's 2013 performance reviews. When did you do that?
    Mr. Konop. We did that on November 22nd.
    Chairman McHenry. Okay. So when did the union receive the 
report?
    Mr. Konop. It would probably have been on January 14th.
    Chairman McHenry. Okay. And why was the report requested?
    Mr. Konop. We felt that it appeared anecdotally that a 
large amount of people coming to us with questions and concerns 
and serious issues with their ratings were minorities or those 
over 40 and women, as well.
    Chairman McHenry. So when you received this report, when 
the union received this report in January, until March 5th, the 
day before the American Banker published these reports of 
alleged discrimination and retaliation within the Bureau, what 
happened with the union's negotiations about this matter?
    Mr. Konop. We engaged in a good 2 months of pretty hard-
nosed negotiations and there was a lot of resistance to 
changing--
    Chairman McHenry. Did that resistance change after the 
American Banker article?
    Mr. Konop. I believe it certainly softened at that point, 
yes.
    Chairman McHenry. Okay. So let me ask you another question. 
The CFPB received a report from Deloitte Consulting in 
September of last year which documented sharp racial 
disparities and gender disparities as well, not only in 
performance reviews but also with pay, hiring, promotions, and 
in a number of other areas. Are you familiar with this report, 
which is right before you?
    Mr. Konop. Yes. I became familiar with it yesterday after 
it was reported in the media.
    Chairman McHenry. Yesterday?
    Mr. Konop. Yes.
    Chairman McHenry. Ms. Strong, about this report, in 
September of last year Deloitte provided this report at the 
Bureau's behest and found that, ``Asians and Whites are being 
deemed most qualified at higher ratings per applicant than 
other remaining minority groups, and Asians and Whites are 
being hired at more than double the rate of other ethnic 
categories.'' So why did the CFPB continue to defend its 
performance ratings system when they had such a damning report 
from a revered consulting firm?
    Ms. Strong. First of all, I have not read this report. I 
vaguely remember being interviewed for it about a year and a 
half ago.
    Chairman McHenry. Were you provided the report?
    Ms. Strong. No, so I wouldn't be able to speak to the 
content of that report. I wouldn't be the appropriate person. I 
do not oversee our hiring process. There is another lead who is 
responsible for that.
    Chairman McHenry. But you are the lead negotiator with the 
union about the contents of this report.
    Mr. Konop, would it have been helpful for the union to have 
this Deloitte report, considering you asked for a report, an 
investigation 2 months after the Bureau received this report? 
Would that have been helpful in this process?
    Mr. Konop. This report would have certainly informed our 
negotiations in 2013 over pay. It would have informed our 
negotiations this year over pay and the PMR system, and also, 
obviously would have informed our grievance postures and 
positions, yes.
    Chairman McHenry. So not only the Deloitte report, but also 
the internal CFPB report that the union requested, outlines 
what managers did within the performance review process. And 
so, with those performance ratings, Ms. Strong, they were made 
by Bureau managers. Isn't that correct?
    Ms. Strong. Yes, the managers rate the employees and issue 
a rating at the end of the performance year.
    Chairman McHenry. So it stands to reason that any systemic 
discrimination observed in compiling the individual ratings can 
be traced back to those managers. Is that correct?
    Ms. Strong. I really wouldn't be able to answer that 
question because I do not oversee--
    Chairman McHenry. You answered the first question that 
those managers did do the performance reviews.
    Ms. Strong. Yes, sir, but I do not oversee the--
    Chairman McHenry. Not only do Deloitte and the Bureau find 
that they are discriminatory, therefore, those managers who did 
that, it was either the system that was the performance review 
or the people involved or both.
    Ms. Strong. Yes. So my understanding, again, I do not 
oversee the Bureau's performance management program, but--
    Chairman McHenry. But you negotiate with the union on that 
issue.
    Ms. Strong. Yes. We negotiated with the union on a 
performance management program for the future. So, I don't have 
a role in assessing the past system. I did not analyze the 
data.
    Chairman McHenry. I would encourage you to review the past 
system so the future system will not be so negative to your 
employees.
    With that, we will now recognize Mr. Ellison for 5 minutes.
    Mr. Ellison. Let me thank the chairman and the ranking 
member. I think it is important just to start my questioning by 
putting on the table that on March 6th of this year, the 
American Banker did an article and basically the reason for the 
article was, I will just read from the article: ``Since the 
Consumer Financial Protection Bureau burst onto the financial 
stage a few years ago, it has made a steady stream of 
controversial moves. None are more despised by bankers than the 
agency's use of statistical differences in the loan terms 
offered to different ethnic groups to sue creditors for its 
unintentional racial bias. In an ironic twist, it turns out 
that the CFPB's own managers have shown distinctly different 
patterns on how they rate employees of different races.
    So that is what started this, okay. We are not here because 
this committee has come to the conclusion that racial bias is a 
problem in Federal agencies. We are here to vindicate American 
Banker and the financial services industry in their attempt to 
make the CFPB look hypocritical. That is the purpose of this 
hearing. That is what we are doing.
    It so happens that the CFPB does need to clean up its act, 
as every other Federal agency does, proving that even a stopped 
clock can be right twice a day. But my point is that out of 
something that I think is a bad motive, an improper motive, 
something good can happen, which is that we can try to bring 
some real issues of fairness to the forefront.
    So my question is basically this, and I will ask Mr. Konop 
the question: Do you think the CFPB management has responded to 
the concerns that bias exists within the rating system?
    Mr. Konop. I think Director Cordray's actions a couple of 
days ago were a substantial response. I think, after the 
American Banker article, within negotiations there did seem to 
be a response and we did reach tentative agreement on these 
systems. So I think, yes, in the last month or two there has 
been movement and especially with Director Cordray's actions on 
Monday.
    Mr. Ellison. So do you think that management is now taking 
these concerns seriously and has a plan to address it?
    Mr. Konop. I think they are taking these concerns 
seriously. I don't think even they would acknowledge that they 
have a full plan to address them. I think that is part of what 
our working group has hoped to achieve, and certainly, this is 
on ongoing issue that needs constant supervision, monitoring, 
training, and holding people accountable, holding bad manners 
accountable, and that is really an issue that has been at the 
forefront of the union since its inception.
    Mr. Ellison. Now, Ms. Strong, I just want to express my 
view that I think it is unfortunate that we are sort of trying 
this case here. I don't want to talk about the specifics of the 
case. I would like to leave that for a factfinder who can do 
the right kind of close work that needs to be done. Because I 
used to be a plaintiff's civil rights attorney, I am 
sympathetic to most plaintiffs. Of course, I am not immune to 
the facts, but I am just expressing my bias upfront.
    But I will say this, do you agree that there is real work 
the CFPB and every Federal agency has to do to make sure 
workers are treated fairly?
    Ms. Strong. Absolutely.
    Mr. Ellison. And my question is, do you believe the CFPB is 
prepared to do that work to make sure that every worker can 
feel that their contributions are being respected, without 
regard to their race, their gender, their color, or their age?
    Ms. Strong. I do. I believe the Director is committed to 
that, and I believe that we are trying very hard.
    Mr. Ellison. Do you take the complaints seriously--
    Ms. Strong. Absolutely.
    Mr. Ellison. --and if so, what is the evidence of that?
    Ms. Strong. Absolutely. In all the grievances--now, I don't 
oversee EEO complaints. I oversee the grievance process, and we 
take each and every grievance very seriously.
    Mr. Ellison. What is out there to show that you take this 
very seriously?
    Ms. Strong. We negotiated with NTEU. We have a multilevel 
grievance process that includes an informal stage, a step one 
and step two, that gives two levels of supervisors the ability 
to review the grievance. And then, ultimately, if the parties 
are not able to agree, the matter goes to an outside 
independent arbitrator who renders a binding decision on that 
matter.
    Mr. Ellison. Thank you, Ms. Strong.
    Let me just go back to Mr. Konop.
    Mr. Konop, I just want to get your opinion on this quickly, 
would you agree with me that the mission and the goal of the 
CFPB is to make sure that the financial services industry 
treats consumers fairly, including treating them fairly on the 
basis of their race, is, it should not be undermine by the fact 
that the CFPB itself has now had to deal with issues of bias 
and inclusion?
    Mr. Konop. I agree completely.
    Mr. Ellison. Thank you.
    Chairman McHenry. I will now recognize the vice chairman of 
the subcommittee, Mr. Fitzpatrick, for 5 minutes.
    Mr. Fitzpatrick. I thank the chairman.
    And I thank the two witnesses for your testimony here this 
morning.
    Mr. Konop, the American Banker came out with this 
publication on March 6th, a little more than 2 months ago. And 
the report is as follows. I want to quote this article: ``CFPB 
managers show a pattern of ranking White employees distinctly 
better than minorities in performance reviews used to grant 
raises and bonuses. Overall, Whites were twice as likely in 
2013 to receive the agency's top grade than were African-
American or Hispanic employees, the data shows.''
    So my question to you is, did the data which the CFPB union 
received from the Bureau support this conclusion?
    Mr. Konop. It was the exact data that was cited in the 
Banker article.
    Mr. Fitzpatrick. So what was your reaction when you were 
informed by the CFPB that Whites were ranked higher than 
African-Americans?
    Mr. Konop. Certainly, the board as a whole was 
disappointed, kind of almost bordering on shock, I would say, 
at first. But, we had problems with PMR the previous year, in 
2012, so it was not completely out of left field that there 
were systemic issues with PMR which needed to be addressed.
    Mr. Fitzpatrick. And when you had data from the previous 
year, what did the union do with that?
    Mr. Konop. We used it in negotiations to try and level out 
the pay disparities that were going to be a result of the 
skewed ratings for management as opposed to the labor force, 
and certainly challenged management directly on using the 
system going forward in the manner in which it was going to be 
used to influence people's careers.
    Mr. Fitzpatrick. Following up on Mr. Ellison's questions, 
is it surprising to you that an agency which prides itself on 
egalitarian values treats minorities in this way?
    Mr. Konop. As I reference in my statement, this is a 
problem that obviously affects society as a whole. Every part 
and every organization probably has this. It certainly is 
something that we need to focus on to correct especially 
strongly, I think, because of our mandate in the marketplace.
    Mr. Fitzpatrick. What do you think it says as an officer of 
the Treasury Union? What does it say to the public that is 
watching?
    Mr. Konop. It says that this problem is, I think, endemic 
in society and that even in a place like the CFPB, which 
certainly has a noble mission and lofty goals and does really 
good work, these problems seep in. And so I hope the CFPB, with 
the help of the union, can be an example for other institutions 
and societies of how to remedy this when it is addressed and 
how to make things right.
    Mr. Fitzpatrick. Mr. Konop, in your experience, did you 
find performance reviews subjective and arbitrary?
    Mr. Konop. There was a great amount of subjectivity, yes, 
and arbitrariness, yes.
    Mr. Fitzpatrick. A great amount?
    Mr. Konop. Yes.
    Mr. Fitzpatrick. Can you expand on that?
    Mr. Konop. Yes. When you are a lawyer--and there are a 
number of lawyers, I think, on the panel--it is hard to judge 
your year's work. If you are working on three large cases, 
let's say, and your day-to-day dealing with opposing counsel 
and filing motions and doing research and then to be able to 
try and sum that up in a 20-minute performance review for the 
entire year and give you a rating which will impact your future 
career significantly is just, by nature, problematic.
    And subjectivity, there is no way for subjectivity not to 
creep in. We are not baseball players. When we have a batting 
average, it is easy to evaluate them. But with workers in the 
CFPB, it is very difficult to come up with a numerical rating.
    Mr. Fitzpatrick. Do you believe other employees had similar 
experiences?
    Mr. Konop. I would say the majority of employees have 
similar experiences.
    Mr. Fitzpatrick. Between 2012, when you had the first set 
of data, and 2013, was that number going up?
    Mr. Konop. The union wasn't in existence for 2012 so we 
didn't have a mechanism for taking grievances and taking 
complaints.
    Mr. Fitzpatrick. But you did have data.
    Mr. Konop. We had data. The system was flawed, certainly, 
but at the time the ratings were handed out, we weren't there 
to administer.
    And I also might add, this is a problem, many managers have 
expressed to me this, that PMR system is flawed, and they would 
have liked to have done away with it sooner than we did. So I 
think there is, on sort of both sides of the table here, 
agreement that the PMR system is flawed.
    Mr. Fitzpatrick. Ms. Strong, you indicated in your 
testimony this morning that you were interviewed for this 
Deloitte report. Who attended that interview?
    Ms. Strong. It has been a while. I believe I was 
interviewed by someone from Deloitte. I don't recall the--
    Mr. Fitzpatrick. So just you and the interviewer? Just the 
two of you?
    Ms. Strong. I believe so.
    Mr. Fitzpatrick. Did you have any curiosity as to why 
Deloitte was asking about diversity and inclusiveness?
    Ms. Strong. No, I didn't. I was told that the Office of 
Minority and Women Inclusion had asked them to conduct a 
review, and if I remember correctly, they only asked me a 
couple of questions, such as, what does diversity mean to you?
    Mr. Fitzpatrick. That didn't prick your curiosity at all?
    Ms. Strong. No. No. I think because that is the role of 
OMWI, it seemed reasonable that they would be conducting a 
review.
    Mr. Fitzpatrick. And your testimony is, you read this 
report for the first time when?
    Ms. Strong. I have not read this report.
    Mr. Fitzpatrick. You haven't?
    Ms. Strong. No.
    Mr. Fitzpatrick. Nothing further.
    Chairman McHenry. I will now recognize Mr. Cleaver for 5 
minutes.
    Mr. Cleaver. Thank you, Mr. Chairman.
    I associate myself with the comments earlier of the 
gentleman from Minnesota, Mr. Ellison. I have been on this 
committee for almost 10 years. I was mayor for 8 and on the 
City Council for 12 years before that. This is the first time 
in my political career I have been involved in a hearing about 
an individual.
    And while I don't have any objections to that, I, again, as 
I did at a previous hearing, issue a friendly caution that we 
can become consumed in doing this.
    Mr. Konop, I believe you said something earlier that would 
support what I am just saying. I am not sure you said you were 
shocked to find some of the complaints. Did I quote you close 
to being accurate?
    Mr. Konop. I think we were shocked when we saw the racial 
disparities.
    Mr. Cleaver. Okay. I tend to probably side with you on 99 
percent of everything you said, but I am shocked that anybody 
would be shocked--
    Mr. Konop. Fair point.
    Mr. Cleaver. --that there is some kind of inequality. And 
you would agree with me, I think--
    Mr. Konop. Yes.
    Mr. Cleaver. --that there is probably structural 
discrimination in every single Federal agency that exists. Am 
I--
    Mr. Konop. I would say at this point in our Nation's 
history, there is probably structural discrimination in almost 
every entity that exists, regardless of whether it is in the 
Federal Government or not.
    Mr. Cleaver. Yes. When I was mayor, in a city where 
minorities are really in a minority, the overwhelming majority 
of the Kansas City, Missouri, population would be nonminority, 
and so we did a, it was called a disparity study, which was 
very expensive, incidentally, to look at scientifically, what 
barriers were there and the structural barriers, not with 
intentionality.
    A lot of things happen without intentionality. People, they 
grow up in a certain way, and they are not even aware of some 
of the things they do. It is my understanding that an RFP has 
already been developed and maybe already issued to do something 
like a disparity study for the agency. Are you aware of that?
    Mr. Konop. I am not aware of it. I think Director Cordray's 
memorandum that he circulated on Monday seemed to be the 
Bureau's attempt at doing that disparity study, and it did find 
the disparity. Yes.
    Mr. Cleaver. I think it is already out. The RFP is already 
out.
    Mr. Konop. Okay. It could be.
    Mr. Cleaver. I saw something Monday that the disparity 
study is out. And I don't know what kind of money they intend 
to pay, but I can tell you, experientially, they are very, very 
costly, but they are worth it. Because hopefully, the 
Department of Agriculture, which has had a long history of 
problems, much more than this agency, of course, it is new, did 
the disparity study. And I think that if you spoke with 
Secretary Vilsack, he will say that is one of the best dollars 
they ever spent, because now they are trying to deal with those 
problems.
    Do you believe--and I want to ask Ms. Strong a question, 
but one final question--that there is any Federal agency 
functioning at the 24-carat level in terms of equality?
    Mr. Konop. First of all--
    Mr. Cleaver. I know you don't know, but I am just asking 
your opinion.
    Mr. Konop. Right. It has been my experience in life that we 
all have a long way to go when it comes to equality, and I am 
sure that would apply to all the Federal agencies, as well.
    Mr. Cleaver. Okay. Thank you.
    Ms. Strong, in your role managing investigations of 
individual employee grievances, how would you characterize the 
majority of these grievances? In the past, have they been 
focussed on the PMR system?
    Ms. Strong. We have, I believe, about 136 grievances to 
date. Approximately 57 or so were based on grievances coming 
out of the performance management program, but we also have 
grievances on other issues, as well.
    Mr. Cleaver. All right. My time has expired, and I thank 
you very kindly.
    Chairman McHenry. I now recognize Mr. Fincher for a few 
minutes.
    Mr. Fincher. Thank you, Mr. Chairman.
    And let me just make a statement. One of my other 
colleagues on the other side of the aisle referenced a few 
minutes ago that this hearing was about an American Banker 
article or something. We need to be careful, all of us, in 
generalizing, making statements. A lot of us are trying to get 
to the bottom of what is happening here. And to some of us, 
this is not political; we just want to make sure it doesn't 
happen going forward. So I would urge some of my colleagues not 
to make general statements.
    If the same disparity occurred in a private company, how 
would the CFPB react? Would they take an aggressive and 
retaliatory approach to force immediate corrective action, do 
you think?
    Mr. Konop. I don't practice in the Fair Lending sector of 
the Bureau. But certainly, the chapter's general argument is, 
yes, if they saw these type of behaviors going on in the 
private marketplace in an area we regulated, it would draw 
attention, and it has drawn attention in other contexts at the 
CFPB, yes.
    Mr. Fincher. If racial disparities occur in the performance 
reviews of a private company, would the CFPB take an aggressive 
regulatory approach to force immediate corrective action?
    Mr. Konop. Again, that is not specifically my area of 
practice. But I would say the CFPB would take a look at that 
issue if it occurred in the issuance of loans, certainly. I am 
not certain that we would have jurisdiction over employee 
ratings. But certainly, in the context of, like, an auto loan, 
yes.
    Mr. Fincher. Have you or other union leaders talked to the 
CFPB about this in your negotiations and encouraged the Bureau 
to abandon or change this performance review system?
    Mr. Konop. Oh, yes. We have made it very clear that we did 
not support the previous system, and we engaged in many hours 
of relatively heated negotiation on that issue.
    Mr. Fincher. When did you start talking about this issue?
    Mr. Konop. We started probably in the 2013 pay 
associations. That would have been in September of 2013. At 
that time, we only had a limited amount of data. We didn't, 
unfortunately, have the Deloitte study. We were just going off 
of one data set which was a differential between management and 
labor. And that looked, to us, incredibly unfair. So we, at 
that point, raised serious concerns about the system.
    Mr. Fincher. Ms. Strong, in February 2013, CFPB's Legal 
Division requested that your office engage an investigator to 
determine if Scott Pluta, the Assistant Director of Consumer 
Response, was discouraging employees from using the EEO 
process. Is that correct?
    Ms. Strong. That is correct.
    Mr. Fincher. Was this request unique?
    Ms. Strong. It was the first time the Legal Division had 
requested that I conduct such an investigation.
    Mr. Fincher. So no requests had been made before.
    Ms. Strong. No.
    Mr. Fincher. Was this the first?
    Ms. Strong. It was not the first investigation I had 
conducted, but it was the first one that was requested by the 
Legal Division.
    Mr. Fincher. Why do you recommend that employees use the 
EEO process for workplace discrimination complaints when you 
have managers openly discouraging its use?
    Ms. Strong. First of all, that was an allegation that was 
made. Based on my investigation, that allegation was not 
substantiated. However, as I said in my opening statement, that 
investigation remains ongoing.
    Mr. Fincher. Can you point to any concrete measures the 
CFPB management took before March 6, 2014, to address racial 
disparities in performance ratings for employees at the CFPB 
which were disclosed to the union on January 14, 2014, and 
which the CFPB was aware of as early as September 30, 2013, 
when the Deloitte report was released?
    Ms. Strong. I can speak generally. None of these actions 
came out of my office. But I know that the EEO office delivered 
a lot of training to managers. I know our performance 
management team has delivered a training to managers on how to 
properly assess performance and deliver ratings.
    Mr. Fincher. But no specific concrete measures, just 
general?
    Ms. Strong. Yes. I guess maybe--if you could ask your 
question again? Maybe I missed what you are asking.
    Mr. Fincher. Are there any concrete measures that CFPB 
management took before March 6th to address racial disparities 
and performance ratings for employees?
    Ms. Strong. I would say that the Director invited NTEU to 
propose a new performance management system. And we, through 
negotiations, have now agreed on a plan that will carry us over 
for the remainder of this year and next and allow us an 
opportunity to engage in a work group to design together 
collaboratively a new performance management system.
    Mr. Fincher. Okay.
    With that, I yield back, Mr. Chairman.
    Chairman McHenry. We will now recognize Mr. Heck for 5 
minutes.
    The gentleman passes. Okay.
    Mr. Kildee?
    Mr. Kildee. Thank you. Thank you for passing.
    I would like to thank the witnesses, of course, for your 
participation in today's hearing, and I appreciate your 
thoughts.
    The CFPB protects consumers in the financial markets and 
its charge is to ensure that they are treated fairly. Clearly, 
that duty to protect extends not just to consumers but to its 
own employees. So I do appreciate the CFPB's willingness to 
examine the issue that it found in its performance management 
program and its stated intent to ensure that hiring and 
promotion evaluations in that process puts merit first and 
foremost.
    The report that was released of the analysis of its 
performance management program, which evaluates its employees, 
is a pretty candid look at the biases of the Bureau in terms of 
race, age, union membership, and gender. So there is obviously 
a lot of work that needs to be done in this area.
    I would, though, like to point out that although this 
committee and Congress are quite rightfully concerned with 
these reports of discrimination at this one Federal agency, it 
is unequivocal to many of us that nationwide, it is clear that 
we have a big problem here--and this was referenced in some of 
your comments--when women make 77 cents on the dollar as 
compared to men in the workplace.
    So while we are discussing discrimination, and rightfully 
so, I think it is important to point out that this Congress has 
failed to pass the Paycheck Fairness Act to address gender pay 
disparity in the private sector and ensure that women earn what 
they rightfully deserve.
    As has been pointed out, what we are seeing here is 
evidence of something that is not particular to a particular 
agency or entity or organization, but it is a societal problem 
that we have to address. And in this case, clearly we have to 
address it.
    But I do want to make sure that those in Congress, those of 
us here who wax so eloquently on this subject are willing to 
extend that same resolve with the other legislative 
prerogatives that this Congress has to deal with what is 
clearly a substantial problem.
    So while it is concerning to me that CFPB found disparity 
of treatment between union and nonunion members in its 
performance, that obviously crosses lines of race, gender, and 
ethnicity.
    Considering the findings by the CFPB in its evaluation, I 
look forward to working with the NTEU to ensure uniform 
treatment.
    Finally, I understand that the request for proposal (RFP) 
has been issued for an outside group to undertake an 
independent analysis of the performance evaluation program, 
along with hiring promotion and evaluation process by the 
Bureau. And I look forward to this analysis. I look forward to 
further conversations with the CFPB.
    Ultimately, I would just like to hear from both of you, 
along with the issues that I have raised, what you think the 
priorities ought to be as CFPB moves forward with this 
analysis.
    I would appreciate hearing your thoughts on that. And I may 
have an additional question. If you could just tell me what you 
think the priorities ought to be as the CFPB moves forward?
    Ms. Strong. I think the priority for my team now is going 
to be to engage in the working group with NTEU in designing the 
new performance management system. So, I would see that as one 
of my team's top priorities.
    Mr. Konop. I think initially, obviously, we have to remedy 
the past wrongs. And that will mean, in some cases, financial 
remedies. I think Director Cordray's memorandum takes a good 
step forward on that matter.
    But we still have pay equity issues that have not been 
addressed which affect dozens of women and minorities at the 
Bureau. We have grievances pending on those, but we think that 
would be a strong remedial step.
    And then I think the union would like to ensure that there 
is accountability for managers who make mistakes. We have 
always acknowledged that certainly, union members make 
mistakes, and we get held accountable. We just want that same 
amount of accountability applied to managers going forward. And 
I think that really has to start at the top for the Bureau to 
make sure that happens.
    Mr. Kildee. I thank you both for your participation in this 
hearing.
    Mr. Chairman, I yield back.
    Chairman McHenry. I will now recognize Mrs. Wagner for 5 
minutes.
    Mrs. Wagner. Thank you, Mr. Chairman.
    And I thank the witnesses for being here today.
    I want to make sure I have the timeline correct here. This 
Deloitte report came out on September 30, 2013. That is 8 
months ago. Is that right?
    Mr. Konop. I believe that is correct.
    Mrs. Wagner. Ms. Strong, is that correct?
    Ms. Strong. I don't know. I'm sorry.
    Mrs. Wagner. You say you were interviewed for this report?
    Ms. Strong. I was. It was about a 15-minute interview over 
a year ago.
    Mrs. Wagner. It was delivered to the CFPB--
    Ms. Strong. Right.
    Mrs. Wagner. --on September 30, 2013. Did you read the 
report?
    Ms. Strong. I did not.
    Mrs. Wagner. When were you made aware of the report?
    Ms. Strong. Just now.
    Mrs. Wagner. You were just--say again to me, please, you 
were just made aware--you did not tell anybody prior to this, 
this committee, that you were made aware of this report prior 
to this very moment?
    Ms. Strong. I have not seen this report before.
    Mrs. Wagner. When were you made aware of this report?
    Ms. Strong. I am telling you, I have not seen this report 
before. So this is the first time I am actually--
    Mrs. Wagner. This is the first time that you have been made 
aware of this report after 8 months?
    Ms. Strong. Yes. Yes, ma'am.
    Mrs. Wagner. Okay. Wow. I am wondering who read the report, 
then, that the CFPB authored and sent over 8 months ago about 
these disparities, discrimination, retaliation, the system 
being broken. Who read the report?
    Ms. Strong. It was conducted, my understanding is, by the 
OMWI office. So I am sure they read it. I just--I don't know. I 
can't answer that question.
    Mrs. Wagner. The CFPB spokesperson says that the Bureau 
sought to protectively engage its labor union partners to 
address the issue in the report.
    Were you engaged, Mr. Konop?
    Mr. Konop. The first time I saw the report was yesterday.
    Mrs. Wagner. The first time you saw the report was 
yesterday.
    Yet, CFPB spokesperson Jen Howard said in an email to the 
Bureau, analyzed the information and presented to the Bureau 
and sought to proactively engage it.
    Who was proactively engaged, Ms. Strong, in both analyzing 
this with the CFPB and proactively engaging the labor union?
    Ms. Strong. I'm sorry, I can't answer that question. I 
think Stuart Ishimaru would be the appropriate person to ask 
that question because he conducted--
    Mrs. Wagner. So a report is out there for 8 months about 
these issues. And nothing is even done until an American 
Banker's article goes public some 5 months later talking about 
this issue.
    What is your title, again, Ms. Strong? Are you, in fact, 
the lead employee for employee relations? What is your title, 
ma'am?
    Ms. Strong. I am the Lead of Labor and Employee Relations.
    Mrs. Wagner. And your spokesperson says that you all took 
this report and proactively engaged the labor union after full 
analysis and information had been presented. And you are not 
aware of this.
    Ms. Strong. I am not. And maybe what she is referring to is 
the Director asked Stuart Ishimaru, who is the head of the OMWI 
office, to conduct listening sessions. So maybe that is what 
she is referring to as her ongoing--
    Mrs. Wagner. Mr. Konop, let me ask you this question. I 
think you have already testified that you thought that there 
were distinctly different patterns in how employees were rated 
based on race. Is that correct? Is that an accurate 
interpretation, sir?
    Mr. Konop. Yes. The numbers certainly support that.
    Mrs. Wagner. The numbers. Do you have any reason to believe 
that rating an employee on a scale of 1 to 5 is somehow too 
complicated or too sophisticated for CFPB managers to 
understand?
    Mr. Konop. I think we have a lot of smart managers who 
could probably theoretically understand how to apply a number 
rating, yes.
    Mrs. Wagner. This is not an automated system. Is that 
right?
    Mr. Konop. No, far from it.
    Mrs. Wagner. It is not an automated system.
    The statistics the CFPB used in its analysis are based on 
the ratings that actual managers assigned to their employees. 
Is that correct?
    Mr. Konop. Yes.
    Mrs. Wagner. This isn't a systematic thing. This is 
subjective, arbitrary. Is that how you would characterize it?
    Mr. Konop. In most positions at the Bureau, I think it is 
fair to say this rating has to be subjective by the nature of 
the people's work that is being rated.
    Mrs. Wagner. So it is not systematic.
    Ultimately, if it comes from the decision made by the CFPB 
manager, it stands to reason that any systematic discrimination 
observed in compiling the individual ratings can be tracked 
back to the managers. Is that correct?
    Mr. Konop. Managers were certainly the ones who made the 
ratings--
    Mrs. Wagner. They actually made the ratings.
    Mr. Konop. --fall on them.
    Mrs. Wagner. Does it strike you as odd that Director 
Cordray would blame the system for this, then?
    Mr. Konop. I think there is more than enough blame to go 
around, but I certainly think managers deserve their fair share 
as well.
    Mrs. Wagner. Thank you. I appreciate that.
    Ms. Strong, in your experience, is it true that the CFPB 
managers have shown distinctly different patterns in how they 
rate employees of different races?
    Ms. Strong. Not based on my observations.
    Mrs. Wagner. Not based on your observation. Really. Just 
based on the reporting, I suppose.
    Which CFPB managers gave CFPB employees ratings of 1s and 
2s using the discriminatory performance rating system?
    Ms. Strong?
    Ms. Strong. Which managers?
    Mrs. Wagner. Which ones? Names, please.
    Ms. Strong. I couldn't give you the names. There were a 
handful of employees whose performance was determined to be 
unacceptable or minimally acceptable. But I couldn't give you 
the names right now.
    Mrs. Wagner. Perhaps you can provide those to the 
committee.
    Chairman McHenry. The gentlelady's time has expired.
    Ms. Strong, to clarify for the record, when did you have 
knowledge that the Deloitte report had been completed?
    Ms. Strong. When? Honestly, this is the first time I have 
seen this report.
    Chairman McHenry. Have you heard that the report was 
complete?
    Ms. Strong. Not that I can recall.
    Chairman McHenry. Have you been asked about the report?
    Ms. Strong. No.
    Chairman McHenry. Okay. All right.
    Now, we will go to Mrs. Beatty for 5 minutes.
    Mrs. Beatty. Thank you, Mr. Chairman.
    And thank you, Ranking Member Green.
    And to our witnesses, thank you for being here.
    We know that this is a difficult time for all parties 
involved. But one of the things I want to focus on a little 
more is the information from the American Banker article, which 
is in part why we are here today. In that article, which cited 
primarily findings from an internal Bureau analysis, as I am 
sure you have discussed, it was alleged that the reviews were 
being given in a manner such that it was more likely to award 
higher ratings to White males than to their minority or female 
counterparts. And much of that was based on performance ratings 
that were directly linked to each employee's ability to receive 
raises or bonuses and/or promotions, as we have heard.
    Therefore, a performance review system which is skewed in 
favor of one group clearly has a disparate impact on the 
nonfavored groups. In fact, in the final analysis, the Bureau 
found that the distribution of high rating marks was impacted 
not only by race and gender but also by age and location as 
well.
    So as a result of these obvious disparate impact 
performance reviews, the Bureau has, as I understand it, 
recently undertaken to compensate aggrieved personnel and to 
reform the system by which performance reviews are conducted.
    My question to you would be, can you discuss or explain to 
us the system of performance review that was in place up until 
last week? How were these employees evaluated and what were the 
criteria used?
    Ms. Strong. Again, I am not the lead over the performance 
management program. But I can speak generally to it. It was a 
five-level system. And employees were rated on individual 
objectives that were created in collaboration between the 
manager and the employee and then also on a set of competencies 
which applied--they were the same competencies applied to 
employees at the same grade level and then also the same set of 
competencies that applied to managers.
    Mrs. Beatty. So by using the term the same for managers, 
are you of the opinion that there was a clear and uniform 
method by which the evaluations could be made on an equal 
basis?
    Ms. Strong. I would say that the performance management 
system that we had in place prior to our negotiations with the 
union is not very different than the performance management 
programs that are in place in other agencies. So it is pretty 
common or standard that employees have individual objectives 
and then are also assessed on competencies.
    Mrs. Beatty. So if, in fact, the reviews were that, do you 
have any helpful information for us that explains how do we 
have the standard reviews that result in disparate treatment if 
it is equal? If it is more rigorous for me being female and 
African-American than for maybe my White counterparts, what 
makes the disparity?
    Ms. Strong. Unfortunately, I wouldn't be able to help you 
there. I don't think I am the right person. I was not part of 
the group who assessed that data. I know that the Director 
would be happy to come and talk to you about that assessment. I 
just was not part of it.
    Mrs. Beatty. But you are comfortable that someone made an 
assessment which may have been a little more subjective than 
objective if the standards were the same?
    You are nodding, Mr. Konop, so you can feel free to 
respond.
    Mr. Konop. Yes. The system is subjective from the very 
start because in most areas of the Bureau, the first step in 
the review is actually the person being reviewed has to, in 
essence, brag about how well they did that last year.
    So if someone is really good at talking themselves up, they 
might get a better rating. If someone is more humble or has a 
different way of communicating, that actually will hurt them 
going forward. Because what is evaluated in large part is the 
personal statement. That sort of starts the process.
    To me, the process is flawed from the beginning. It is 
extremely convoluted. You would probably need another hearing 
just to try and figure out exactly what was going on. Managers 
spent a good month away from their substantive work trying to 
do this. And it still turned out rather flawed. So it is a bad 
system.
    Mrs. Beatty. Thank you very much. I yield back.
    Chairman McHenry. We will now go to Mr. Rothfus.
    Mr. Rothfus. Thank you, Mr. Chairman.
    Mr. Konop, the American Banker article from March 6, 2014, 
stated that, ``Employees have filed 115 official grievances 
with the National Treasury Employees Union since last August.''
    If unofficial complaints that haven't yet worked their way 
through this system are included, that number exceeds 200, 
according to information obtained by the American Banker. Are 
those statements correct?
    Mr. Konop. I think those are certainly within the ball 
park. I would have to go back and check, but it sounds about 
right.
    Mr. Rothfus. Are you surprised by the number of official 
and unofficial grievances?
    Mr. Konop. I think it is an extremely large volume for a 
relatively small agency, yes.
    Mr. Rothfus. So you would agree that the volume of 
complaints is unusual?
    Mr. Konop. Very unusual.
    Mr. Rothfus. Now, you testified, I think, in your written 
testimony and also orally that the vote to organize was 80 
percent?
    Mr. Konop. Yes.
    Mr. Rothfus. Was the margin by which CFPB employees voted 
to have a union represent their interests unusual?
    Mr. Konop. I was told by folks at NTEU National that it was 
one of the higher margins they had ever seen.
    Mr. Rothfus. Ms. Strong, do you dispute the figures cited 
in the March 6, 2014, American Banker article that over 200 
complaints had been filed by CFPB's employee union from the 
period of August 2013 through March?
    Ms. Strong. According to my count, we have had 137 
grievances to date filed by NTEU.
    Mr. Rothfus. 137.
    Ms. Strong. Correct.
    Mr. Rothfus. Does that include unofficial complaints?
    Ms. Strong. The union sometimes asks us to do inquiries, 
and I think they are not technically an informal grievance. So 
there may be more than that. But officially filed grievances, 
there have been 137.
    Mr. Rothfus. So is there--again the American Banker article 
talked about official grievances, but then it also talked about 
unofficial complaints. Do you have a process set up for 
unofficial complaints?
    Ms. Strong. I guess I would call them like requests.
    Mr. Rothfus. How many requests would you have received in 
that time period?
    Ms. Strong. I am not sure.
    Mr. Rothfus. Has your office resolved all 137 complaints? 
Are there still outstanding complaints?
    Ms. Strong. We have pending settlement or settlement or 
have actually settled 50 of the 137, and most of them are still 
in process.
    Mr. Rothfus. How long will it take to resolve those 
outstanding complaints?
    Ms. Strong. The entire process takes about 110 days.
    Mr. Rothfus. Some of those complaints were filed over 10 
months ago.
    Ms. Strong. Some of them what? I'm sorry.
    Mr. Rothfus. Some of those complaints were filed over 10 
months ago.
    Ms. Strong. It could be. Because of the large number, the 
volume of grievances that we have received, we have passed our 
deadlines. But I will also say that the union has requested 
extensions during different phases of the grievance procedure. 
And we have granted those as well.
    Mr. Rothfus. Do you expect that all these complaints will 
be resolved 110 days from now?
    Ms. Strong. There are different times in the process. But 
our goal is always to resolve them within the timeframes that 
we agreed upon with NTEU.
    Mr. Rothfus. But that has not been happening. Is that 
correct?
    Ms. Strong. A very small percentage of them have exceeded 
the deadlines.
    Mr. Rothfus. Are any of the outstanding complaints active 
since last August that you are aware of?
    Ms. Strong. Are you asking me?
    Mr. Rothfus. Yes.
    Ms. Strong. Outstanding since last August?
    Mr. Rothfus. Yes.
    Ms. Strong. There is a set of grievances that are getting 
ready to go to arbitration.
    Mr. Rothfus. And how old are they? What is the oldest one?
    Ms. Strong. I don't know what the oldest one is.
    Mr. Rothfus. Could it be as old as last August?
    Ms. Strong. It could be.
    Mr. Rothfus. How do you respond to employees who have now 
waited since last August, nearly a year, for their grievance 
related to the discriminatory pay and performance ratings to be 
resolved?
    Ms. Strong. I would just say that we take each and every 
grievance very seriously and thoroughly investigate it and work 
through the process. We did receive a larger amount of 
grievances than we expected. We have recently been allowed to 
fill initial slots within my team. So we are working as quickly 
as we can.
    Mr. Rothfus. Are all persons of authority, Ms. Strong, 
within the CFPB held to the same standard of accountability?
    Ms. Strong. I'm sorry. I am having a hard time hearing you.
    Mr. Rothfus. Have you reviewed the 2012 PMR data which 
shows that managers consistently rated themselves more highly 
than nonmanagers?
    Ms. Strong. No.
    Mr. Rothfus. So the CFB has not responded when it 
discovered in 2013 that managers were rating themselves more 
highly than their own staff, or has the CFPB responded to that?
    Ms. Strong. I believe the CFPB has responded to that, yes.
    Mr. Rothfus. What has the CFPB done?
    Ms. Strong. It is my understanding that the Director has 
decided to compensate all employees as though they were rated 
at the highest rating.
    Mr. Rothfus. Thank you.
    Chairman McHenry. We will now recognize Mr. Horsford for 5 
minutes.
    Mr. Horsford. Thank you, Mr. Chairman.
    And I thank the ranking member. I want to thank our 
witnesses for being here today, as well.
    And like many of my colleagues, I take the issue of 
discrimination in the workplace very seriously, whether it may 
be happening at the CFPB or any other Federal agency or entity 
outside of the Federal Government. An unfair discriminatory 
workplace, whether it be for minorities, women, or based on 
someone's sexual orientation should not be tolerated.
    I am interested in learning more about the severity of the 
issue and how it is being handled internally. I had hoped for 
senior management to be here representing the CFPB. But I want 
to thank Ms. Strong for appearing today.
    Ms. Strong, your testimony stated that you are responsible 
for managing the investigations of individual employee 
grievances.
    Ms. Strong. That is correct.
    Mr. Horsford. Can you discuss the process that you go 
through in conducting the investigations to substantiate the 
validity of discrimination or retaliation that come to your 
attention?
    Ms. Strong. Absolutely. So in the--if a grievance alleges 
discrimination, then we interview the manager and determine if 
there was an independent legitimate business reason for the 
decision they made.
    For example, in a performance grievance, if the manager is 
able to articulate and document the reason that they issued the 
performance rating, then we find evidence that there is no 
discrimination.
    Mr. Horsford. And in the case of Ms. Martin, which I don't 
want to harp on, only because it is one individual and it is an 
entire agency, but I do want to get an understanding of the 
process. After you made the determination, was Ms. Martin 
permitted the opportunity to appeal your office's decision? 
And, if so, what was that process?
    Ms. Strong. So if I am understanding you correctly, you are 
maybe talking about an allegation that Ms. Martin made against 
her peer. We in my office investigated that, and we did not 
substantiate that a hostile work environment existed. But Ms. 
Martin then filed an EEO complaint, which is in a different 
office, and went through that process and ultimately--go ahead.
    Mr. Horsford. I understand the EEOC process is an 
alternative.
    Ms. Strong. Right.
    Mr. Horsford. Does she have the right to appeal your 
decision that there was not a substantiated grievance?
    Ms. Strong. The purpose of my investigation is different 
than the purpose of an EEO investigation. My investigation is 
to determine if any misconduct took place.
    So if the person that she was making the allegation against 
did engage in some inappropriate behavior, my office would make 
recommendations on the appropriate action to take. So my office 
isn't in charge like the EEO office of determining or finding 
of discrimination.
    Mr. Horsford. Okay. So I want to turn to the other witness 
and understand again the fact that the Bureau and the National 
Treasury Employees Union reached this collective bargaining 
tentative agreement that involved the Bureau discontinuing the 
use of its previous performance management team.
    So does the agreement going forward address how the Bureau 
will handle employees who have been part of this problem 
previously based on where you are going forward with the new 
performance review model?
    Mr. Konop. I think Director Cordray's memorandum on Monday 
addresses past wrongs to some extent, but not completely. The 
agreement we reached going forward changes the system to 
hopefully rid it of some of its discriminatory impact. But it 
is going to take constant supervision, constant leadership from 
the top of the Bureau on down and constant monitoring from the 
union to make sure that happens. Because it is a very difficult 
process to keep fair.
    Mr. Horsford. And I just want to end with your last 
statement. Because you had said earlier in your testimony that 
there were systematic and structural factors that contributed 
to the disparity in pay, hiring, and in evaluation of 
promotion.
    So I know some of my colleagues on the other side were very 
argumentative in asking, why is this systematic? It is 
systematic because the data substantiates the fact that women 
and minorities were treated in disparate ways, and that was 
done in a systematic and structural way. And that has to be 
addressed in a systematic and structural way.
    So I am looking forward to seeing the results of this new 
performance management system. I know that the ranking member 
and the other members of this committee will continue to pursue 
this, not just for the CFPB but for any other Federal agency. 
And I look forward to working with my colleagues on both sides 
of the aisle--
    Chairman McHenry. The gentleman's time has expired.
    Mr. Horsford. --so we can end racial discrimination 
wherever it exists.
    Chairman McHenry. Mr. Barr is recognized for 5 minute.
    Mr. Barr. Mr. Konop, you said that you had not reviewed the 
Deloitte report until yesterday. Is that correct?
    Mr. Konop. Yes.
    Mr. Barr. And you, on behalf of the union, requested 
information related to performance review disparities. And 
when, on the timeline here, did you request that on behalf of 
the union?
    Mr. Konop. I think we made two separate requests. One would 
have been in early September of 2013, that was in the context 
of the 2013 pay negotiations. And then we made another request 
on November 22, 2013, following that year's PMR ratings. And 
that is the request that yielded the data cited in the American 
Banker article.
    Mr. Barr. Just to be clear, you represent the union with 
respect to negotiations. You were aware of pay equities 
disparities. And you became aware of those pay equity 
disparities eventually when?
    Mr. Konop. We were aware that there was a disparity between 
the bargaining unit and the managers in December of 2013. We 
were aware that it extended to race and age in January of 2014.
    Mr. Barr. Okay. And you became aware of race and age 
disparities in January 2014, correct?
    Mr. Konop. And the continued disparity between bargaining 
unit and nonbargaining unit.
    Mr. Barr. Right. But you had requested the information 
relating to race and gender discrimination in September, then 
again in November. Is that correct?
    Mr. Konop. In November, we requested specifically the race 
data. In September, all we requested was the bargaining unit, 
nonbargaining unit data.
    Mr. Barr. Okay. Then finally when the CFPB did provide you 
with a report on the information substantiating the race and 
gender discrimination, again, that was in January of 2014. 
Correct?
    Mr. Konop. The January report substantiated race, age, and 
bargaining unit, nonbargaining unit. I do not believe it found 
in the PMR context a gender discrimination. We have had gender 
discrimination issues in the pay equity grievance context, 
which is separate.
    Mr. Barr. Right. You have now been made aware that CFPB was 
in possession of a Deloitte report in September of 2013 that 
found sharp racial disparities in performance ratings, pay, 
hiring, and other measures; that the Bureau had that in its 
possession; that report revealed disparities in performance 
rating, in employee pay, and in hiring; that you requested 
information relating that in September, but certainly in 
November. You were provided a report from the CFPB in January. 
And in that report, the Deloitte information, the Deloitte 
conclusions were not disclosed to the union. Is that correct?
    Mr. Konop. The first time I heard of the Deloitte 
conclusion was yesterday.
    Mr. Barr. And so are you surprised that the Bureau after 
multiple requests of information failed to disclose to you the 
Deloitte information that the Bureau had in its possession that 
you had requested on multiple occasions and that they 
apparently deliberately withheld in January of 2014?
    Mr. Konop. I think sort of a duty of good-faith bargaining 
and if we really wanted to have a collaborative relationship 
with management, they ought to have disclosed this to us. I 
think, though, our actual information requests may not have 
covered the Deloitte study because we didn't know it was there, 
so we didn't know to ask for it. Underlying data.
    Mr. Barr. You asked for information relating to 
disparities?
    Mr. Konop. Certainly.
    Mr. Barr. The Deloitte report contained information 
relating to disparities, and the Bureau did not disclose 
information that you had requested.
    Mr. Konop. That is true. It is disappointing and it 
actually substantively hurts because we have could have used 
the Deloitte report in our negotiations and also in defending 
people--or representing people in grievances who were harmed.
    Mr. Barr. Let me just quickly move to Ms. Strong.
    Ms. Strong, you testified in your opening statement that 
you were aware that the Bureau was analyzing the performance 
review information for signs of disparate impact even before 
the American Banker published its story.
    Ms. Strong. That is correct, for 2013 performance.
    Mr. Barr. For 2013, but you were unaware, you did not 
review the Deloitte consulting report and you still haven't. Is 
that right?
    Ms. Strong. I believe this covers the prior performance 
year, not 2013, which is the year in question here.
    Mr. Barr. But you were interviewed for that report?
    Ms. Strong. I was interviewed for that report, yes.
    Mr. Barr. So you had knowledge that it was happening and 
that it existed.
    Ms. Strong. I didn't--
    Mr. Barr. Although you haven't reviewed it, you did know 
about it.
    Ms. Strong. I didn't know what the purpose of it--the 
report was. I was just asked two questions.
    Mr. Barr. Again, finally, Ms. Strong, your title is the 
Lead of Employee Relations?
    Ms. Strong. The Lead of Labor and Employee Relations.
    Mr. Barr. Labor--of employee relations. And you did not 
look--you were not interested in finding out what the Deloitte 
report might have said in September? You didn't look. And the 
union is requesting information related to that report, and you 
deliberately didn't--you weren't curious that this Deloitte 
information was out there? As the Lead of Employee Relations?
    Ms. Strong. I didn't know it was out there. It was 
conducted by an office that is completely outside of mine.
    Mr. Barr. And so you were just totally uninterested what 
the Deloitte report might have--
    Ms. Strong. If I knew it was there, I would have been 
interested. But I didn't know it existed.
    Mr. Barr. I yield back.
    Chairman McHenry. The ranking member of the subcommittee, 
Mr. Green, is recognized.
    Mr. Green. In his absence, I would like to compliment our 
newest member of our subcommittee, Mr. Horsford. I believe this 
was his first opportunity to participate in questioning.
    Let me start with the basic premise that there are many 
reasons for having this hearing. My concern is whether or not 
there are some people who will use or attempt to use 
information acquired at this hearing to weaken, emasculate, or 
possibly eviscerate the CFPB.
    So let me start with our union representative. Would you 
have anything that you have said today be utilized to weaken or 
eviscerate in some way or emasculate the CFPB?
    Mr. Konop. I actually hope this hearing will strengthen the 
CFPB by remedying these problems and making us a better, more 
compassionate place.
    Mr. Green. How large is your union? You mentioned another 
aspect of it. How large is your union?
    Mr. Konop. The bargaining unit is, give or take, 1,000, 
1,100 probably right now.
    Mr. Green. How many agencies do you find yourself--
    Mr. Konop. Oh, I was just talking about the chapter. I 
think the NTEU as a whole is about 70,000.
    Mr. Green. At how many agencies are you located?
    Mr. Konop. Our chapter is just the CFPB, but the NTEU has 
dozens and dozens of agencies, yes.
    Mr. Green. Any other agencies that might come under the 
purview of this committee? For example--
    Mr. Konop. Yes.
    Mr. Green. Thank you. With those agencies that come under 
the purview of this committee, will your union provide similar 
information concerning your issues to my office?
    Mr. Konop. I would just say, in this case, the vast amount 
of sort of momentum for this inquiry was undertaken by the 
chapter and not the national. And I represent the chapter. So I 
would hope the national would take this and sort of move the 
ball forward in other areas. But what you are talking about 
today was largely driven by the local.
    Mr. Green. I understand.
    You have indicated that you believe that some of these 
problems are endemic in society. You have indicated that you 
believe that they are associated with other agencies. Would you 
have similar circumstances be treated similarly? Meaning, if 
there is something happening in another agency that an OMWI has 
some authority to look into, would you have similar 
circumstances be treated similarly? Would you want other 
agencies to receive the same scrutiny that the CFPB is 
receiving?
    Mr. Konop. Of course.
    Mr. Green. And sometimes, where you are is important. It is 
always important. But equally as important can be the direction 
that you are moving in.
    I have looked at your comments, your statement. And on the 
very last page, you indicate that there is some compensation 
that is taking place and you indicate that is a solid first 
step.
    Am I to assume from this comment that you believe this is a 
good remedy?
    Mr. Konop. It is a partial remedy, a first step.
    Mr. Green. A partial remedy. But as to this part of the 
partial remedy, do you believe that it is a good remedy?
    Mr. Konop. There needs to be a couple of additional aspects 
of it to protect people who got the lowest ratings. They don't 
come under this and to also, as the national filed a mass 
grievance, to erase the numbers from people's ratings. So I 
think those two prongs, in addition to what the Director issued 
on Monday, would certainly--
    Mr. Green. Let me ask you another way. Would you have this 
part of it eliminated from the process? Is this something we 
should keep, what you have indicated here, as a good first 
step? We don't want to eliminate a good first step.
    Mr. Konop. No, not at all. We are very happy.
    Mr. Green. You agree that this is a good thing.
    Mr. Konop. Of course, yes.
    Mr. Green. You also indicate that there is a tentative 
agreement on a new PMR system that you had an opportunity to 
work with.
    Is this moving in the right direction?
    Mr. Konop. It is definitely moving in the right direction, 
yes.
    Mr. Green. You have indicated that some changes have taken 
place as of late. And that you seem to see these as positive 
changes.
    Is it your opinion now that we are starting to move in the 
right direction to remedy some of the things that you have 
called to our attention?
    Mr. Konop. We have taken a very solid first step, as I have 
said in any testimony.
    Mr. Green. I understand the solid first step. But I am 
concerned about the direction.
    Mr. Konop. Yes.
    Mr. Green. Are we moving in the right direction?
    Mr. Konop. Yes.
    Mr. Green. I know where we are, I know what we have done. 
And I know that Mr. Cordray has indicated a desire to remedy 
certain aspects of what has happened. In fact, he has indicated 
a desire to me to take affirmative action to remedy all of the 
negativism. But I want to make sure that you are of the opinion 
that we are starting to move in the right direction.
    Mr. Konop. We are starting to, yes.
    Mr. Green. Okay. Now, I have from Mr. Cordray a letter, and 
Mr. Chairman, I believe you received a copy of the letter. And 
as well there is a Performance Management Analysis for fiscal 
2013. I would like to introduce these things into the record, 
with unanimous consent.
    Chairman McHenry. Without objection, they will be entered 
into the record.
    Mr. Green. Mr. Chairman, you have been very liberal with 
your time, and I would ask one additional indulgence.
    I would just like to give Ms. Strong an opportunity to 
explain why it is she did not have an opportunity to peruse 
this report. She has been quizzed on it, but she has never had 
an opportunity to just state it. Would you give her an 
additional few seconds to do so, please?
    Chairman McHenry. Sure. If you would address--there are two 
reports in question. The internal report the union was 
provided, and then the earlier Deloitte report. You may address 
both.
    Mr. Green. Thank you, Mr. Chairman.
    Ms. Strong. I can't speak to the report that was prepared 
for the OMWI office. But the request for information from the 
union that revealed the performance distribution data was 
requested through my office and we provided that information to 
the union. And I believe that was in January.
    Chairman McHenry. Was the OMWI--if the gentleman--was the 
OMWI office aware that you put together that report, or that 
the report for the union was routed through you?
    Ms. Strong. I am not sure. It was a routine information 
request. We get information requests from the union all the 
time. My office acts as a conduit for those requests so that we 
turn them over to our systems people, they pull the information 
from the system, give it back to us, and we turn it over to the 
union.
    Chairman McHenry. The OMWI office was not involved with the 
data you provided to the union?
    Ms. Strong. Not initially. But after we offered the union 
an invitation to enter into a working group with the EEO 
office, OMWI, and Human Capital in reviewing that 
documentation.
    Mr. Green. Mr. Chairman, if I may?
    The OMWI report, will you give your representation as to 
why you were not privy to the report, please?
    Ms. Strong. I can't answer that question. I just have never 
seen it until today. It may have been circulated to my 
supervisor or someone higher than me in my organization. But I 
just haven't seen it.
    Mr. Green. Thank you, Mr. Chairman.
    I will yield back.
    Chairman McHenry. I think it shows there is a problem when 
the lead union negotiator doesn't have that very important data 
provided by Deloitte.
    Mr. Konop, if you would like to respond?
    Mr. Konop. I think, obviously, yes, it would have been 
helpful. And in the spirit of good-faith bargaining, I think we 
should have seen it at a much earlier date.
    Chairman McHenry. Okay. Thank you.
    We will now recognize the gentleman from Wisconsin, whom I 
should congratulate on the birth of his youngest daughter, 
number seven.
    Mr. Duffy. Number seven.
    Chairman McHenry. That is right. Congratulations.
    Mr. Duffy. Thank you. We like Marvin Gaye in Wisconsin, I 
guess.
    Mr. Green. Mr. Chairman, I think that invites a comment 
from the ranking member. Let me compliment you as well; you 
have met your mandate to be fruitful and multiply.
    Mr. Duffy. Thank you.
    Ms. Strong, obviously, as the labor and employee relations 
lead for the CFPB, you heard complaints from different 
employees of the CFPB about racism and sexism and maybe some 
agism, right? You heard those complaints some time ago. Yes?
    Ms. Strong. So we--out of the 137 grievances that we have 
received, there is around, I think, 17, that have alleged some 
sort of discrimination.
    Mr. Duffy. But they come through you. You are aware of 
complaints that came in. Yes?
    Ms. Strong. Yes.
    Mr. Duffy. As you said in your opening statement, you are a 
woman and a minority. When you hear about these allegations of 
sexism and racism, obviously, you must take this very 
seriously. Right?
    Ms. Strong. Absolutely.
    Mr. Duffy. And so not only did you have the complaints from 
employees, you also, in September of last year, had the DIG 
report, which I heard in your testimony that you don't agree 
with that report. But there was also an outside investigation 
that told you that there were some issues as well with regard 
to racism as well in the CFPB. Correct?
    Ms. Strong. Those were conclusions of that report.
    Mr. Duffy. That you disagree with. Right?
    Ms. Strong. I just do not think it was a complete report.
    Mr. Duffy. Fair enough.
    You are also aware that Deloitte was doing an investigation 
on this very issue that you care about because they asked you a 
few questions about it. Right?
    Ms. Strong. It wasn't my understanding that it was an 
investigation. It was more of a--like the question that was 
posed to me was, ``What does diversity mean to you?'' So I 
thought it was more of a study.
    Mr. Duffy. Fair enough. When did you learn that there was a 
Deloitte report that had been completed?
    Ms. Strong. This is the first time that I have seen this 
report.
    Mr. Duffy. No. Ms. Strong, we all get the joke when you 
don't answer my question. I didn't ask you when you saw the 
report, which you told me you saw that today. My question for 
you is, when did you know the report existed?
    Ms. Strong. I'm sorry, I can't answer that question. I do 
not know.
    Mr. Duffy. So you knew before today. Right?
    Ms. Strong. I have never seen the report. I knew that there 
was some type of study. I am not trying to not be truthful in 
answering your question. It is just that I haven't seen the 
report. I did know that Deloitte was doing the study.
    Mr. Duffy. I know you didn't see it. Did you know that it 
existed a week ago?
    Ms. Strong. No.
    Mr. Duffy. So, then, 2 weeks ago, you didn't know it 
existed?
    Ms. Strong. I don't believe so. No. I haven't--
    Mr. Duffy. You don't recall.
    Ms. Strong. --so if I had an opportunity to review it, 
maybe that would trigger my memory.
    Mr. Duffy. Did you have a meeting with the staff of the 
committee?
    Ms. Strong. Yes.
    Mr. Duffy. Before this hearing.
    Ms. Strong. Yes.
    Mr. Duffy. Didn't they tell you a report existed in that 
meeting? They told you that it existed 2 weeks ago? Yes?
    Ms. Strong. Okay. Maybe, yes. I just don't recall that.
    Mr. Duffy. So, 2 weeks ago, you knew the report existed. 
You knew that you were going to come into this hearing and you 
were going to get questions about the report. And when we ask 
you those questions, you tell us that you haven't read the 
report.
    Ms. Strong. My attorney--
    Mr. Duffy. And you mislead us and say, well, I didn't see 
the report.
    Ms. Strong. I'm sorry, I am not trying to be misleading.
    Mr. Duffy. You are.
    Ms. Strong. My attorney just said that they did not inform 
us of the report in that closed briefing.
    Mr. Duffy. You knew it existed. You didn't read the report. 
So you won't answer questions today about it.
    Let me ask you this: Mr. Konop, the union, has requested 
the report. They asked for it months ago.
    Ms. Strong. They have never asked for this report. I'm 
sorry.
    Mr. Duffy. For information in regard to this issue. Right?
    Ms. Strong. They asked for information.
    Mr. Duffy. That is contained in the report.
    When did the CFPB provide the report to Mr. Konop or the 
union?
    Mr. Konop. When did the CFPB provide this? They haven't.
    Mr. Duffy. They never did. Right. The committee gave it to 
you. Correct?
    Mr. Konop. That's--
    Mr. Duffy. The CFPB has never given you the report that 
contains the information that you have asked for.
    And the CFPB comes in today and says, listen, we are on the 
front line trying to get rid of racism and sexism. But then you 
come in, Ms. Strong, and won't answer our questions. You won't 
even give the union the report. We have to give it to them. And 
you want us to believe as a lead negotiator that you want to 
root out racism and sexism. If you want to accomplish that 
goal, you have to cooperate.
    Did you prepare for this hearing with leadership of the 
CFPB?
    Ms. Strong. Yes.
    Mr. Duffy. Did they talk to you about how you should 
testify?
    Ms. Strong. No.
    Mr. Duffy. So what was the conversation with the CFPB and 
how you should testify in preparation for this hearing?
    Ms. Strong. They asked me practice questions to get me 
ready.
    Mr. Duffy. So they prepared you. They didn't say, Ms. 
Strong, go off the best of your recollection and tell the 
truth. Tell them what you know.
    Instead, you come in here and say, I saw the report today, 
but I never read it, even though I knew it existed weeks ago. 
So we can't ask you questions about it and you don't give it to 
Mr. Konop.
    And then you want us to believe that you care about this 
issue and you want to help on a bipartisan effort for us to 
resolve it. I'm sorry. I don't believe it. And when you start 
to be more credible and more forthcoming, I will buy in.
    I yield back.
    Ms. Strong. That is not true. I'm sorry.
    Chairman McHenry. We will now recognize Mr. Heck for 5 
minutes.
    Mr. Heck. Thank you, Mr. Chairman. At this time, I would 
like to yield my time to the ranking member.
    Mr. Green. Thank you, Mr. Heck.
    Let's, Ms. Strong, continue with the report. And we are 
talking about the OMWI report.
    You indicated that you saw the report for the first time 
today, I believe. Is that correct?
    Ms. Strong. That is correct.
    Mr. Green. And that you did not have knowledge of this 
specific report. You knew that questions were being asked and a 
report was being compiled. Is this correct?
    Ms. Strong. I knew that Deloitte--that the OMWI office had 
contracted with Deloitte to do a study on diversity. And I was 
interviewed.
    Mr. Green. And you did not receive a copy of the report.
    Ms. Strong. Not that I am aware of, no.
    Mr. Green. And not having a copy of the report and having 
not read it, you are not in a position to testify as to the 
content.
    Ms. Strong. I am not. I think Stuart Ishimaru actually 
offered to come and speak with you. So he would be the 
appropriate person to talk about that report.
    Mr. Green. Would it be unusual for there to be other 
reports that you would not be privy to?
    Ms. Strong. I don't think it would be unusual. I am sure 
there are a lot of reports at the Bureau that I am not privy 
to. I am not a senior manager. I am not an executive. I am a 
first-level supervisor.
    Mr. Green. And would any indication that there was some 
intentionality with reference to your not giving information 
today, would that be incorrect because of your lack of 
knowledge about the report?
    Ms. Strong. Yes. I did not have knowledge of the report.
    Mr. Green. I am doing this because I am trying to give you 
an opportunity to make it clear as to your lack of knowledge 
and, as a result of your lack of knowledge, your inability to 
give comments, as opposed to your knowing about this and your 
refusal to in some way impart information to others or to give 
testimony today.
    Ms. Strong. That is correct. I am just not the appropriate 
person to speak about this report because I didn't have 
anything to do with the report. But there is someone at the 
Bureau who would be happy to come and talk to you about it.
    Mr. Green. Thank you, Mr. Chairman.
    Mr. Chairman, I will yield back.
    Chairman McHenry. Thank you. And we will now go to Mr. 
Hultgren of Illinois.
    Mr. Heck. Mr. Chairman? Reclaiming my time.
    Chairman McHenry. I'm sorry. How much time did the 
gentleman have remaining?
    Mr. Heck. Two minutes and 55 seconds, to be specific.
    Chairman McHenry. We will put it back on the board at 3 
minutes because we are being kind.
    Mr. Heck. You are very kind, Mr. Chairman.
    Ms. Strong?
    Ms. Strong. Yes.
    Mr. Heck. It is my understanding that committee procedures 
require you to attest to the veracity, at least, of your 
written testimony here today.
    Do you affirm now and again that everything that you have 
submitted to this committee, you do so to the best of your 
knowledge, and it represents the truth as best as you can 
recollect it?
    Ms. Strong. Yes.
    Mr. Heck. Thank you. And thank you for your presence here 
today.
    Ms. Strong. Thank you.
    Chairman McHenry. The gentleman yields back.
    We will now go to Mr. Hultgren of Illinois.
    Mr. Hultgren. Thank you, Mr. Chairman. Thank you both for 
being here today.
    Ms. Strong, I want to follow up a little bit on--talk about 
preparation here, meeting with leaders at CFPB to prepare to go 
over questions, to go over answers.
    I wondered if Director Cordray would have been part of 
that, if you would have talked to him in that preparation?
    Ms. Strong. Repeat the question, please?
    Mr. Hultgren. I wondered if Director Cordray was part of 
your preparation for your--
    Ms. Strong. No.
    Mr. Hultgren. He wasn't in those meetings at all? You never 
discussed your testimony today with Director Cordray?
    Ms. Strong. No, sir.
    Mr. Hultgren. For both of you, do you think that the 
removal of Dennis Slagter from his role as of Director of Human 
Capital was a positive step in correcting the problem of pay 
inequity and discriminatory performance ratings detailed in the 
March 6, 2014, American Banker article?
    Ms. Strong. It is my understanding that Mr. Slagter was 
offered another position and he accepted it. I don't think it 
had anything to do with the performance management rating 
distribution.
    Mr. Hultgren. Do you think the fact that he is no longer 
there does help the fact of the pay inequity and discriminatory 
performance ratings?
    Ms. Strong. I don't think it has any impact on that.
    Mr. Hultgren. Mr. Konop, what are your thoughts?
    Mr. Konop. I think, as my testimony referenced, management 
needs to hold itself accountable. From my dealings with Mr. 
Slagter, there seemed to be a lack of sensitivity to these 
issues. And in several meetings I had with him, I think also a 
lack of urgency in addressing them.
    So, I think he was reassigned. Perhaps, that is a better 
fit for his skill set. Because I do think there was an endemic 
problem in the Human Capital Division that has led to a number 
of problems that we are talking about today.
    Mr. Hultgren. So would you suggest that his removal and 
reassignment likely had something do with the problems with the 
pay inequity and discriminatory performance ratings?
    Mr. Konop. I can't testify as to exactly what happened. But 
certainly the timing of it, several weeks after the American 
Banker article and the hearings he conducted, indicates that it 
potentially could be linked.
    Mr. Hultgren. Ms. Strong, do you think Dennis Slagter 
should be commended for a job well done at Human Capital?
    Ms. Strong. Dennis Slagter was my supervisor for the 
majority of the time that I have been at the Bureau. I found 
him to be a very caring person who worked very hard to stand up 
the CFPB from a Human Capital perspective.
    Mr. Hultgren. So would you support the idea of commending 
him for a job well done at Human Capital?
    Ms. Strong. I believe he did a good job.
    Mr. Hultgren. How about you, Mr. Konop? Would you think 
that would be idea to commend him for a job well done at Human 
Capital?
    Mr. Konop. I would not offer that proclamation, no.
    Mr. Hultgren. Would you agree that there are serious 
problems with the Office of Human Capital? It sounds like you 
have already stated that, Mr. Konop.
    Mr. Konop. Yes, I would.
    Mr. Hultgren. Ms. Strong, would you agree that there are 
serious problems with the Office of Human Capital?
    Ms. Strong. No, I would not agree to that.
    Mr. Hultgren. But would you say that pay inequity and 
discriminatory performance ratings are serious?
    Ms. Strong. We take all grievances and complaints very 
seriously. But there is--
    Mr. Hultgren. So discriminatory practice and pay inequity 
would be something that you take seriously and would lead--you 
would say that would be a serious problem.
    Ms. Strong. Of course. We take all allegations of those 
types very seriously.
    Mr. Hultgren. My time is running out. Let me get to a 
couple of other things quickly and focus these to Mr. Konop.
    After providing the union with a report on 2013 performance 
reviews which indicated sharp racial disparities in January 
2014, I wonder, did CFPB take immediate action to revise its 
performance management review process?
    Mr. Konop. No, it did not.
    Mr. Hultgren. What discernable action did the CFPB take in 
January 2014 after the Bureau released data showing sharp 
racial disparities in performance ratings?
    Mr. Konop. I believe there was a very general message sent 
by the Director noting that this is a problem, but certainly, 
we did not see a change in the posture of the Bureau in 
grievances nor in the collective bargaining process.
    Mr. Hultgren. Is CFPB's union satisfied with CFPB's 
approach to resolving the outstanding issues with 
discrimination at the Bureau?
    Mr. Konop. We are not completely satisfied by any means at 
this point. A large part of that would have to do with the pay 
equity issues.
    Mr. Hultgren. What could CFPB do to resolve the union's 
concerns about sharp racial disparities and performance 
ratings?
    Mr. Konop. I think we have discussed a lot of the remedies. 
I think Director Cordray's step was positive on Monday. But we 
need a new system. We are going to have that. We need more 
accountability. We really need from the Director on down to 
make sure the managers are doing this fairly and hold those who 
don't accountable. And that is really all the union has been 
advocating for in general throughout the process.
    Mr. Hultgren. But you haven't seen that yet?
    Mr. Konop. Not yet.
    Mr. Hultgren. My time has expired. I yield back.
    Mr. Chairman, thank you.
    Chairman McHenry. We will now enter into the next round, 
and recognize Mrs. Wagner.
    Mrs. Wagner. Thank you, Mr. Chairman.
    Just to get a few things straight here, according to the 
March 6, 2014, American Banker article, the sharpest 
disparities in the performance ratings were seen amongst the 
staffers who had received the top rating of 5. The 
discrepancies were even greater at the ratings ranges extremes, 
and at the top one-fifth of White employees or some 20.7 
percent received a 5 and were dubbed role models compared with 
10.5 percent of African-Americans and 9.1 percent of Hispanics.
    Why do you believe that the CFPB, Mr. Konop, designated 20 
percent of its White staff as role models and conferred this 
designation to only 10 percent of African-American and Hispanic 
staff?
    Mr. Konop. I think what those numbers proved to the union 
was that there was a disparate impact. And much like the Bureau 
would do in a fair lending case, it is almost the strict 
liability situation, where once you view those numbers, the 
inquiry ends, and the remedy section begins. So we focused on 
remediating the problem through grievances and through back pay 
and things like that, but the numbers, I think, speak for 
themselves.
    Mrs. Wagner. Gosh, speaking of the numbers, is there any 
empirical data that CFPB had been able to produce to the union 
that would account for the ratings' disparities?
    Mr. Konop. No.
    Mrs. Wagner. None. Is there any explanation that CFPB had 
been able to provide to the union to explain any of these 
disparities at all?
    Mr. Konop. No.
    Mrs. Wagner. So there was no empirical data to base these 
numbers on? There was no explanation? Did CFPB management and 
Liza Strong state that CFPB's apparently discriminatory 
performance rating system exemplified meritocracy?
    Mr. Konop. I raised the issue probably sometime in February 
during our collective bargaining process. I raised it numerous 
times fairly aggressively and throughout was met with strong 
resistance to changing the system, including a question back to 
me whether I didn't believe in meritocracy, so, in essence, 
saying that the current system was a meritocracy, which I found 
sadly--
    Mrs. Wagner. Stunning.
    Mr. Konop. --humorous in a sad way.
    Mrs. Wagner. Ms. Strong, did you or anyone else 
representing CFPB management refer to CFPB's discriminatory 
performance review system as a form of meritocracy?
    Ms. Strong. No, I did not.
    Mrs. Wagner. Maybe you two weren't in the same meeting.
    Given the data disclosed in the March 6th American Banker 
article and this one that apparently is 8-months-old and just 
everybody is coming to light on here, the Deloitte report of 
September 30th, that actually, let me be very specific, it 
identified diversity problems across the agency including 
overrepresentation of minority and women employees in the lower 
pay scale groups. That is what this 8-month-old Deloitte study, 
as it is called, did.
    Ms. Strong, can you explain why CFPB employees should trust 
you and your office to look out for their interests and protect 
them from abuses of CFPB management?
    Ms. Strong. First of all, I don't think or I have not been 
privy to any abuses by CFPB management. I look into the 
grievances that are brought to me.
    Mrs. Wagner. I'm sorry. Would you state that again? You 
have not, go ahead, seen--
    Ms. Strong. In the cases that I have worked on and in the 
investigations I have conducted, I have not found any evidence 
of discrimination.
    Mrs. Wagner. And one more time, you would like to stand by 
that answer?
    Ms. Strong. Yes, ma'am.
    Mrs. Wagner. Okay. Mr. Konop, do you believe CFPB's Human 
Capital Office generally, and Ms. Strong in particular, are 
doing everything in their power to address and resolve specific 
workplace complaints as well as the underlying issues driving 
those complaints, sir?
    Mr. Konop. No.
    Mrs. Wagner. I would agree.
    Are you aware of a culture of retaliation and intimidation 
that discourages employees from submitting valid complaints or 
exposing wrongdoing at the CFPB?
    Mr. Konop. We have seen instances of retaliation for a 
variety of reasons against union members, yes.
    Mrs. Wagner. Do you share information about an employee's 
complaints with the very same manager they are complaining 
about?
    Mr. Konop. I am not sure I quite understand that question.
    Mrs. Wagner. It is going directly to that manager?
    Mr. Konop. Unfortunately, in the current system, yes, that 
would be the way it works.
    Mrs. Wagner. So you have to share that directly with the 
current manager, who has rated in the disparate directly 
against the employee? I want to make sure I get this for the 
record.
    Mr. Konop. That is one thing we seek to change in the 
collective bargaining agreement going forward. I think you have 
identified a key problem in the structure of the grievance 
process, yes.
    Mrs. Wagner. I think we have. Do you understand how 
disclosing that information can very easily lead to 
retaliation, sir?
    Mr. Konop. Sure. It is human nature, I would say.
    Mrs. Wagner. Mr. Chairman, I yield back.
    Chairman McHenry. The ranking member passes, and we will go 
to Mr. Barr of Kentucky for 5 minutes.
    Mr. Barr. Mr. Konop, just to follow up on something that we 
were exploring earlier. Obviously, the Bureau at some point in 
time disclosed to the union that managers were rating 
themselves higher, more highly than their own staff. And the 
union became aware of that when exactly?
    Mr. Konop. The union became aware of that in September of 
2013.
    Mr. Barr. Okay. How did, as you represent the union, the 
Bureau respond to that?
    Mr. Konop. Obviously, we voiced our displeasure with that. 
It kind of goes against most things the union stands for. And 
generally, it appeared to me there was some sort of unified 
front of just not discussing it, just not acknowledging it and 
negotiating it almost as if it didn't happen.
    Mr. Barr. To date, have they adequately addressed that 
issue in the eyes of the union?
    Mr. Konop. I think really Director Cordray's statement on 
Monday certainly addressed it, and I think that was the first 
time it has really been addressed head on.
    Mr. Barr. So, for the first time since September after this 
committee began to look the into this issue, the Bureau is 
finally acknowledging this as of today?
    Mr. Konop. As far as I know, yes, that is the first 
straight-on admission of fault.
    Mr. Barr. Ms. Strong, you refer to Stuart Ishimaru. You 
have a professional relationship with Mr. Ishimaru at the 
Bureau, correct?
    Ms. Strong. Correct.
    Mr. Barr. And is he still the Head of the Office of 
Minority and Women Inclusion?
    Ms. Strong. Yes, he is.
    Mr. Barr. And he has been in that position for how long?
    Ms. Strong. I don't know exactly. A couple of years.
    Mr. Barr. Okay. So as long as you have been there?
    Ms. Strong. I have been there longer than him.
    Mr. Barr. Okay. How many meetings do you have typically 
with Mr. Ishimaru at work?
    Ms. Strong. We don't meet on a routine or regular basis. I 
would say I have met with him maybe 4 or 5 times. He has also 
been in meetings that other people have been in, as well.
    Mr. Barr. Your office is the Office of Human Capital, 
right?
    Ms. Strong. That is correct.
    Mr. Barr. And Mr. Ishimaru's office is the Office of 
Minority and Women Inclusion?
    Ms. Strong. That is correct.
    Mr. Barr. And both of those offices are within the 
Operations Division?
    Ms. Strong. They were until recently, and the OMWI office 
was elevated to report directly to the Director.
    Mr. Barr. When did that happen?
    Ms. Strong. I would say within the past 3 months.
    Mr. Barr. Okay. Is Mr. Sartaj Alag still head of the 
division?
    Ms. Strong. He is the COO.
    Mr. Barr. So does he organize meetings where there is 
communication among the various offices within the division?
    Ms. Strong. I am sure he does; I just don't attend those 
meetings.
    Mr. Barr. You are not part of those?
    Ms. Strong. That is correct.
    Mr. Barr. In the four or five occasions--you are telling me 
that you have only spoken with Mr. Ishimaru four or five times 
in your entire--
    Ms. Strong. That is a guess.
    Mr. Barr. That is about right?
    Ms. Strong. Right.
    Mr. Barr. And in those four or five conversations, not once 
in the last 8 months was the Deloitte report ever brought to 
your attention?
    Ms. Strong. No, sir.
    Mr. Barr. You are aware of the Deloitte report being in Mr. 
Ishimaru's office? You knew that?
    Ms. Strong. Yes. I was interviewed.
    Mr. Barr. But there was never a discussion between you and 
Mr. Ishimaru related to that?
    Ms. Strong. I was never briefed on this report.
    Mr. Barr. In your management of investigation of employee 
grievances, have you ever come across allegations that 
employees within the Office of Consumer Response referred to a 
division as ``the plantation?''
    Ms. Strong. I had not heard that before the April 2nd 
hearing.
    Mr. Barr. That was the very first time you had ever heard 
that?
    Ms. Strong. That was the very first time.
    Mr. Barr. So did you not hear about that in Ms. Raucci's 
report?
    Ms. Strong. No, that was not in her report.
    Mr. Barr. Okay. And did you ever hear of any other kinds 
of, in your investigations of employee grievances, any other 
allegations of gender or racial discrimination?
    Ms. Strong. I have received some grievances that have 
alleged, for example, that an individual's performance rating 
was lower based on their race.
    Mr. Barr. Okay.
    Chairman McHenry. Will the gentleman yield?
    Mr. Barr. Yes.
    Chairman McHenry. Mr. Konop, regarding Angela Martin, Ms. 
Strong testified and said some very direct things about her 
case. Do you believe Ms. Martin to be truthful in her 
allegations?
    Mr. Konop. Every allegation I have heard Ms. Martin make, I 
have no reason to believe it is untruthful.
    Chairman McHenry. Do you believe that she suffered 
retaliation?
    Mr. Konop. Yes, I do.
    Chairman McHenry. Have you actually been retaliated upon?
    Mr. Konop. Me, personally?
    Chairman McHenry. Yes.
    Mr. Konop. I didn't file a grievance or anything on it, so 
it certainly is not a formal complaint, but I think generally 
the CFPB was a little slow to embrace the idea that we were a 
union and we were going to act like a union and represent 
employees vigorously. And I think there was some blowback from 
managers who had no experience in working in that type of 
environment that certainly I felt.
    Chairman McHenry. All right. The gentleman's time has 
expired.
    Mr. Green. Thank you, Mr. Chairman. I will accept my 5 
minutes.
    Mr. Konop, you just made comments about a certain case and 
I have tried to stay away from specific cases, but your 
comments invite my concerns. Did you investigate this case 
yourself? Do you have some empirical evidence to support your 
claim?
    Mr. Konop. I read the report, obviously. I--
    Mr. Green. My question was, did you investigate?
    Mr. Konop. Of course, I did not do an investigation.
    Mr. Green. I assumed as much, but I wanted the record to 
reflect what the facts are. And understanding that you did not 
investigate them, am I to understand that you did not talk to 
people on both sides of the issue, that you did not talk to 
persons who can give you intelligence about both sides without 
bringing names into it? Is that a fair statement?
    Mr. Konop. No.
    Mr. Green. Did you talk to people on both sides?
    Mr. Konop. I talked to the person sitting next to me.
    Mr. Green. No, no, no, no.
    Mr. Konop. She was representing--
    Mr. Green. People associated with the specific case that 
was mentioned. I have tried to refrain from mentioning names, 
but people associated with that case. Did you talk to people on 
both sides of it?
    Mr. Konop. I have had discussions with people on both sides 
of that, yes.
    Mr. Green. About that specific case?
    Mr. Konop. I believe so, yes.
    Mr. Green. So you have investigated, then?
    Mr. Konop. I wouldn't call it an investigation. It would be 
more of trying to reach a resolution.
    Mr. Green. Did you talk to people who disagreed with the 
contentions of the complainant?
    Mr. Konop. Sure.
    Mr. Green. Did you have reason to disbelieve them?
    Mr. Konop. I thought the report was fairly convincing, and 
I have reviewed certainly many aspects of Angela Martin's case 
personally because I represented her on a grievance.
    Mr. Green. My question was, did you have reason to 
disbelieve the persons who gave you information that was 
antithetical to the testimony that we received here? Did you 
talk to people who gave you another opinion?
    Mr. Konop. Yes, I actually think I did have reason to 
disbelieve them, yes.
    Mr. Green. What was the reason?
    Mr. Konop. The report, for one.
    Mr. Green. Not the report. I am asking you about what you 
did and what you found out yourself. You see, we have the 
report.
    Mr. Konop. Okay.
    Mr. Green. And you have given your opinion.
    Mr. Konop. Yes.
    Mr. Green. And your opinion, I want to find out if it is 
based on something associated with empirical evidence. Is it 
associated with empirical evidence, or are these just your 
thoughts based upon things that you have picked up along life's 
way, as it were?
    Mr. Konop. I don't think Angela Martin's case really dealt 
with necessarily empirical evidence, so no, my beliefs on her 
case would not necessarily be empirically-based.
    Mr. Green. Thank you.
    Now, let's go to disparate impact. That is a theory that 
has been accepted and embraced by many courts; in fact, the 
Supreme Court of the United States of America has embraced the 
theory, and it has been embraced apparently by this committee. 
My hope is that in future testimony, we will find that this 
theory finds the same degree of validity that it has found 
today and has found on previous occasions.
    Now, I am a person who believes that you have to be 
consistent to the extent that you can. We all have 
inconsistencies in our lives. But to the extent that you can be 
consistent, you should. And if you are going to embrace 
disparate impact as it relates to this agency, my hope is that 
your union would believe that it would be appropriate for other 
agencies, as well. Is that a fair statement?
    Mr. Konop. I think we believe in the principle of disparate 
impact, yes.
    Mr. Green. And would you agree that if you have some 
evidence that is based upon disparate impact, that this would 
be something that you should call to my attention?
    Mr. Konop. Yes, I do.
    Mr. Green. Are you indicating today that you are free to do 
this? Can you call these things to my attention?
    Mr. Konop. I would be honored to, yes.
    Mr. Green. And I would be honored to receive any 
intelligence that you have, connoting or indicating disparate 
impact so that we may give all persons the same opportunity to 
be heard that we have accorded some people in this 
circumstance.
    Now, finally this: You have indicated that there is a 
remedy that is being imposed that deals with the pay 
circumstance. You have indicated that you are working now on a 
remedy that deals with the way these evaluations will take 
place in the future. Is that correct?
    Mr. Konop. Yes.
    Mr. Green. And you have indicated that you seem to be 
moving in the right direction. You are not where you want to 
be. But is this the way unions work? Do you start at one point 
and do you try to graduate to a final point that is acceptable 
to the union and other parties, as well? Is this a fair 
statement?
    Mr. Konop. Yes.
    Mr. Green. So you are now working with the agency. Are you 
working directly with Mr. Cordray?
    Mr. Konop. We have quarterly meetings with the Director, 
yes.
    Mr. Green. And as such, you are moving in the right 
direction, not where you want to be but moving in the right 
direction?
    Mr. Konop. I think that is right.
    Mr. Green. Thank you.
    Chairman McHenry. I will now recognize Mr. Duffy for 5 
minutes.
    Mr. Duffy. Thank you, Mr. Chairman.
    We have had quite a few hearings on the discrimination at 
the CFPB, and during one of those hearings, it was brought to 
our attention that a unit at the CFPB that predominantly had 
African-American employees was oftentimes referred to as ``the 
plantation'' or ``the cesspool.''
    Ms. Strong, were you aware that this unit or agency was 
referred to by those terms?
    Ms. Strong. No, sir.
    Mr. Duffy. Okay. Is this the first time you have heard that 
those terms have been used for a unit within the CFPB?
    Ms. Strong. No. I heard that in the April 2nd hearing. That 
was the first time I had heard it.
    Mr. Duffy. But before that, you didn't know?
    Ms. Strong. No, I did not.
    Mr. Duffy. Mr. Konop, have you heard these terms being used 
for a specific unit within the CFPB?
    Mr. Konop. I certainly have heard for basically a year 
since the union has been in existence extremely unhappy 
employees in Consumer Response who seem to have justified 
complaints and they did seem to revolve, in many cases, around 
race. The first time I believe I heard that actual term was 
with Ms. Martin's testimony.
    Mr. Duffy. Okay. And, again, Ms. Strong, you are at the tip 
of the spear in regard to employee relations between employees 
and management, right? You are the labor and employee relations 
person?
    Ms. Strong. Yes, I am the Lead of Labor and Employee 
Relations.
    Mr. Duffy. And did not know that this was taking place?
    Ms. Strong. No, that was never reported to me.
    Mr. Duffy. And, again, in your statement, you told us that 
you care about women and you care about minorities because you 
are both yourself. And I don't want to beat a dead horse, but 
you knew that the Deloitte report had come out. And as a person 
who cares about women and minorities, are you telling us today 
that you cared so much about women and minorities that you had 
no interest in reading the investigation that was provided by 
Deloitte, and even today as you sit here you had no interest in 
reading it?
    Ms. Strong. No. It is just that I wasn't provided a copy of 
it, so I did not have the opportunity to review it, and I 
didn't know that it existed. I knew that a study was being 
done, but I didn't know there was a product that came out of 
it.
    Mr. Duffy. Your testimony, in my prior round, you said you 
did know about it 2 weeks ago and that you didn't have a copy. 
Does that mean that you couldn't have received a copy?
    Ms. Strong. No, actually, I'm sorry, I said that was not 
true.
    Mr. Duffy. After you consulted with your lawyer, but first, 
you told me that you did see it.
    Ms. Strong. No. You said that it was brought up in that 
meeting, and I said, I am not sure, but it was clarified that 
it was not.
    Mr. Duffy. I was very clear that you indicated you have no 
independent recollection of whether you knew it existed or not 
until today and you haven't seen it.
    Mr. Konop, you have heard Ms. Strong's comments today about 
her lack of review of a report that is pretty damning to the 
agency, so she can't answer questions today at this hearing. Do 
you think there is concern within the employee body of the CFPB 
in regard to the trust of Ms. Strong as the Lead of Employee 
Relations with management?
    Mr. Konop. I think currently, because of these problems 
that we are discussing here today and others, there is a lot of 
distrust between various aspects of management and labor. I 
think Human Capital certainly played a role in that.
    Mr. Duffy. Do you think now, after this hearing, as the 
spokesperson for labor at the CFPB, do you think they would 
probably feel a lot better about Ms. Strong and the position 
that she holds, a lot more confident in her?
    Mr. Konop. I think our continued position will be there is 
a lot of work to be done and management needs to hold itself 
accountable.
    Mr. Duffy. Do they feel better about her today after this?
    Mr. Konop. Do I? I actually like Liza Strong. We have 
worked together on a lot of things. We see issues, though, 
differently in many cases, and I have felt that workers have 
not been getting a fair shake from Human Capital, so--
    Mr. Duffy. So is it fair to say that they haven't been 
getting a fair shake from Ms. Strong?
    Mr. Konop. She is the second sort of rung supervisor of 
Human Capital, so, of course, that would indicate my 
displeasure with that, with her, as well.
    Ms. Strong. Yes, so just to clarify my role. My role is to 
assist managers in responding to grievances. Ultimately, it is 
the manager's decision on how to respond to a grievance. We 
give them recommendations and guidance, but it is not my role 
to make or render decisions on grievances.
    Mr. Duffy. And I want to do one quick question. You do see 
cases come in on grievances from the union, right, Ms. Strong?
    Ms. Strong. Yes.
    Mr. Duffy. And in those grievances, roughly how many have 
there been?
    Ms. Strong. There have been about 137.
    Mr. Duffy. And in how many of those grievances have you 
sided with the union as opposed to management?
    Ms. Strong. I don't know the exact numbers, but I believe 
we are pending resolution or have resolved 50, but there are 
still some that are still in the process.
    Mr. Duffy. So 50-plus have been sided in favor of the 
union?
    Ms. Strong. Correct.
    Mr. Duffy. Mr. Konop, would you agree with that?
    Mr. Konop. I don't think siding in favor of the union would 
be the--I think there was settlement reached, but for a long 
time, I think the denial rate was hovering around 90 percent, 
so there has been quite a bit of change in that in the last 
several weeks.
    Mr. Duffy. I yield back.
    Chairman McHenry. The gentleman's time has expired.
    I will take my 5 minutes for this round. Ms. Strong, have 
any supervisors received counseling for making racially 
insensitive remarks or using racial epithets?
    Ms. Strong. Yes.
    Chairman McHenry. Okay. What remarks or racial epithets are 
you aware of?
    Ms. Strong. I don't feel very comfortable talking about 
specifics.
    Chairman McHenry. Actually, I am not comfortable with you 
saying it, but you are aware of what they said?
    Ms. Strong. Yes.
    Chairman McHenry. And in order to resolve the grievance, 
you had to be aware of what they said, right, the 
circumstances?
    Ms. Strong. It wasn't a grievance.
    Chairman McHenry. It wasn't? Okay.
    Ms. Strong. Maybe it was first raised as a grievance. I'm 
sorry.
    Chairman McHenry. So what disciplinary action has been 
taken against those supervisors who made racially insensitive 
remarks or used racial epithets?
    Ms. Strong. There was a manager who made a comment to an 
employee in a performance discussion that the manager did not 
feel or intend to have it come out that way. That manager was 
counseled.
    Chairman McHenry. How many managers have made racially 
insensitive remarks or used racial epithets?
    Ms. Strong. That is the only one that I recall.
    Chairman McHenry. That is one circumstance or two?
    Ms. Strong. That is one.
    Chairman McHenry. That is one, okay. And what was the 
remediation? What was the punishment?
    Ms. Strong. They were counseled.
    Chairman McHenry. They were counseled, okay. Okay. And they 
are still in their same position today?
    Ms. Strong. Correct.
    Chairman McHenry. Do you know in the performance review 
process if they got high marks?
    Ms. Strong. I do not know.
    Chairman McHenry. Okay. And under the provisions that 
Director Cordray outlines, if he did not receive high marks, he 
will be compensated as if he did get high marks. Is that 
correct?
    Ms. Strong. My understanding is that all employees will be 
compensated as though they received a 5 level rating.
    Chairman McHenry. A what rating?
    Ms. Strong. A 5 level rating.
    Chairman McHenry. Out of how many?
    Ms. Strong. Out of 5 levels.
    Chairman McHenry. So everyone is now superior under the 
conclusion of this.
    Is that right, Mr. Konop? Is that how you see it?
    Mr. Konop. I believe that is correct, yes.
    Chairman McHenry. Okay. And is the union's position that 
that is satisfactory, that it resolves the issue with 
performance reviews?
    Mr. Konop. It certainly doesn't resolve the whole issue, 
but it is certainly the first acknowledgment there were 
problems, and we think that is a good building block for going 
forward.
    Chairman McHenry. Mr. Konop, I want to ask this because I 
was here during the creation of the CFPB on this committee. Are 
you surprised, or how has the approach been between the union 
and management? Because as far as I saw it, the unions were key 
and instrumental in the creation of the CFPB. You could quibble 
with that, if you wish. But has the welcome been warm?
    Mr. Konop. First, I think but for labor unions, we wouldn't 
have a CFPB. I think the CFPB was very welcoming to us in the 
organizing efforts. But when we actually organized, I think 
they might have been a little surprised that a union was 
actually acting like a union, and--
    Chairman McHenry. Have they been heavy-handed in their 
response to you?
    Mr. Konop. I think there were instances of heavy-
handedness, and it has been an adjustment change. I think as 
the ranking member put it, Rome wasn't built in a day. We 
understand that. However, that being said, I do think the CFPB 
could have been certainly more collaborative and put the union 
on equal footing, and we didn't see that for a long time.
    Chairman McHenry. Sure. So let me ask you, back to the 
series of questions I had for you, Ms. Strong, will you provide 
in writing who the supervisor was and the circumstances under 
which they used the racially insensitive or racial epithet?
    Ms. Strong. What is the question?
    Chairman McHenry. Will you provide in writing who the 
supervisor was?
    Ms. Strong. Can I provide it in writing?
    Chairman McHenry. Will you provide--not can--will you 
provide to this committee in writing who that was and the 
circumstances under which--
    Ms. Strong. Sure, I would be happy to kind of brief on 
specifics of that.
    Chairman McHenry. Thank you. You have legal counsel. As you 
are entitled as a CFPB employee, your legal counsel is being 
paid for by yourself or the agency?
    Ms. Strong. I have requested reimbursement through our 
indemnification policy.
    Chairman McHenry. And have you been granted that?
    Ms. Strong. Yes.
    Chairman McHenry. Mr. Konop, likewise, did you request 
repayment of legal counsel?
    Mr. Konop. I did not even get to that point. I was told 
pretty clearly--
    Chairman McHenry. Why?
    Mr. Konop. I was told pretty clearly that I would not be 
indemnified so I did not retain an attorney.
    Chairman McHenry. Do you believe that is some level of 
retaliation?
    Mr. Konop. It certainly didn't strike me as a fair 
approach, as we are both Bureau employees and both privy to the 
same information.
    Chairman McHenry. Okay. It seems as if this committee and 
what we have aired today--we know a lot more about employee 
relations than you do, Ms. Strong, and so it is surprising to 
me that you were not provided this Deloitte report. Do you 
believe that is problematic?
    Ms. Strong. I don't know. I see on here that it was--
    Chairman McHenry. Will you respond in writing as to whether 
or not you believe it is problematic after reviewing the report 
that is before you?
    Ms. Strong. I will tell you that I definitely will read it 
now.
    Chairman McHenry. I would certainly appreciate it. Before 
you engage in negotiations, you should look at this data. It is 
damning.
    My time has expired. I recognize the ranking member.
    Mr. Green. Yes. Thank you, Mr. Chairman. I would like to 
have just a couple of comments and questions, if I may, please.
    Chairman McHenry. We are going into a third round, so we 
will give you 5 minutes. The gentleman strikes the last word.
    Mr. Green. I don't think I will need 5 minutes, Mr. 
Chairman.
    But I do want to have you indicate where the managers are a 
part of this remedy that is being imposed. The question was 
phrased such that you included all persons at the CFPB 
receiving the bonuses based upon a 5, and my question to you 
is, did this include managers, as well?
    Ms. Strong. I do not believe it includes senior-level 
managers, at the Assistant Director level or above, is my 
understanding.
    Mr. Green. And do you agree with this, Mr. Konop?
    Mr. Konop. Yes, I agree with her statement.
    Mr. Green. Thank you.
    Mr. Konop, a question was posed to you about your feelings, 
as it were, as they relate to Ms. Strong, and you indicated 
that where she is in the chain of command, as it were. Let me 
ask you now, are you indicating that you think that the 
employees at the CFPB have some animus as it relates to Ms. 
Strong?
    Mr. Konop. I think certain employees certainly do.
    Mr. Green. Certain employees?
    Mr. Konop. Yes.
    Mr. Green. All right. Is that to include, for my purposes, 
all employees, which would mean that I would assume you would 
say no?
    Mr. Konop. No, not all employees.
    Mr. Green. And let me ask you this, just for clarity: There 
are certain employees who probably don't think highly of you. 
Is that a fair statement?
    Mr. Konop. I am sure there are.
    Mr. Green. But that wouldn't mean that all of them?
    Mr. Konop. No.
    Mr. Green. And finally, for Ms. Strong, you are not here to 
represent the CFPB today, are you? Are you the spokesperson for 
CFPB today, or did you come here to represent your station and 
what you have done there? Which?
    Ms. Strong. The latter. The latter, sir.
    Mr. Green. So you are not here to represent the agency?
    Ms. Strong. No, sir. The Director offered to come himself. 
I know that Stuart Ishimaru offered many times to come, and 
both of those offers were declined.
    Mr. Green. Mr. Chairman, I want to give back more than 3 
minutes of time.
    Chairman McHenry. Certainly. I want to just recognize 
myself for 5 minutes, and then we will end this thing. And I 
appreciate the witnesses being here today, even under the 
circumstances of being compelled. I appreciate your willingness 
to answer questions from both sides of the aisle.
    What we found today is interesting. Ms. Strong, you have 
been less than forthcoming in terms of how you have answered 
questions today, and that, I believe, is problematic.
    But I do want to ask you, this Deloitte report, which was 
done by the Office of Minority and Women Inclusion, it is 
``Diversity and Inclusion Assessment'' dated from September of 
last year. Do you think that information could have been 
helpful to you in doing your job?
    Ms. Strong. I don't know. I haven't reviewed it, so I can't 
answer that.
    Chairman McHenry. Would you respond in writing to that 
after you review it?
    Ms. Strong. No.
    Chairman McHenry. You will not respond in writing as to 
whether or not you believe it would be helpful to have this 
information?
    Ms. Strong. Excuse me for one moment.
    Chairman McHenry. Your lawyer is nodding--
    Ms. Strong. On my attorney's advice, no, I would not.
    Chairman McHenry. Okay. Well, I certainly appreciate your 
assertion of your rights to not respond to that.
    So would you find it problematic to know that on page 13 of 
this report, at--the conclusion is, ``further examination 
reveals that the minority population is overrepresented in the 
lower pay bands and underrepresented in the higher pay bands, 
which is masked in the Bureau-level data.'' Would that 
information have been helpful to you in doing your job?
    Ms. Strong. I haven't had a chance to read the report, so I 
wouldn't be able to comment on that.
    Chairman McHenry. Specifically, minority composition in pay 
bands 60s, 70s, 80s, and 90s are approximately 10 percent below 
the Bureau-level minority composition, as well. Do you think 
that is helpful data, useful data in your negotiations with the 
union about the issue of minorities being discriminated against 
and paid disparities within the Bureau?
    Ms. Strong. I would have the same answer. I wouldn't be 
able to respond without thoroughly reviewing the report.
    Chairman McHenry. Okay. Again, less than forthcoming in 
your answers and unwilling to engage here.
    Mr. Konop--
    Ms. Strong. That is certainly not my intent.
    Chairman McHenry. But it is the result of your actions. It 
may not be your intent, but it is certainly the result of your 
actions.
    Mr. Konop, in terms of negotiating, who do you negotiate 
with, with the Bureau? As head of union for the chapter, for 
the--
    Mr. Konop. Certainly, Liza is involved in the actual 
collective bargaining agreement negotiations. Several other 
attorneys--
    Chairman McHenry. Okay. Do you believe that what you have 
heard today means that she is a fully-informed party with whom 
to negotiate?
    Mr. Konop. I do not believe she is fully informed, no.
    Chairman McHenry. Okay. And the withholding of this 
important report from the person you are negotiating with, that 
to me would not give you greater assurances. Do you believe 
that it gives you greater assurance or less assurance that the 
Bureau is being forthright in producing data so that you can 
negotiate with them in good faith?
    Mr. Konop. It certainly would not give us greater 
assurance, yes, I agree.
    Chairman McHenry. Okay. Well, this hearing is problematic, 
the origin of it. We have both data and individual examples of 
discrimination and retaliation, and so I think it is important 
that we follow up with this. We are going to have additional 
questions for both of you. And I would like to thank the 
witnesses for their testimony today.
    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.
    Without objection, the hearing is adjourned.
    [Whereupon, at 12:37 p.m., the hearing was adjourned.]
    
    
    
    
    
    
    
                            A P P E N D I X



                              May 21, 2014


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