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





                      ALLEGATIONS OF DISCRIMINATION

                      AND RETALIATION AND THE CFPB

                           MANAGEMENT CULTURE

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


                                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

                               __________

                             JULY 30, 2014

                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 113-96
                           
                       
  
                                 ______

                      U.S. GOVERNMENT PRINTING OFFICE 

91-160 PDF                     WASHINGTON : 2014 
-----------------------------------------------------------------------
  For sale by the Superintendent of Documents, U.S. Government Printing 
  Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; 
         DC area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC, 
                          Washington, DC 20402-0001
                         

                 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. VELAAZQUEZ, 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  RUBEEN 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:
    July 30, 2014................................................     1
Appendix:
    July 30, 2014................................................    43

                               WITNESSES
                        Wednesday, July 30, 2014

Cordray, Hon. Richard, Director, Consumer Financial Protection 
  Bureau.........................................................     5

                                APPENDIX

Prepared statements:
    Cordray, Hon. Richard........................................    44

              Additional Material Submitted for the Record

Duffy, Hon. Sean:
    Letter to Hon. Gene Dodaro, Comptroller General of the United 
      States, U.S. Government Accountability Office (GAO), from 
      Financial Services Committee Chairman Jeb Hensarling, 
      Financial Institutions and Consumer Credit Subcommittee 
      Chairwoman Shelley Moore Capito, and Oversight and 
      Investigations Subcommittee Chairman Patrick T. McHenry, 
      dated July 18, 2014........................................    46
    Response letter from GAO to Financial Services Committee 
      Chairman Jeb Hensarling, dated July 30, 2014...............    48
Green, Hon. Al:
    Letter to Financial Services Committee Chairman Jeb 
      Hensarling, and Oversight and Investigations Subcommittee 
      Chairman Patrick T. McHenry, from Financial Services 
      Committee Ranking Member Maxine Waters, and Oversight and 
      Investigations Subcommittee Ranking Member Al Green, dated 
      July 22, 2014..............................................    49

 
                     ALLEGATIONS OF DISCRIMINATION

                      AND RETALIATION AND THE CFPB

                           MANAGEMENT CULTURE

                              ----------                              


                        Wednesday, July 30, 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 3:30 p.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, 
Ellison, Maloney, Beatty, Heck, Kildee, and Horsford.
    Ex officio present: Representatives Hensarling and Waters.
    Chairman McHenry. The subcommittee will come to order.
    The title of today's Oversight and Investigations 
Subcommittee hearing is, ``Allegations of Discrimination and 
Retaliation and the CFPB Management Culture.''
    Without objection, the Chair is authorized to declare a 
recess of the subcommittee at any time.
    The Chair now recognizes himself for 5 minutes for an 
opening statement.
    This afternoon, our subcommittee meets to continue our 
investigation into allegations of discrimination and 
retaliation at the Consumer Financial Protection Bureau (CFPB).
    Director Cordray, we appreciate your willingness to appear 
before us today.
    In April of this year, 7 months after a Deloitte Consulting 
report confirmed racial disparities in the Bureau's hiring, 
pay, and performance review ratings, and 4 months after the 
Defense Investigators Group confirmed Angela Martin's claims of 
Bureau retaliation, Director Cordray wrote to me to request 
that he appear before the subcommittee to discuss these 
troubling issues and his responsibility for controlling CFPB 
managers.
    Accountability is crucial to leadership, and I look forward 
to Director Cordray specifying actions that he has taken to 
reprimand and terminate managers who have wrongfully treated 
and retaliated against CFPB employees.
    Equally important, I look forward to hearing from Mr. 
Cordray about how he has taken actual steps to end employee 
abuse at the CFPB. People are suffering and feeling unprotected 
at their place of work, and we have heard from them.
    Their managers have been given unequivocal free rein, 
resulting in a toxic management culture that lacks 
accountability and trust. Employees fear speaking out and they 
fear asserting their rights lest they suffer reprisals and 
retaliations. This must change. I think we all agree about 
that.
    Mr. Cordray testifies before us here today fully furnished 
with the capacity and obligation to have already taken 
immediate action against oppressive managers and to assert his 
internal accountability and leadership at the Bureau. Anything 
less than that is an abdication of the Director's 
responsibility to the Bureau and its employees.
    Like Director Cordray, I have heard firsthand about the 
unsafe culture within the Bureau. In fact, since the 
subcommittee opened its investigation into allegations of 
discrimination and retaliation at the Bureau, no fewer than 32 
employees have come forward about their maltreatment.
    These 32 brave leaders have come forward to do what is 
right to protect their colleagues who suffer, and they have 
stood up even in the face of retribution from their managers if 
they were found out. And what do you think these employees are 
telling us, Mr. Cordray? They are telling us that other people 
are being harmed, and they are being harmed. It is not 
disparate impact. It is about individual cases of 
discrimination and retaliation.
    It is evident that the Bureau's problems run deeper than a 
manager's treatment of any one employee such as Angela Martin, 
Ali Naraghi, or Kevin Williams. The problems are much larger 
than some modifications to the performance management system. 
The problem is a CFPB management culture that condones 
intimidation, discrimination, and retaliation.
    And if the Director has failed to reprimand and remove bad 
managers, then the problem is also his leadership or lack 
thereof. That is why we are having this hearing today, to give 
the Director the opportunity to say what he has done and how he 
has fulfilled his obligations.
    Director Cordray, dozens of your employees are coming 
forward to this subcommittee because they have nowhere else to 
turn. At least, that is how they feel. They don't trust their 
EEO process. They don't get a fair shake in your union 
grievance process. And some of them have even approached you 
personally, apparently, with nothing to show for it.
    For the CFPB employees watching, I would like to say this: 
We are listening. If you have already come forward to share 
your concerns, know that you are not alone. If you are unsure 
about whether coming forward will do any good, please know that 
it will.
    To that end, I, along with Financial Services Committee 
Chairman Hensarling and Financial Institutions and Consumer 
Credit Subcommittee Chair Capito, recently wrote to the U.S. 
Government Accountability Office (GAO) to request that it 
undertake an independent, nonpartisan investigation into these 
matters. I am pleased to report that the GAO has accepted our 
request, and shortly, Bureau employees will have an opportunity 
to confidentially share all of their concerns with the 
Government Accountability Office.
    Director Cordray, the subcommittee recognizes that its 
investigations led you to initiate some action. However, 
changing employee ratings, topping off pay, hiring consultants, 
and holding listening sessions around the office does nothing 
to hold your managers accountable. And so, these measures are 
wholly inadequate.
    I am not interested in hearing about the bureaucratic ways 
the Bureau is papering over the real problem. We need action. 
We need results. Like you wrote to me in April, Director 
Cordray, you said, in essence, that you are ultimately 
responsible for the Bureau's management, and that is why you 
have agreed to come forward and to give us your response.
    So today, I am interested in hearing about the actual steps 
you, personally, have taken to protect your employees and end 
the Bureau's management culture of intimidation and 
retaliation.
    I will now yield to the distinguished ranking member of the 
subcommittee, Mr. Green of Texas, for 5 minutes.
    Mr. Green. Thank you, Mr. Chairman.
    And I thank you for appearing today, Mr. Cordray. You and I 
know that you have been amenable to and willing to appear at 
all times that you have indicated such. So it does not surprise 
me that you are here today.
    This is the fourth hearing entitled, ``Allegations of 
Discrimination and Retaliation and the CFPB Management 
Culture,'' the fourth hearing. We have heard allegations, and I 
want to assure all that, while we have heard allegations, I 
have not drawn a final conclusion, just because we have heard 
allegations.
    I will let you know that we have spent approximately 8 
hours and 40 minutes of investigative time hearing allegations, 
looking at subpoenas. And I believe that these hearings 
initially caused me to have a visceral thought of this, is 
about the CFPB only, that the CFPB was being singled out.
    That was my initial thought, and there probably may be some 
of this, but I have also come to conclude that it is bigger 
than the CFPB. It is about invidious discrimination wherever it 
happens to be, not just at the CFPB.
    And to this end, the ranking member of the full Financial 
Services Committee and I have sent a letter to the chairman of 
the full Financial Services Committee and the chairwoman of the 
Financial Institutions and Consumer Credit Subcommittee asking 
that invidious discrimination be investigated in other areas. 
For example, we have asked in this letter that allegations 
against Goldman Sachs be investigated.
    I ask that this letter be presented for the record, please, 
if there are no objections.
    Mr. Duffy [presiding]. Without objection, it is so ordered.
    Mr. Green. And I just believe that what is good for the 
regulator is good for the regulated. If we are going to 
investigate with a great amount of energy, and many, many 
hours, the CFPB, the regulator, I think we have to look at the 
regulated as well. These are all allegations, but here are some 
of the allegations.
    As you know, we started this investigation with an American 
Banker article. Bloomberg has an article entitled, ``Goldman 
`Boys Club' Accused of Mocking Women as `Bimbos' and `Party 
Girls.''' What is good for the regulator is good for the 
regulated. Bloomberg indicates that there are concerns with 
salaries and promotions at Goldman.
    But there is another article that goes into some greater 
detail in terms of what the issues are. This one is from the 
International Business Times. It indicates that the most 
damning claims revealed in documents--all allegations--are: 
one, that a woman was punished for reporting an alleged sexual 
assault by a male co-worker; and two, Goldman hired beautiful 
women, but mocked their intelligence.
    I am reading from the International Times. These are 
allegations. I don't draw conclusions until I hear from all 
sides.
    Goldman paid women less because they didn't consider them 
heads of household. Escorts were hired for a holiday party. 
Women were worried that becoming pregnant would threaten their 
chances at a promotion. Male Goldman Sachs employees took 
clients to strip clubs. Women weren't taken seriously when 
socializing at bars and clubs after workhours, all allegations.
    But I do believe that is what good for the regulator is 
good for the regulated, and my hope is that my colleagues will 
join me--we have made the request--and let's look into what is 
happening at Goldman Sachs. Let's not end this investigation 
with the regulator. Let's look at what is happening with the 
regulated.
    My belief is that people of goodwill who have decided that 
this is a course that we should embark upon will not cease and 
desist with the regulator. My belief is that they will look 
into what is happening with the regulated.
    Dr. King reminded us, Mr. Chairman, that the truest measure 
of the person is not where you stand in times of comfort and 
convenience, but where you stand in times of challenge and 
controversy. This is a time of challenge and controversy. We 
are investigating allegations of discrimination.
    And while Mr. Cordray has not been a perfect public 
servant, he has been a good public servant, and I look forward 
to hearing what he has done to take corrective action at the 
CFPB. And I also look forward to looking into the regulated to 
the same extent that we are looking into the regulators.
    Mr. Duffy. Thank you, Mr. Green.
    We now welcome our witness, CFPB Director Richard Cordray. 
Director Cordray was confirmed by the Senate on July 16, 2013, 
to serve as the CFPB's first Director.
    Prior to his service at the CFPB, Director Cordray served 
the people of the State of Ohio as Attorney General, State 
Treasurer, State Representative, and Ohio's first Solicitor 
General.
    Director Cordray is a graduate of Michigan State 
University, Oxford University, and the University of Chicago 
Law School.
    The witness will be recognized for 5 minutes to give an 
oral presentation of his testimony.
    On your table, Director Cordray--you are well aware of 
this--we have three lights: green means go; yellow means hurry 
up; and red means stop. You are well aware of that.
    After you are done with your presentation, each member of 
the subcommittee will be given 5 minutes in which to ask you 
questions.
    Without objection, the witness' written statement will be 
made a part of the record.
    As you are well aware, too, our microphones are awfully 
sensitive. So if you would make sure it is on and pull it 
close, that will help everyone on the committee to hear your 
testimony.
    And, with that, Director Cordray, you are now recognized 
for 5 minutes.

STATEMENT OF THE HONORABLE RICHARD CORDRAY, DIRECTOR, CONSUMER 
                  FINANCIAL PROTECTION BUREAU

    Mr. Cordray. Thank you, Chairman McHenry, I guess Acting 
Chairman Duffy, Ranking Member Green, and members of the 
subcommittee. I am glad to be here today to address certain 
personnel and management matters at the Consumer Financial 
Protection Bureau.
    Although I am the Director of the Bureau and I am the one 
who is squarely responsible to you for its oversight, the many 
significant accomplishments of this new agency have been 
achieved not by me but by my dedicated and talented colleagues. 
In just 3 years, they formed a strong team that is busy 
improving everyday life for consumers all over this country, in 
each of your congressional districts. They have taken 
enforcement actions that put more than $4.6 billion back in the 
pockets of millions of American consumers. They have adopted 
new mortgage rules, as required by Congress, to make the 
world's largest single consumer financial market safer for 
consumers and for our economy. I am proud of our Consumer 
Response team, which, so far, has handled over 400,000 
complaints, secured both monetary and non-monetary relief on 
behalf of many consumers, and constructed a public database of 
complaints that is generating more careful focus on customer 
service at our larger banks and financial companies.
    At the same time, the strong CFPB team has been doing all 
the work necessary to build a brand new Federal agency from the 
ground up. That work has not been easy, and some of the working 
conditions have been especially difficult for people. We have 
been consistently short-staffed, and working space has been 
challenging. Management structure had to be developed from 
scratch, and for a long time employees have not had settled 
expectations around key matters like performance reviews, pay 
adjustments, and promotions, which created some anxiety. 
Looking back, I can also see that we felt tremendous pressure. 
We were created in the wake of the largest financial crisis 
since the Great Depression, and there were high expectations 
amongst the public and aggressive goals set for us by Congress. 
From the beginning, I believed that it was extremely important 
for us to get things done, to show clear progress, and to 
deliver on our promise to make things better for American 
consumers. All of that increased the workload and made it 
harder for everyone to cope with the demands of the new 
situation.
    I take very seriously the concerns aired at your previous 
hearings about the Bureau's work environment. I am committed to 
ensuring that all Bureau employees are treated fairly and that 
they receive the respect and dignity they deserve. Across-the-
board, they are highly dedicated to public service and to the 
mission of this agency. In turn, I want them to be in position 
to do their best work and be able to see that they are making a 
difference to the future of this country.
    Because of the speed with which we tried to build this new 
agency, we found that we did not get everything right for our 
own employees. One especially sore spot was the system for 
reviewing and assessing the performance of CFPB employees. 
During the second year we had that system, we heard complaints 
and concerns from employees about it. After we had completed 
the second year of performance reviews, we began to analyze the 
numbers in more detail and we found that many different 
categories of employees were seeming to be treated unevenly. 
Whether the distinction was headquarters versus field, or one 
part of the Bureau versus another, or bargaining unit versus 
non-bargaining unit employees, or other categories like age and 
race, we perceived that the review system was creating 
differential outcomes that indicated the system was 
unsatisfactory and not working out as intended. Notably, about 
half of our employee grievances filed to date have concerned 
performance reviews.
    Having recognized these issues, we took decisive and 
comprehensive actions to address them. We self-initiated a more 
detailed analysis that ultimately showed ratings disparities 
across a wide range of employee characteristics, which you have 
seen in the form of the Snapshot report we released earlier 
this year. We also put on the table in our union negotiations 
whether to discard this system, which we agreed to do after 
bargaining over it. For the next 2 fiscal years, we will be 
moving to a new two-level performance review system, and we 
have agreed to a joint working group with our union to design a 
new system to use after that. We also announced that we would 
adjust prior performance-related compensation for the 2 years 
during which our employees may have been adversely affected by 
the flaws in the prior system. By self-correcting and self-
remediating disparities in our performance ratings, we are 
holding ourselves to the same standards of fairness that we 
expect from the financial industries we oversee.
    Although the Bureau has had good diversity numbers around 
hiring and contracting, we need to focus more consciously on 
how to improve our culture, so that diversity and inclusion are 
more deeply ingrained in our everyday work life. To that end, I 
have elevated our Office of Minority and Women Inclusion (OMWI) 
to work directly out of my office and I have tasked the head of 
OMWI, Stuart Ishimaru, with conducting dozens of Bureau-wide 
listening sessions to hear directly from our employees about 
their experience with equality and fairness. Hundreds of our 
colleagues have participated in these sessions, and we are 
listening closely to learn more about how to set a better 
direction for the future and achieve some of the goals that I 
have touched on here today.
    I am here today because I know you have been seeking to 
ensure congressional oversight of this agency and these issues. 
As the sole Director of the Bureau, I am the responsible party 
to work with you in providing such oversight. Other issues have 
arisen involving individual allegations that are part of 
employee grievances and complaints. Like other Federal 
agencies, the Bureau has an Equal Employment Opportunity 
complaint process and a grievance process for employees to 
initiate and seek resolution of any allegations of 
discrimination and harassment. It is important that these 
processes be able to work, that individual privacy and due 
process rights protected by Federal law can be respected, and 
that both sides of every story can be heard and considered and 
assessed accordingly. Public discussion of these individual 
matters may have a chilling effect that prejudices individual 
rights and undermines the integrity of the legal process. For 
this reason, I must be very careful in speaking about ongoing 
personnel matters in this public hearing. We take each of these 
allegations very seriously, and we will continue to work 
diligently to resolve any issues through all appropriate 
channels.
    Thank you for the opportunity to make this statement, and I 
would be happy to answer your questions.
    [The prepared statement of Mr. Cordray can be found on page 
44 of the appendix.]
    Mr. Duffy. Thank you, Mr. Cordray.
    The Chair now recognizes the gentleman from Pennsylvania, 
Mr. Fitzpatrick, for 5 minutes for questions.
    Mr. Fitzpatrick. I thank the chairman for calling the 
hearing.
    And, Director Cordray, we appreciate you being here and 
your assessment that the agency is essentially a work in 
progress and that, in many instances, the management or the 
implementation of the policies has not been correct or done 
correctly.
    We also hope that you appreciate and respect the obligation 
of this Oversight and Investigations Subcommittee to do some 
oversight on the agency.
    Mr. Cordray. I do.
    Mr. Fitzpatrick. Are you aware that on March 31, 2014, 
which was 2 days before the whistleblower, Angela Martin, was 
said to testify here, Scott Pluta called an all-hands-on-deck 
meeting of the Office of Consumer Response?
    Mr. Cordray. I am not specifically aware of all the 
meetings that go on at the Bureau, including that one.
    Mr. Fitzpatrick. You didn't call the meeting?
    Mr. Cordray. I did not.
    Mr. Fitzpatrick. You were not aware of the meeting? You 
were not aware of that meeting on--
    Mr. Cordray. I don't believe I was. No.
    Mr. Fitzpatrick. --March 31st?
    So you wouldn't be aware that the Bureau's Chief Operating 
Officer, also, Mr. Sartaj Alag, I think--is that his name?--was 
also in attendance at this meeting and addressed the employees?
    Mr. Cordray. I was not at the meeting. I don't know the 
details of that meeting.
    Mr. Fitzpatrick. Did anybody speak to you about the meeting 
after it occurred?
    Mr. Cordray. I don't know if they might have at the time. 
There are meetings across the Bureau all the time, and I don't 
know the details of all of them.
    Mr. Fitzpatrick. I can tell you this, Mr. Director. At the 
meeting, which I would describe as a pep rally, Scott Pluta 
twice described this committee's oversight efforts as 
``political theater.''
    Do you agree with Mr. Pluta's characterization of our 
efforts, as an Oversight and Investigations Subcommittee?
    Mr. Cordray. I would hope that would not be the nature of 
congressional oversight.
    Mr. Fitzpatrick. Would you agree with Mr. Pluta's 
assessment of our efforts?
    Mr. Cordray. I would hope that would not be the nature of 
congressional oversight.
    Mr. Fitzpatrick. Certainly, the presence of the COO lends 
the imprimatur of the agency senior management at this meeting.
    So if that occurred, what message do you think it sends to 
the employees?
    Mr. Cordray. I take seriously congressional oversight. I 
have been offering myself to testify in front of this 
subcommittee. I thought that there were others who were called 
to testify where, perhaps, the responsibility should have been 
on me.
    I think it is appropriately on me. And I think you know 
that I have always respected and tried to be responsive to 
Congress' oversight and understand the importance of that for 
an independent Federal agency like ourselves.
    Mr. Fitzpatrick. Do you believe that Mr. Pluta's view of 
congressional oversight is widely shared by the managers at 
your agency?
    Mr. Cordray. I can't speak for people, but I would hope 
that the nature of congressional oversight would not be as you 
described.
    Mr. Fitzpatrick. Mr. Director, at this meeting, Scott Pluta 
also said, ``My guess is the individuals who constructed 
Wednesday's event would prefer to keep certain things in play 
such that dissenting voices aren't there.'' And, for the 
record, we invited two CFPB managers, Liza Strong and Stacey 
Bach, to attend. They did not attend.
    Did you suggest that they not attend or prevent their 
attendance here at this subcommittee?
    Mr. Cordray. Here is what I recall about the sequence of 
events. There was a subcommittee hearing noticed with the 
purpose of the subcommittee meeting to be to review the 
performance review system that I believe, as I testified, was 
flawed and we were in the process of scrapping the system and 
fixing the problems.
    Two days before the hearing, as I recall it, there was a 
suggestion suddenly that two witnesses would be called to 
testify about individual personnel matters. We were concerned 
about that, tried to explore with this subcommittee what was 
happening in terms of a notice of a meeting being changed so 
dramatically a few days before, concerned about privacy and due 
process rights of individuals.
    And, ultimately, as I understand it, both Ms. Strong and 
Ms. Bach have either testified to this committee or been 
deposed in a structured and transcribed interview.
    Mr. Fitzpatrick. But you are aware that they needed to be 
subpoenaed in order to come to this committee. Correct?
    Mr. Cordray. I believe their lawyers requested that they be 
subpoenaed so that they would have protection from this 
committee.
    Mr. Fitzpatrick. Nobody at the agency suggested that they 
not attend?
    Mr. Cordray. As I said, 2 days before the hearing, suddenly 
injected into it were individual personnel matters and 
allegations and we were concerned about privacy rights of 
individuals and did want to explore--
    Mr. Fitzpatrick. So was it suggested that they not attend?
    Mr. Cordray. --did want to explore further with the 
subcommittee what was the appropriate way of proceeding here.
    Mr. Fitzpatrick. Were they directed not to attend?
    Mr. Cordray. I think we did want to explore further with 
the subcommittee, and we had very little time--
    Mr. Fitzpatrick. It is just a yes-or-no answer.
    Were they directed not to attend?
    Mr. Cordray. They did ultimately attend at a different set 
of hearings and gave a transcribed interview.
    Mr. Duffy. The gentleman's time has expired.
    Mr. Fitzpatrick. Thank you, Director Cordray.
    Mr. Duffy. The Chair now recognizes the ranking member of 
the full Financial Services Committee, Ms. Waters from 
California, for 5 minutes.
    Ms. Waters. Thank you very much, Mr. Chairman, and members.
    Mr. Cordray, as you know, the Democrats on this side of the 
aisle have taken seriously the complaints that have been made 
about the Consumer Financial Protection Bureau, and we have 
cooperated.
    We have done everything within our power to make sure we 
get to the bottom of it and to find out what we can do to 
ensure that in the Consumer Financial Protection Bureau--that 
they do not have any ongoing cases of what is alleged to be 
discrimination, and we have asked the opposite side of the 
aisle to cooperate with us by sending us certain information, 
which we have not gotten.
    I have listened to your testimony today and all that you 
are doing to make sure that you correct any instances of 
discrimination that you have been accused of--that the agency 
has been accused of. So I want to know more about what you are 
doing.
    You talked about the OMWI having been moved into your 
office to ensure that you have direct contact with them. You 
have mentioned listening sessions.
    Tell us again, if you will, how this is working. What is a 
listening session? What comes out of it? And what do you do 
with that information, for example? And why did you move the 
Director of your OMWI into your office?
    Mr. Cordray. So, a couple of things.
    The first is the whole performance review system. It was a 
major undertaking to decide that system was flawed and needed 
to be actually overhauled and ultimately scrapped, which is 
what we have done. We put it into bargaining with the union and 
that has been the result, I think agreed to with satisfaction 
on both sides.
    We also have--and I didn't get into the details of this--
implemented a process to remediate the employees so that they 
would not have been adversely affected during the 2 years that 
rating system was used. And that was a significant undertaking, 
but we thought it was the right thing to do and we wanted to 
step up and address the issue out of fairness to the employees.
    In terms of the OMWI, that is, as you know--and you have 
given me counsel on this subject because you were deeply 
involved in the passage of the statute and I was not in 
Washington at the time--a major step forward in terms of 
dealing with these issues at the Federal banking regulatory 
agencies. I had had a dotted-line relationship with the OMWI to 
my office and, frankly, in the wake of discussions directly 
with you and other members of this committee, we have changed 
the reporting structure so that the OMWI reports directly to 
me, elevating the OMWI's role. And the OMWI has now been 
undertaking the project at the Bureau to respond to and address 
the broader issues raised in front of this subcommittee and has 
been in direct communication with now hundreds of Bureau 
employees and is in the process of producing a report on what 
that has taught us factually about the experience the employees 
are having with equality and fairness at the Bureau and what 
steps would be appropriate to make sure that the atmosphere at 
the Bureau is what you would want it to be, what I want it to 
be, what the employees themselves would want it to be on these 
issues.
    Ms. Waters. Mr. Cordray, we are pleased that you are here 
today, and we know that you have indicated both to my staff and 
to the chairman's staff that you are available to come before 
this committee at any time and you are willing to do so.
    Did you find that the chairman and the subcommittee chair 
responded to your requests to appear before this committee and 
perhaps did not invite you to appear before this committee 
until today?
    Mr. Cordray. Not until last week.
    Ms. Waters. But it was not--you were not before this 
committee because you were not cooperative?
    Mr. Cordray. No. That is correct. I offered to come. I 
thought I was the appropriate person. I am the responsible 
person and I am the one whom this Congress deals with in terms 
of oversight for this Bureau. And I thought all along that was 
the appropriate means. People had different thoughts, and 
people are entitled to their thoughts, I guess. But it wasn't 
until last week that I was asked to come and testify in front 
of this committee.
    Ms. Waters. Thank you very much.
    I yield back the balance of my time.
    Mr. Duffy. Thank you.
    The Chair now recognizes himself for 5 minutes.
    Mr. Cordray, I would just note that I believe you asked for 
this hearing to clear up issues in regard to racism and sexism.
    I am a bit disappointed in the lack of answers you gave Mr. 
Fitzpatrick in regard to your direction to employees on April 
2nd. Hopefully, we will have a little better luck in answers as 
we engage.
    Now, I know that you have indicated that it has been the 
system of review that has caused the racial and sexual bias, 
not the culture or the managers. So, I just want to make sure 
we are on the same page.
    Before August 2nd of 2013, Angela Martin had filed an EEO 
complaint with the Bureau. You would stipulate that. Yes? The 
answer is ``yes'' to that.
    Mr. Cordray. I believe that is correct.
    Mr. Duffy. And, to your knowledge, she was represented by 
counsel. Right?
    Mr. Cordray. At some point, she was represented by counsel. 
I don't know the details of when that would have occurred.
    Mr. Duffy. That was 7 days before the settlement.
    She had counsel leading up to the first settlement. Is that 
correct?
    Mr. Cordray. I believe that is correct. Yes.
    Mr. Duffy. Okay. And you were asked in a prior hearing by 
our chairman, Mr. Hensarling, whether you were aware of calling 
Ms. Martin on August 7th of 2013, and your answer was, ``I 
don't know offhand whether I did.''
    Do you now know whether you called her on August 7th of 
2013?
    Mr. Cordray. I do not.
    Mr. Duffy. If I could, I am going to show you a copy of Ms. 
Martin's phone record. If I could have Ryan provide that to 
you. Oh, no, it is right there.
    Mr. Cordray. I don't dispute it, if that is what you are 
getting at. Maybe I can save you some time.
    Mr. Duffy. Okay. Great.
    Mr. Cordray. There had been discussions back and forth 
between Ms. Martin--
    Mr. Duffy. And the phone record in front of you would 
indicate that on August 7th, at 8:54 p.m., you called Ms. 
Martin for approximately 2 minutes. You would agree with that?
    Mr. Cordray. There had been discussions back and forth--
    Mr. Duffy. Would you agree with that?
    Mr. Cordray. --between Ms. Martin and myself.
    Mr. Duffy. Does your number begin with a 614? The document 
is right in front of you. Take a look.
    Mr. Cordray. I don't dispute the document.
    Mr. Duffy. Great.
    So you called her for 2 minutes and you--first of all, I 
want to note that I am not going to enter this into the record 
because I respect your privacy and I don't want your personal 
phone record disclosed.
    Mr. Cordray. That's fine. I don't dispute the point. We can 
save some time.
    Mr. Duffy. You are an attorney. Right?
    Mr. Cordray. I am an attorney. Yes.
    Mr. Duffy. And if Ms. Martin is represented by counsel, do 
you think it is appropriate that you, as the Director, would 
call her directly when she is represented by counsel to discuss 
her case?
    Mr. Cordray. I read the testimony of Ms. Martin at the 
hearing.
    Mr. Duffy. That is not my question.
    Do you think that is appropriate?
    Mr. Cordray. And she indicated that--
    Mr. Duffy. Do you think that--
    Mr. Cordray. --it is not a represented party situation.
    Mr. Duffy. Mr. Cordray, do you think it is appropriate that 
you called her on the night of August 7th when she was 
represented by counsel?
    Mr. Cordray. As she testified, it was not a represented 
party situation. It was a continuation of a prior discussion, 
some of which she had initiated with me about resolving her 
dispute.
    Mr. Duffy. So your testimony is, you do think it was 
appropriate? Yes?
    Mr. Cordray. It was not a represented party situation. I 
wasn't acting in an attorney capacity.
    Mr. Duffy. I don't know what--we read your transcript. And 
considering the fact that you were an attorney general and a 
lawyer, you still think that was appropriate?
    Mr. Cordray. That was her testimony and my testimony. We 
agree.
    Mr. Duffy. Now, I would note that 10 minutes after that 
call she sent an email out. 10 minutes. Present-sense 
recollection.
    The first line, ``Wow, Rich Cordray just called me and said 
to get my attorneys to back down.'' Later in the email, she 
says, ``The fact that Rich would even call me is unthinkable.''
    And I would agree with that. It is unthinkable that you 
would call her during the pending settlement.
    Let me move on. Do you recall--
    Mr. Cordray. Could I address that for the record, or not?
    Mr. Duffy. I want to move on quickly. I only have 1 minute 
and 40 seconds left.
    Mr. Cordray. Okay. So, I can't.
    Mr. Duffy. Do you remember the settlement agreement with 
Ms. Martin? If I could put that up on the board--
    Mr. Cordray. Which one? The one with the--
    Mr. Duffy. The first settlement agreement that was reached 
on August 7th.
    Mr. Cordray. Okay.
    Mr. Duffy. The last line--I will read it to you. It is 
highlighted. ``Complainant--which is Ms. Martin--would manage 
CASA for the duration of the project, which is anticipated to 
last not less than 30 months.''
    Do you agree, as per the settlement agreement with Ms. 
Martin, that she was the manager of CASA?
    Mr. Cordray. If that is what the settlement agreement said, 
then that is what it was.
    Mr. Duffy. So you would say that she was the manager of 
CASA. Yes?
    Mr. Cordray. That was my intent. Yes.
    Mr. Duffy. Okay. It was your intent, but was that actually 
what happened?
    Mr. Cordray. So what happened, as I understand it, was a 
very important matter to Ms. Martin was the reporting structure 
she would have, to whom she would report.
    Mr. Duffy. Let me just pause you right there. I want to--
    Mr. Cordray. And that changed at that time because of 
personnel issues within the Bureau.
    Mr. Duffy. Yes. Right after she was given the agreement--
    Mr. Cordray. It was a medical issue.
    Mr. Duffy. If I could put up slide 3.
    Let me just show you the CASA structure. It has the acting 
Enforcement Director, the CASA Director, which was not Ms. 
Martin, and then, off to the side, Project Manager, with 
virtually no responsibility.
    Take a look at the management structure. No one reports to 
Ms. Martin. And you would tell me that this came from the CFPB?
    Mr. Cordray. I am not sure what document you are referring 
to.
    Mr. Duffy. It is a CFPB document--
    Mr. Cordray. What I do know is that Ms. Martin was 
dissatisfied. She reopened her grievance. We have worked 
through that and now resolved it again.
    Mr. Duffy. Yes, you have. But I am talking about when you 
did it.
    Mr. Cordray. And I believe she has a productive position--
    Mr. Duffy. Because I am going to put up the next slide, 
which will show that 2 days after she testified, remarkably, 
the structure of CASA changed. And look at what happens.
    Remarkably, the managing Director, where everyone reports, 
is to Ms. Martin, consistent with the settlement agreement.
    But it wasn't until she came before this committee and was 
willing to testify before this committee that you actually 
complied with the settlement agreement.
    My time has expired.
    Mr. Cordray. I don't think any of that ever quite worked 
out as intended, but we have worked out a different arrangement 
and settled her matter to everyone's satisfaction, I believe. 
Yes.
    Mr. Duffy. Votes have been called. But pursuant to our 
discussions, the Chair will now recognize Mr. Ellison from 
Minnesota for 5 minutes.
    Mr. Ellison. Thank you. Thank you very much. Sorry about 
that, Mr. Chairman.
    Mr. Cordray, my question is: Are you fully committed to 
making sure that every employee complaint is fairly 
investigated without regard to who may end up being held 
responsible or liable?
    Are you committed to the process to make sure all these 
workers who have brought forth complaints get them fairly and 
properly reviewed?
    Mr. Cordray. I am. And there would be no advantage to me or 
to the agency to do anything other than exactly that.
    Mr. Ellison. And if you were to simply go to the workers 
who have made the complaints and just give them the relief that 
they are seeking without regard to the person who is accused, 
would that be fair?
    Mr. Cordray. My understanding is that in the Federal 
Government, there are processes on these things that need to be 
followed, because what you do for one employee will affect what 
you may do for other employees, and there has to be a fairness 
not just to the individual, but across-the-board.
    Mr. Ellison. So it may be that the people who have brought 
forth these complaints will be fully vindicated and will have 
full redress, but there is a process that needs to take place?
    Mr. Cordray. There are multiple processes, yes. And there 
are appeals if people are dissatisfied. And they can go outside 
the agency to other venues, certainly. Yes.
    Mr. Ellison. I am sure it is frustrating for people who 
have legitimate complaints who, in fact, may well have been 
discriminated against.
    The fact that it takes a long time, it must be frustrating 
for them. Am I right?
    Mr. Cordray. I think it is frustrating for everyone. It is 
frustrating for me, too. I would like to see these things 
resolved. That is what I would like to see.
    Mr. Ellison. But we are stuck with the process just because 
that is the way it is. Right?
    Mr. Cordray. Apparently. Yes.
    Mr. Ellison. And I guess my question is: As the person who 
runs the shop, have you thought about making sure that the 
managers that you employ are getting the proper training?
    And have you thought about how to make sure that--now that 
you are up and you are running, have you tried to think about, 
``Okay. Here is how we are going to be fair with all employee 
complaints,'' and given training to top managers about that?
    Mr. Cordray. I am. And what I have come to see, frankly, is 
I don't think we did enough of that in the beginning. We didn't 
have many people to begin with. We didn't have structure. We 
didn't have programs of that sort. We now do. It is very 
important that we do. I think managers are receiving 
considerably more training than they did initially. And it was, 
frankly, probably an oversight of the Bureau and reflective of 
the start-up phase, perhaps, but it hurt us, I think, a great 
deal in various respects.
    Mr. Ellison. Now, it is a fact that this whole process 
began--this committee started focusing on discrimination in the 
CFPB when the American Banker magazine, I believe--
    Mr. Cordray. Yes.
    Mr. Ellison. --basically put out an article saying that, as 
the CFPB is making allegations about disparate impact of 
certain players in the market, they themselves have some 
discrimination that they better deal with.
    And at least the way I read the article, it sort of 
signaled that maybe what they were looking for was to make the 
CFPB back off of those claims.
    Do I have the history right?
    Mr. Cordray. That is not going to happen.
    Mr. Ellison. Right.
    So the right thing to do is to make sure you clean up your 
house with regard to discrimination--
    Mr. Cordray. Yes.
    Mr. Ellison. --and then pursue your mission.
    Here is my question: Of all of the people who have made 
complaints of discrimination and made complaints about being 
treated unfairly by certain individuals in your shop, have any 
of the complainants ever expressed a lack of confidence in the 
overall mission of the CFPB or have they individually said, ``I 
am for the mission. I just want to make sure I am treated 
fairly?'' Do you understand my question?
    Mr. Cordray. I do.
    I actually heard testimony from others who came before this 
subcommittee previous to my appearance today, and that seemed 
to be the tenor of their views. And I think it is the broad 
view across the Bureau.
    People came to the Bureau to improve life for consumers in 
this country, and they are dedicated to that. There have been 
certain aspects of the working conditions and the situations, 
especially as a start-up agency, that made it harder for people 
to do that. We all recognize that. We have been under a fair 
amount of pressure to do that.
    But that is what everybody wants. And there is a high 
degree of adherence to the mission at the Bureau. And despite 
it all, the overall job satisfaction at the Consumer Bureau has 
been above that of the rest of the Federal Government, and I 
think that is notable. And it is because of the mission.
    Mr. Ellison. I just want to say that I hope and pray that 
the people who have complaints get them fully and fairly 
adjudicated. But as I have listened to the testimony, anybody 
who believes that they are going to back the CFPB off of 
discrimination by making these allegations is dead wrong, and I 
am committed to making sure that is true. All the best to you 
and the complainants and the defendants.
    Thank you.
    Mr. Cordray. Thank you.
    Mr. Duffy. I would just note that votes have been called. I 
would ask that we recess for such time as needed to cast those 
votes.
    I would just note, Mr. Director, you did ask for this 
hearing, and you wanted to clear the air. I would ask, after a 
couple of questions on our side, that you would rethink the 
forthright answers that you are giving.
    I would like to clear it up by way of the committee and put 
this behind us, and one of the ways to do that is to do the 
best you can to answer our questions.
    Mr. Cordray. My answers have been and all will be 
forthright, sir, and I will be here as long as it takes today.
    Mr. Duffy. We have three votes. So we will reassess until 
such time the votes are concluded.
    Mr. Cordray. That is fine. Take your time.
    Mr. Duffy. The committee stands in recess.
    [recess]
    Mr. Duffy. The committee will come to order.
    The Chair will now recognize Mr. Barr from Kentucky for 5 
minutes.
    Mr. Barr. Thank you, Mr. Chairman.
    And thank you, Director Cordray, for your time today.
    As you may know, one of the employees at the Bureau who was 
hired as an examiner, Mr. Ali Naraghi, testified in front of 
this subcommittee, alleging retaliation from his managers 
within the Bureau.
    Mr. Naraghi served as a Federal Reserve Bank Analyst and 
Examiner and, from what I can tell, had a distinguished career 
of bank supervision prior to his employment with your agency.
    In his prepared testimony, he testified that, ``Voicing a 
professional dissenting opinion that is in any way at odds with 
Bureau management, even in the smallest ways, will result in 
retaliation.''
    And he pointed out concerns that he raised to management of 
the Bureau. Some of those concerns that he raised were that, 
first, the Bureau hired inexperienced managers whose only 
qualification appeared to be personal or other connections to 
Bureau hiring officials.
    Second, gross mismanagement. For example, he said that in 
the southeast region, about 50 to 75 examiners were kept at 
their homes, essentially without work, to perform 8 months 
between approximately September 2011 to May 2012.
    He also testified that there were results-oriented 
examinations in which the Bureau at the headquarters appeared 
to have decided at the outset to find a violation, even if none 
were identified.
    He said that CFPB management imposed inefficient national 
exam procedures. He said that the exams were inefficient; they 
take at least 6 weeks onsite, regardless of size and assets or 
footprint.
    And probably most troubling of all, he alleged that lawyers 
from the Enforcement Division joined examiners and occasionally 
mentioned plans to bring enforcement actions prior to 
completion of exam work and/or discovering a violation.
    He further testified that when he brought these concerns to 
management, he was a victim of retaliation. So, obviously, 
these are troubling allegations.
    But whether true or not, do you believe that a searching 
investigation into the accuracy of those claims is a 
legitimate, appropriate, and substantive course of inquiry for 
this congressional subcommittee?
    Mr. Cordray. Thank you, Congressman, for the question.
    I think whether true or not, the phrase you used there, it 
is actually a very significant matter. And I do not believe 
that any of what you just described is either accurate or 
justified.
    Mr. Barr. It doesn't surprise me, that you would say that.
    Mr. Cordray. No. Let me say our supervision program has 
been looked at very carefully 3 times now. It has been looked 
at by the Inspector General, it has been looked at by the U.S. 
Chamber of Commerce, who gave us a review of our supervision 
program, and it has been looked at by the clearinghouse of the 
large banks, all of whom determined that our supervision 
program is being run professionally and capably. They had 
various suggestions along the way, but none of this--
    Mr. Barr. But do you think it would be appropriate for us 
to take a look at that as well? That would not be political 
theater. That would be a legitimate course of inquiry. Right?
    Mr. Cordray. I would welcome that.
    Mr. Barr. Okay. Very good.
    And so, I wanted to know just as a follow up, Mr. Director, 
who is John Dowd?
    Mr. Cordray. I am not sure who John Dowd is.
    Mr. Barr. The committee has a letter from John Dowd, and I 
believe he is a partner with the Akin Gump law firm. And it 
appears that he represents Ms. Liza Strong, who is, according 
to Mr. Naraghi, the perpetrator of the retaliation against him.
    My question is: Did the Bureau hire Mr. Dowd to represent 
Ms. Strong?
    Mr. Cordray. I don't know how she would be the perpetrator 
of retaliation against him. She is not his manager or 
supervisor. She has no control--
    Mr. Barr. Okay. Alleged. Alleged retaliation. But 
stipulating that--
    Mr. Cordray. I believe that Ms. Strong would have hired her 
own lawyer.
    Mr. Barr. Okay. So you don't know whether or not the Bureau 
is indemnifying managers who are alleged to have retaliated 
against employees at the Bureau?
    Mr. Cordray. We do indemnify certain managers in accordance 
with the policy.
    Mr. Barr. So it is possible, at least, that this Akin Gump 
law firm was hired by the Bureau to represent--
    Mr. Cordray. Not hired by the Bureau. When there is a 
situation of potential conflict between an employee and the--
    Mr. Barr. Who is paying for it? Who is paying for the 
lawyer?
    Mr. Cordray. Same as with a board of directors of a 
company.
    Mr. Barr. So who--
    Mr. Cordray. The indemnification means that the Bureau 
would pay for--
    Mr. Barr. So the taxpayers are paying for lawyers to 
represent--and I would just say here, in the letter from the 
lawyer, that he is requesting that Mr. Naraghi's statement be 
stricken.
    So you acknowledge that this is something that we should be 
looking at, but the lawyers that the taxpayers are paying for 
don't want us to take seriously these allegations.
    Mr. Cordray. I don't know that any of that is true at all. 
What I know is that there is such a letter. The lawyer took the 
position it should be stricken because he thinks it is a one-
sided account.
    There are allegations that I believe are not true and not 
justified. Our supervision program has been looked at carefully 
by multiple external sources who had no reason to whitewash 
anything, and the supervision program has been generally 
professional and well-run.
    Mr. Duffy. The gentleman's time has expired.
    Mr. Barr. My time has expired.
    Mr. Duffy. The Chair now recognizes the gentleman from 
Washington, Mr. Heck, for 5 minutes.
    Mr. Heck. Thank you very much, Mr. Chairman.
    And Mr. Cordray, thank you so much for visiting with us 
this afternoon.
    I would like to start out, as I often have, by 
complimenting the agency and, in particular, its Office of 
Servicemembers Affairs under Holly Petraeus, for the great work 
they do with and for our active duty personnel.
    In fact, I think I noted that just last week there was the 
discovery of a $92-million circumstance to the disfavor of our 
active duty military personnel, which your agency was integral 
in spotlighting. And I thank you for that.
    Every time you have been here, I have asked you about the 
status of the Military Lending Act. Rules and regulations of 
the Department of Defense was to promulgate it by, I think, the 
end of last calendar year.
    And I was hoping beyond hope that maybe today you could 
give us kind of an update on where those are and what it might 
mean going forward.
    Mr. Cordray. So, two things.
    First, I will say about the enforcement action you 
described, the $292 million that will be wiped off debt 
collection for servicemembers across the country, we worked 
with 13 State Attorneys General on that. I was pleased to see 
Defense Secretary Hagel taking a personal interest in the 
matter and commending that work. And it is good work. And it is 
again, as you say, Ms. Petraeus' team, together with our 
enforcement team, who accomplished that.
    On the Military Lending Act, you are in luck. If you had 
asked me any other time, other than today, you would not have 
been in luck. But I understand that the Defense Department 
conveyed the draft Military Lending Act rules to the Office of 
Management and Budget yesterday and those will go in a fast 
process of review there and then be considered for 
finalization, which would bring the long-standing desire of 
this Congress to have military members protected against 
predatory lenders to real fruition. And the CFPB, as Congress 
stipulated, advised the Defense Department on those rules and 
worked with them and with the other agencies to put them 
together with great help from Treasury and the other agencies. 
So, I am pleased about it and it is moving forward.
    Mr. Heck. Have you had a chance to review them in the form 
as submitted to OMB?
    Mr. Cordray. It essentially aligns with what the drafting 
committee of multiple agencies put together. They are good, 
strong, comprehensive rules. Yes.
    Mr. Heck. Okay. A second question, if I may.
    As you know, we have been debating in the full committee a 
proposed legislation that would enable, perhaps even require 
the CFPB to offer and publish advisory opinions in response to 
requests from businesses.
    I was pretty concerned about the languages initially 
proposed, but very attracted to the idea as a step forward in 
being more collaborative and constructive, I think, between 
people who are regulated and the agency.
    And I am just wondering, is this something that the agency 
has considered doing? And if there were adequate resources and 
safeguards in place, what is your personal and professional 
opinion about whether or not it offers the potential to be a 
constructive step forward in your responsibility to interact 
with those that you regulate?
    Mr. Cordray. I think there may have been some issues about 
some of the legislation in terms of what is mandatory and 
bandwidth, and so forth.
    We have been looking at what steps we could take on our own 
to address these types of issues from industry. We do answer a 
lot of industry requests for guidance constantly, and we have 
given interpretive rulings and other types of things. But we 
are looking at potentially a no-action letter process, similar 
to that which the SEC has in place. Not necessarily exactly the 
same as that one, but that is the kind of process we are 
looking at. And I do think the agency will be able to do some 
forward-looking things on this and we would be happy to keep 
you apprised as we go.
    Mr. Heck. Conceptually, do you think this is therefore a 
good idea? Depending on the devil being in the details, of 
course, but do you think it holds the possibility of being a 
positive step?
    Mr. Cordray. I think that institutions often want guidance 
about how they should implement the law when they really aren't 
sure about the guidance. If we can provide it, that helps get 
them through an issue, maybe save them lawyers' fees and have 
clarity. And when we do that and we can publish it so that 
everyone knows, I think that is the best approach.
    Mr. Heck. So, finally, let me just reiterate that which I 
gleefully take the occasion to do every time you are here, sir. 
Thank you very much for the work your agency does on behalf of 
Armed Services personnel. It matters a lot. This is the last 
thing in the world that these young men and women ought to be 
worrying about. You have their back, and we are deeply grateful 
for it.
    Mr. Cordray. I have always been a strong advocate for that, 
and we appreciate your interest in these ongoing matters.
    Mr. Heck. Thank you.
    Mr. Duffy. The gentleman yields back.
    The Chair would ask for unanimous consent to enter into the 
record a letter received today from the GAO to the chairman of 
the full Financial Services Committee, Chairman Jeb Hensarling, 
indicating that the GAO will review the organizational, 
cultural, and personnel management practices at the CFPB.
    Without objection, it is so ordered.
    The Chair now recognizes the gentleman from Pennsylvania, 
Mr. Rothfus, for 5 minutes.
    Mr. Rothfus. Thank you, Mr. Chairman.
    And thank you, Director Cordray, for being with us this 
afternoon.
    Director Cordray, are you aware of any managers at the CFPB 
disqualifying a job applicant by stating that an applicant's 
resume demonstrated that the applicant ``doesn't believe in the 
mission?''
    Mr. Cordray. I have no awareness of that, although I would 
say that we have had hundreds of people come to work at the 
Bureau and they seem to be uniformly interested in the mission. 
If they are not interested in the mission, I can't imagine they 
would want to apply to the Bureau.
    Mr. Rothfus. Have you ever heard this expression used at 
the CFPB, that an application or somebody involved in the 
hiring context, somebody who is in for an interview, somebody 
who has applied--a manager or somebody at the CFPB says that 
person doesn't believe in the mission? Have you ever heard 
that?
    Mr. Cordray. I never have. No.
    Mr. Rothfus. Will you look into this personally and report 
back to us and see if--
    Mr. Cordray. When you say ``this,'' who are you talking 
about?
    Mr. Rothfus. We have been told that happens there. And so, 
I would ask that you look into it.
    Mr. Cordray. If there is any information you want to 
provide to us, whether it is anonymized or whatever--
    Mr. Rothfus. No. I would like you to ask your managers if 
this is part of the hiring culture there.
    Mr. Cordray. I will ask them that question. And if there is 
more information you want to provide so that we can look into 
it in more detail, I would be happy to do so.
    Mr. Rothfus. Are you aware of any managers in the CFPB's 
Office of Consumer Response ever describing the hiring of a 
former congressional staffer as, ``doing the party a solid?''
    Mr. Cordray. I have not heard that. We are not a partisan 
organization, and partisan politics has no place there.
    Mr. Rothfus. Okay. We have sent a letter to you requesting 
documents on this issue, yet your staff refuses to turn them 
over.
    Will you please instruct your staff to immediately produce 
all of the records we have requested to the subcommittee?
    Mr. Cordray. I would be happy to have our staff work with 
your staff and the subcommittee's staff to make sure, as we 
were trying to do all along that as you engage in oversight, 
you have the information that you need.
    Mr. Rothfus. Are you aware of any of your managers 
interviewing a candidate for a position before a job 
announcement has formally been posted?
    Mr. Cordray. Say that again.
    Mr. Rothfus. Are you aware of any of your managers 
interviewing a candidate for a position before a job 
announcement had formally been posted?
    Mr. Cordray. I am not aware of it. I would say that, in the 
early going, when we were, you know, 10, 20, 30 people and just 
staffing up, I don't know whether something might have occurred 
at one point or another. But, that would not be the normal 
process now that we are a fully built agency and have our 
processes in place.
    Mr. Rothfus. Again, I would ask you to go back and take a 
look at that and let us know.
    Mr. Cordray. Okay.
    Mr. Rothfus. Are you aware of a contractor ever writing a 
job description for themselves and then getting hired into that 
position without competition?
    Mr. Cordray. I am not aware of that. But any information 
you want to provide to us and you want us to look into 
something, we will be glad to do it.
    Mr. Rothfus. Again, I am going to ask you to take a look at 
that.
    Are you aware of any of your managers ever hiring an 
individual with whom they have a friendship or other personal 
relationship into a position for which the individual is 
objectively unqualified?
    Mr. Cordray. I am sure there have been many occasions at 
the Bureau where people were hired because they knew other 
people and people thought well of them and had reason to know 
their background and experience. But we do not hire unqualified 
people, and I do not believe that has been the case. But, 
again, if you have any instances that you want us to look into, 
we will do so.
    Mr. Rothfus. On May 21st, Benjamin Konop, the executive 
vice president of your employee union, testified 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.''
    Do you agree with his assessment of the situation?
    Mr. Cordray. It is not correct. It is not factually 
correct. That may be his perspective. Mr. Konop is representing 
six or eight employees in particular matters. But, in fact, we 
have adjusted the pay of dozens of employees at the Bureau, 
both men and women, no particular disparity there, both White 
and Minority, and it has happened many times.
    Mr. Rothfus. Are you aware of any gender pay equity issues 
in the Bureau today?
    Mr. Cordray. We have looked at this carefully in light of 
that testimony, and it is not indicative of what goes on at the 
Bureau.
    Mr. Rothfus. Did you take--
    Mr. Cordray. There were allegations made--
    Mr. Rothfus. --corrective action after that testimony with 
respect to any individuals at the CFPB?
    Mr. Cordray. No. There were allegations made in that 
hearing and other hearings that were completely factually 
incorrect, stating that there are pay disparities based on 
White and Minority and that no Minority pay was ever adjusted, 
no White pay was ever adjusted. It is factually incorrect.
    Mr. Rothfus. My time has expired, Mr. Chairman.
    Mr. Duffy. The gentleman yields back.
    The Chair now recognizes the gentleman from Nevada, Mr. 
Horsford, for 5 minutes.
    Mr. Horsford. I would like to thank you, Mr. Chairman, the 
ranking member of the subcommittee, and the ranking member of 
the full committee.
    And thank you, Mr. Cordray, for being here today.
    Before I begin, I am one of the new members on the 
committee and one of the new members in this Congress. Before I 
came to Congress, I ran an employment and training agency for 
11 years.
    Part of my job was to help train and then place thousands 
of workers in the private sector in order to help meet their 
workforce needs, and I have run into many personnel matters, 
diversity issues, in the course of that both from a labor and 
management perspective.
    I am not an employment lawyer, nor do I specialize in 
employment law. But I think that it is ironic that there are 
members of this subcommittee who are trying to use this 
Oversight and Investigations Subcommittee to really be more of 
a human resources and grievance subcommittee, and I don't think 
that is our proper role.
    At no point would any employer either in the public sector 
or the private sector discuss sensitive personnel matters. It 
is not in the best interest of the employee or the employer, 
and it is a common practice.
    Furthermore, Republicans or my colleagues on the other side 
talk often about the fact that public agencies, Federal 
agencies, should act more like the private sector, but, yet, 
they would have you come here today and ask you questions that 
they would never ask of the private sector in the manner that 
they are asking you.
    And so, I would just first like to give you an opportunity 
to put on the record, as you did in the beginning of your 
opening statement, what you are doing, as the employer, to 
address from a systemic standpoint the workforce issues that 
have been raised individually or collectively at the CFPB.
    Mr. Cordray. Sure. And, frankly, we probably could have 
used your expertise early on in building this new agency. But 
it is difficult to try to address allegations about individual 
employee situations in a public setting, and I have to be, as I 
said, careful about privacy and due process rights of those 
involved.
    To your question, what we have done here is--first of all, 
the main focus of these issues for us started with and has been 
the performance review system, which we determined did not 
treat employees fairly and had an adverse effect on a number of 
them. And, as a result, the system has been overhauled, 
scrapped, if you will, a new system put in place, and we have 
taken the significant step for the agency of remediating 
individual employees to make sure there is no lingering adverse 
effect from that.
    Second, we have made management structural changes at the 
Bureau to focus on and address the issues of ongoing culture at 
the agency. We continue to make specific efforts around 
diversity in hiring and contracting, and those are ongoing, 
including recruiting at a broad range of institutions, 
including Historically Black Colleges and other Latino and 
Minority-serving institutions.
    And it is an ongoing focus for us to be the diverse agency 
that we should be if we are representing and supporting the 
diverse set of American consumers across this country, which is 
a growing element of the American public. It is the present and 
the future of this country, and we need to make sure that we 
are handling things appropriately in this regard as well.
    Mr. Horsford. Thank you.
    And in my remaining time left, I just want to ask, going to 
your central mission--my constituents don't care about this 
process stuff. If there are legitimate issues, they need to be 
addressed. You, as the employer, need to be held accountable to 
address those. And our oversight functions should be to do 
that.
    What I want to know is around the mission you provide to my 
constituents around consumer protection, consumer complaints, 
mortgage help and housing counseling. That is what my 
constituents want to know about.
    So can you briefly tell me how I can get that information 
out so that my constituents can be better served.
    Mr. Cordray. Sure. And I would say most of all--and this 
is, again, a consumer response that we have spent so much time 
talking about. They have been able and powerful and effective 
at responding to individual complaints of consumers across this 
country. If you feel you have been mistreated on your mortgage 
or your credit card account or bank accounts, auto loans, 
student loans, at consumerfinance.gov, you can file a complaint 
with us and we will work on it.
    Mr. Duffy. The gentleman's time has expired.
    Mr. Cordray. You can call us, toll-free, at 1-855-411-CFPB 
also, to get those complaints--
    Mr. Duffy. You want a Web site, too, Mr. Cordray?
    Mr. Cordray. Consumerfinance.gov.
    Mr. Duffy. The gentleman's time has expired.
    The Chair now recognizes the gentlelady from Missouri, Mrs. 
Wagner, for 5 minutes.
    Mrs. Wagner. Thank you, Mr. Chairman.
    And thank you, Director Cordray.
    Director Cordray, in the committee's June 14, 2014, 
hearing, you said that Stuart Ishimaru, the Director of the 
CFPB Office of Minority and Women Inclusion, commissioned a 
Deloitte consulting report in September 2013 to get a baseline 
so that he could develop a strategic plan for the office. Is 
that correct, sir?
    Mr. Cordray. That is correct.
    Mrs. Wagner. And Mr. Ishimaru was hired, I believe, in 
April--April 30, 2012. Is that correct?
    Mr. Cordray. Yes. And he started to try to commission that 
report and started out with trying to do a small business 
procurement and that led to a process where nobody qualified.
    Mrs. Wagner. Let me just say this--
    Mr. Cordray. So it took a while.
    Mrs. Wagner. I don't understand. I do the math here and Mr. 
Ishimaru waited over a year--
    Mr. Cordray. No.
    Mrs. Wagner. --to commission his baseline report.
    Mr. Cordray. Not correct.
    Mrs. Wagner. He did for, ``a strategic plan,'' sir.
    Mr. Cordray. Not correct. He started a procurement. We 
tried to do a small business procurement, which is something 
that the government seems to want us to do, and we are willing 
to do it.
    Mrs. Wagner. It seems like a very long time to wait to get 
a baseline.
    Mr. Cordray. It was--I would agree with that. It was a long 
time, but it wasn't his problem.
    Mrs. Wagner. Will you share with the committee a copy of 
the contract between the CFPB and Deloitte?
    Mr. Cordray. I beg your pardon?
    Mrs. Wagner. Would you share a copy of the contract between 
the CFPB and Deloitte with the Financial Services Committee?
    Mr. Cordray. Have we been asked to do that?
    Mrs. Wagner. I am asking you to.
    Mr. Cordray. Okay. We would be happy to work with your 
staff--
    Mrs. Wagner. Thank you. I appreciate that.
    Mr. Cordray. --and the committee staff to get you the 
information you need.
    Mrs. Wagner. I would like to have a copy of the contract, 
please.
    Director Cordray, not long after the Deloitte report came 
out in September 2013, revealing racial and gender disparities, 
the Bureau entered into negotiations with the union in January 
2014 regarding similar issues. In your last appearance before 
the committee, you made it sound like you acted quickly once 
you discovered there was a problem.
    However, as we have heard in prior testimony from Mr. Ben 
Konop, the CFPB employee who heads the union and was 
representing the employees during these negotiations, he 
testified that he was never made aware of the Deloitte report 
and that, in fact, it was the complete opposite. He said, 
``Management refused to acknowledge the documented unfairness 
and denied each of the grievances at all stages, often using 
inconsistent reasoning.''
    Is this consistent with good-faith negotiations, sir, do 
you believe?
    Mr. Cordray. I think there are two things incorrect in what 
you just laid out and I think incorrect in Mr. Konop's 
testimony.
    The first is you said we didn't act quickly. We acted very 
quickly. This report was received by the Bureau in the OMWI 
office on September 30th. It was brought to the executive 
committee in early November. And by January, we were in 
bargaining with the union to fix the problem. That is very fast 
action, particularly on the part of the Federal Government, as 
you would acknowledge.
    Mrs. Wagner. Why did the union not have any access to or 
information from this report? This was months, Director 
Cordray.
    Mr. Cordray. I don't know about the access to the report, 
but we put this into bargaining with the union--
    Mrs. Wagner. It was a part of their negotiations that they 
were in the middle of and you did not even talk about--
    Mr. Cordray. No. This report has been misunderstood and 
misused. Okay?
    It was an OMWI limited report to get a baseline for the 
OMWI. If you look at the key findings of the report, this isn't 
even part of the key findings. That wasn't what it was about.
    Mrs. Wagner. You don't think that this would have been 
important information during the union negotiations, Director 
Cordray?
    Mr. Cordray. What was important information was that we 
provided information about unevenness in the performance 
reviews system. We bargained over it. I was fully committed to 
just scrapping it.
    Mrs. Wagner. Were your employees aware of this--
    Mr. Cordray. And we did scrap it.
    Mrs. Wagner. Were the employees who were in the 
negotiations with the union aware of the Deloitte study?
    Mr. Cordray. I don't know who was aware of the Deloitte 
report, and when.
    Mrs. Wagner. Were you aware of the Deloitte study?
    Mr. Cordray. As I said, the report was brought to our 
executive committee and I reviewed it during--for a meeting in 
mid-November of 2013.
    Mrs. Wagner. So you were aware of the Deloitte report--
    Mr. Cordray. And by January, less than 2 months later, we 
were in bargaining with the union to fix the system and later 
to remediate employees. You tell me when the Federal Government 
has ever moved that fast.
    Mrs. Wagner. Well, I will tell you what. I would think 
that, when you are in the middle of negotiations with your 
union and you have had for months a report that talks about the 
difficulties--
    Mr. Cordray. It was not for months.
    Mrs. Wagner. --why you would not share that information 
with the union.
    Mr. Cordray. That wasn't what the report was about. It was 
one--
    Mrs. Wagner. You don't believe--
    Mr. Cordray. It was 2 or 3 pages--
    Mrs. Wagner. Do you believe you acted in good faith with 
your negotiations with the union?
    Mr. Cordray. It was 2 or 3 pages of a 110-page report. This 
should not be blown out of proportion here.
    Mrs. Wagner. Blown out of proportion?
    Mr. Cordray. Yes. What was--
    Mrs. Wagner. Have you read the report, Director Cordray?
    Mr. Cordray. Yes. Absolutely, I have. And what is relevant 
is we then embarked on our own analysis. There is a much 
broader report, the Snapshot report, which was about 30 to 35 
pages, where we walk through and detail, and that convinced us 
that we needed to fix the system.
    Mrs. Wagner. Why, sir, did you wait until the committee 
discovered the report in May 2014 to admit that the union's 
allegations were true and then you retroactively compensated 
employees?
    Mr. Cordray. I don't think any of that is correct. I don't 
understand--I don't follow you.
    Mrs. Wagner. Did you retroactively compensate employees?
    Mr. Cordray. The report was submitted to us at the end of 
September. It came to our executive committee in early 
November. By January, we conducted our own analysis, and went 
into bargaining with the union.
    Mrs. Wagner. And you did not bargain--
    Mr. Cordray. By March--
    Mrs. Wagner. --with the union with this information--
    Mr. Cordray. --we decided to scrap the system. And, by May, 
we decided to remediate the employees. That is fast work. You 
tell me it is not.
    Mrs. Wagner. I have more questions, but I will yield back 
the rest of my time.
    Mr. Duffy. The gentlelady yields back.
    The Chair recognizes the ranking member of the 
subcommittee, Mr. Green of Texas.
    Mr. Green. Thank you, Mr. Chairman.
    Mr. Cordray, let's talk for just a moment about the 
allegations from another perspective.
    We have heard any number of complaints and they covered 
many different areas. But what I would like to know is: How 
many lawsuits have you actually had filed?
    Mr. Cordray. We have, as I understand it, had six matters 
subjected to the Equal Employment Opportunity Commission in 3 
years--I'm sorry--four individuals have filed. Two of them 
filed two complaints each. One was by a former employee, and 
one was by an applicant. That is the sum and substance of what 
we have had filed thus far.
    Mr. Green. And these complaints--concerns of whatever 
nature have been usually resolved without litigation. You 
usually acquire some resolution for the concerns that are 
called to your attention without litigation. Is that a fair 
statement?
    Mr. Cordray. We have had a significant number of 
grievances. People have not been afraid to speak up and voice 
their complaints. Very often, we have been able to resolve 
those grievances in a mediated or legitimate setting without 
having to go to any kind of litigation. On occasion, that has 
not been so. But that is certainly our intent wherever 
possible.
    Mr. Green. And is it true that you encourage resolution 
such that people can have their concerns brought to your 
attention, but, also, resolved?
    Mr. Cordray. I want to have them resolved. And alternative 
dispute resolution, mediation, counseling, and other means have 
been fruitful ways to help people reach a productive result on 
both sides.
    Mr. Green. And is it also true that once you acquired a 
knowledge about the review system, you worked to correct that, 
that you, in fact, worked with the union on this question of 
the review system?
    Mr. Cordray. We did. We took the initiative on this and, 
with respect to the Congresswoman, we acted very quickly to 
resolve it. We did not push this in any litigated forum, which 
could have taken years, which has been true of other agencies, 
at times. We pushed forward. We addressed it. We thought it was 
the right thing to do.
    Mr. Green. And are you still working with the union to 
resolve issues as they arise?
    Mr. Cordray. We continue to be in bargaining with the 
union. We have matters that we are bargaining over now to 
resolve. We will have another round. That is an ongoing 
process, and it has been a very productive process.
    I think that the NTEU is professional. It deals with a 
number of different agencies. We are their newest agency. And 
that has been a way to give a voice to employees and see to it 
that issues get resolved amicably on both sides.
    Mr. Green. Have you demonstrated at every point your desire 
to resolve these disputes and complaints that have been raised? 
Have you always tried to work with people to resolve their 
complaints?
    Mr. Cordray. That has always been my intent. I would say 
not everything gets done as quickly as I would like. I find it 
to be a constant source of frustration. Sometimes, I am more 
involved. Sometimes, I am less involved. I like to see 
productive, positive results where possible, but I also like to 
see appropriate results based on the facts and circumstances.
    And I know that I have to hear both sides--the agency has 
to hear both sides and the process needs to get followed to get 
to appropriate results.
    Mr. Green. That is exactly where I wanted to go next. You 
have given me a good segue.
    It is easy to hear complaints, to hear one side of a story. 
But when you try to ascertain what the facts are, you have to 
hear all sides. That is not necessarily two, it could be three, 
but you have to hear all sides.
    And that process takes a little bit longer than having a 
congressional hearing. It requires that you do some additional 
investigative from time to time.
    Do you find that trying to get to the bottom of things can 
require time that might not be thought of as time wasted, that 
is time well spent, when you try to hear from all sides?
    Mr. Cordray. Yes. And I have never been a judge myself. I 
know you have been. But I have been in front of many judges, 
and I know Congressman Duffy and many of the members of this 
panel have been in front of judges. And you always want them to 
take the time to understand both sides and then hope that they 
will render the fairest decision they can based on the 
knowledge of the entire matter.
    Mr. Green. And as you move forward, will you make sure that 
any of the concerns that are called to your attention, if they 
get to you--hopefully, they are resolved before they get to 
you--they are going to receive the kind of attention that you 
would want your own circumstance to receive if it were before a 
person who had to deliberate and come to some conclusion?
    Mr. Cordray. I do. And I want our employees to be treated 
fairly, and I want these matters to be resolved as quickly as 
they can be, but reasonably and on a full knowledge of what 
both sides of the story are or, as you say, sometimes more than 
two sides of the story would be.
    Mr. Green. I yield back my time.
    Mr. Duffy. The gentleman's time has expired.
    The Chair recognizes the gentleman from Tennessee, Mr. 
Fincher, for 5 minutes.
    Mr. Fincher. Thank you, Mr. Chairman.
    And, Director Cordray, I appreciate you taking time today.
    We meet again today, and I am still very frustrated with 
some things that have been happening. We are talking about 
discrimination. From what I have read, some of your managers 
disregard their employees and won't listen to their ideas and 
experience.
    Unfortunately, it seems like the central theme at the CFPB 
is not listening to those who know more than you. That is 
certainly something, as you know, we talked about manufactured 
housing over and over and over has encountered, since they 
spent countless hours with staff explaining their businesses, 
only to be left with policies that ultimately hurt consumers.
    At the end of the day, it seems as though--and this is so 
unfortunate--the culture of the CFPB is one where decision-
makers are allowed to institute ``my way or the highway'' 
policies and you go to great lengths to protect that authority.
    So, let me get to the questions.
    I have a document here in my hand that shows, on April 17th 
and April 22nd, the CFPB issued indemnity and reimbursement 
policies for your managers, which provided that the Bureau will 
at its discretion reimburse supervisors and managers who have 
obtained private legal advice and/or representation regarding 
any actual or potential civil or criminal claim against them 
related to their informant with the Bureau.
    Question: Why did you issue these policies for your 
managers?
    Mr. Cordray. It is an appropriate thing that is done in the 
public and private sectors. It is done with boards of directors 
of companies where there might be adverse interests. I 
personally have been hired by the Justice Department when I was 
a lawyer to handle some matters where the individual might be 
adverse to the agency. And I think it is an appropriate thing 
to do.
    Mr. Fincher. Are non-managers, rank-and-file employees, 
eligible for the indemnity and reimbursement policies?
    Mr. Cordray. No. And that is also fairly common in 
companies. Not every employees gets reimbursed. However, they 
have the union as their representative and they can pursue 
grievances and they do. And that is appropriate as well.
    Mr. Fincher. Do you understand that employees view this as 
your decision to protect your managers against their own 
employees?
    Mr. Cordray. No. I don't think so. This is a policy that is 
consistent with public- and private-sector precedent. The 
Justice Department does indemnification of employees where 
there are individual interests distinct from that of the agency 
and it is not something--
    Mr. Fincher. What kind of message, Director, do you think 
it sends to the employees? This is a pretty big deal, what has 
happened. What kind of message do you think it sends? None?
    Mr. Cordray. Having an indemnification policy?
    Mr. Fincher. Yes.
    Mr. Cordray. I think it sends no more message than private 
companies that commonly have indemnification policies or 
insurance policies for board members and other executives. I 
think it is commonplace.
    Mr. Fincher. But you are not a private company.
    Mr. Cordray. No. But it is common in larger organizations, 
and it is a policy that we looked around to look at precedent 
in the Federal Government as well.
    Mr. Fincher. What other Federal agencies--
    Mr. Cordray. I can tell you it was also in State Government 
when I worked in State Government.
    Mr. Fincher. The States are way more efficient than the 
Federal Government. What other Federal agencies offer blanket 
indemnity policies for managers and supervisors?
    Mr. Cordray. I would have to have staff get back to you in 
terms of what we looked at to arrive at that policy.
    Mr. Fincher. Could you?
    Mr. Cordray. Yes, sir.
    Mr. Fincher. Thank you.
    How many employees have been granted indemnity since these 
policies were put in place?
    Mr. Cordray. I don't know exactly. But I would be happy to 
have staff follow up with you on that.
    Mr. Fincher. How much--
    Mr. Cordray. It is an increasing number, as the committee 
digs into more--
    Mr. Fincher. How much money has the CFPB spent or is 
planning to spend to date on reimbursing employees as a result 
of the indemnity policy?
    Mr. Cordray. That may depend on the actions of this 
subcommittee.
    Mr. Fincher. Taxpayer money. You have no idea?
    Mr. Cordray. If you end up pushing a number of our 
employees into a situation--
    Mr. Fincher. We are not pushing anybody, Director.
    Mr. Cordray. There may be legitimate differences of opinion 
on that.
    Mr. Fincher. This is clearly a problem that needs to be 
addressed, when you have these kind of allegations brought 
against the agency.
    Mr. Cordray. And to have me here, to have me testify, is 
the appropriate oversight, I believe. But in any event--
    Mr. Fincher. Do you think you shouldn't be here and have to 
testify? Do you think you are above that?
    Mr. Cordray. No. I have been offering to testify in front 
of the subcommittee from the beginning. I think I am the one 
who should be here. I am finally here, and I think that is 
appropriate. And I am glad to be here, and I will be here as 
late this evening as you need me.
    Mr. Fincher. Good. We just--look, Director, we want to get 
to the bottom of it.
    Mr. Cordray. I know.
    Mr. Fincher. It is not personal.
    Mr. Cordray. I understand.
    Mr. Fincher. And try to fix it.
    So with that, Mr. Chairman, I yield back.
    Mr. Duffy. The gentleman yields back.
    With the ranking member's indulgence, we are going to do a 
second round. I know the Director has been kind enough to say 
he would stay until our questions are answered, and we 
appreciate that.
    With that, I recognize myself for 5 minutes.
    Mr. Cordray, it is my understanding that you received Mr. 
Naraghi's report--it was a summary report--on September 11th of 
last year.
    And then on September 30th, as discussed, you received the 
Deloitte report, which did discuss racial disparities in pay 
and performance. I know it was a long report, but some portions 
indicated that.
    Mr. Cordray. Certain portions. Yes.
    Mr. Duffy. On November 13th, Mr. Naraghi's report from the 
defense group also came in. And then, on December 11th, a final 
report from the DIG group came to the CFPB.
    So there was knowledge that--or at least allegations of 
disparity in pay in regard to race and sex, and we knew that 
the complaints from Ms. Martin had come in.
    What did you do internally, and when, in regard to these 
allegations that you knew about at the end of last summer at 
the CFPB?
    Mr. Cordray. There were two distinct and major, I would 
say, areas of allegations. One is the performance reviews being 
unfair and the results being uneven. And that is something that 
we started looking at as soon as the performance review season 
for that fiscal year closed on October 1st and it led to fairly 
fast action of us deciding to scrap the system and remediate 
employees.
    On the other issue of pay equity, we had determined that, 
in the early going at the Bureau, we didn't have any kind of 
database for comparing salaries or anything more systematic of 
that sort. And we determined there were pay inequities at the 
Bureau. And we set up our own process last year to adjust pay 
for inappropriate cases for employees, and we have done that 
dozens of times.
    Mr. Duffy. Hold on one second.
    Because not only did--because you claimed that, yes, one of 
the issues was the system. But you also had information coming 
from the DIG report and from Ms. Martin that there were some 
managerial issues as well, which you may dispute. I understand 
that you don't agree with that. But those allegations had come 
in.
    So my question is: Was there an internal investigation, an 
internal process, at the CFPB to go, ``Hey, we have some red 
lights out there. Let's analyze the complaints that have been 
made by Ms. Martin and by these reports, and let's find out 
internally what is happening?'' Did you do that? Yes or no?
    Mr. Cordray. We did. And we are still doing it.
    Mr. Duffy. And when did you start that?
    Mr. Cordray. I beg your pardon?
    Mr. Duffy. When did you start that analysis?
    Mr. Cordray. The first issue was we commissioned the DIG 
report. It didn't spring from someone else. We commissioned it.
    Mr. Duffy. I am talking about internally.
    Mr. Cordray. It was--internally, we sought an external 
report to give us credibility. It was not a credible report. It 
was poorly done.
    Mr. Duffy. You did not--
    Mr. Cordray. We now, as a result, have had to reopen that 
investigation.
    Mr. Duffy. I find it odd that, if you see these issues that 
these reports lead you to believe and you get complaint from 
employees--
    Mr. Cordray. No. No.
    Mr. Duffy. --that you wouldn't do an internal 
investigation. And that is fine.
    Mr. Cordray. Nothing--
    Mr. Duffy. I agree that you haven't done one, because we 
have asked for correspondence from inside the agency and you 
haven't sent us any information in regard to an internal--
    Mr. Cordray. It is just not an accurate chain of events. We 
commissioned a report. It was poorly done. It was not a 
credible report. That is the DIG report. It has forced us to go 
back and recommission an investigation--
    Mr. Duffy. A new report.
    Mr. Cordray. --which we have ongoing right now.
    Mr. Duffy. Let's talk about the new report, because the 
seeker of truth, Mr. Cordray, who said, ``The DIG report, the 
Deloitte report, all don't work very well for me. I don't like 
the results. The allegations that are made by Ms. Martin, I 
don't like those either. So let me go get an unbiased report.''
    Mr. Cordray. No. No. That is not an accurate picture of 
events.
    Mr. Duffy. ``So I am going to go to an individual by the 
name of Stanley Foster. And Mr. Stanley Foster is going to lead 
this investigation because I want purity and clarity in the 
investigation.''
    Mr. Cordray. That is just not an accurate picture of 
events. If you want me to clarify for the record, I will.
    Mr. Duffy. I want to ask you a question.
    You are a Democrat. Mr. Pluta, where the allegations have 
been made from Ms. Martin, is a Democrat. And I think Ms. 
Martin is an Democrat, maybe an Independent. I don't mean to 
call her out for her party affiliation.
    Mr. Cordray. That has no place with our agency.
    Mr. Duffy. Yes, it does, because--
    Mr. Cordray. No, it does not.
    Mr. Duffy. --Mr. Foster gave $12,250 to Democrats since 
2008 and gave $6,000 to the Obama campaign. He didn't do any 
work for the Federal Government--
    Mr. Cordray. I have no idea about any of that, and that is 
just a smear to bring that into--
    Mr. Duffy. I gave you--
    Mr. Cordray. --this kind of discussion. I mean, honestly.
    Mr. Duffy. Before 2009, he had no Federal contracts, but 
since 2009, he has $1.1 million in various Obama Administration 
agency contracts.
    Mr. Cordray. I don't know anything about that.
    Mr. Duffy. If you want to come to this agency, Mr. 
Director, and tell us, ``We now want an independent analysis on 
the internal workings within the CFPB because we don't like the 
results of the DIG report, we don't like the Deloitte report, 
we don't like Ms. Martin's report.''
    Mr. Cordray. No. That is not accurate.
    Mr. Duffy. ``So now I am going to have''--
    Mr. Cordray. None of that is accurate. I never said I 
didn't like the Deloitte report.
    Mr. Duffy. --``a political operative with Stanley 
Foster''--
    Mr. Cordray. We have acted on the basis of the Deloitte 
report.
    Mr. Duffy. ``Stanley Foster is going to come forward and do 
the unbiased report for us.'' And he is a donor to the Democrat 
party and the Obama Administration, and you want us to believe 
that is going to be fair, Mr. Director.
    Mr. Cordray. Do you just want to tell a story or do you 
want me to respond and set the record straight? Which do you 
like?
    Mr. Duffy. I have asked you to answer the questions.
    Mr. Cordray. Which do you like? We did not dispute the 
Deloitte report. We have acted on the basis of the Deloitte 
report. So that is inaccurate. The DIG report was not credible 
and poorly done, as the company itself acknowledged, and 
therefore had to be thrown out. We now have another 
investigation going. I wish it had been done sooner. But if the 
DIG report hadn't been problematic, it would have been done at 
that point. That is where we stand.
    Mr. Duffy. Why a Democrat operative?
    Mr. Cordray. I don't know whether they are Democratic 
operatives or not. I honestly don't have the slightest idea. 
And that doesn't enter into anything done at the Bureau.
    Mr. Duffy. Mr. Cordray--
    Mr. Cordray. It enters into nothing done at the Bureau.
    Mr. Duffy. --a three-person law firm as a Democrat 
contributor and you are saying you don't know that? You are 
smarter than that.
    Mr. Cordray. I don't know. It is a procurement process. It 
is a legitimate process. All of our processes are done through 
the government process.
    Mr. Duffy. My time has expired.
    Mr. Cordray. You can disbelieve it if you want, but that is 
the nature of the--
    Mr. Duffy. With that, my time has expired.
    The Chair now recognizes the ranking member of the full 
committee, Ms. Waters from California.
    You are recognized for 5 minutes.
    Ms. Waters. Thank you very much, Mr. Chairman, and members.
    Allegations were made against the Consumer Financial 
Protection Bureau, and my friends on the opposite side of the 
aisle have started this investigation with subpoenas and all of 
that.
    And, of course, on our side of the aisle, we welcome the 
opportunity to investigate areas of discrimination such as have 
been alleged. But this has turned into a circus.
    This committee has taken it upon itself, led by the 
Republicans, to attack the Consumer Financial Protection Bureau 
in everything that they can bring up, everything they can think 
of, and it is getting almost comical.
    We recently, just a few minutes ago, heard from the 
gentleman on the opposite side of the aisle questioning about 
indemnification policy.
    Now, on the one hand, Mr. Cordray and the Consumer 
Financial Protection Bureau are being hammered about the 
allegations of discrimination, basically accusing the Bureau of 
discrimination above and beyond the allegations that have been 
made, but on the other hand, questions about protecting the 
workers with indemnification policies, because somehow they are 
alleging or, basically, concluding that is an unnecessary 
expenditure that should not be done, there is something unusual 
about that.
    What else can you find to ask Mr. Cordray about?
    This has turned out to be not a straightforward 
investigation or oversight responsibility in the proper way 
that could be done, but, rather, what is commonly referred to 
as a witch hunt.
    So, first, I would like to say to Mr. Cordray, you know 
that on this side of the aisle we are concerned about getting 
at the problem, and I think you understand and appreciate our 
responsibility to do that. But I want to say to you that I hope 
that you are not in any way intimidated by the attacks that are 
being made from the opposite side of the aisle.
    I think you have conducted yourself splendidly. I think 
that you have come up with responses to the allegations and you 
are doing everything that you possibly can to ensure that OMWI, 
that part of the operation that I had something to do with, as 
you said, based on Dodd-Frank--and so I do not want you, again, 
to be intimidated or threatened in any way, that the attack is 
one that we will join in with as we do our oversight 
responsibilities.
    And I do not want you to discontinue your efforts to make 
sure that you have the kind of Bureau where every human being 
is respected and every human being is dealt with fairly.
    Now, having said that, would you tell the opposite side of 
the aisle one more time what you have done to correct some of 
the problems that have been encountered or that have been 
unveiled?
    What have you done to make sure that people are 
compensated, that they are treated fairly, and that it doesn't 
happen again? Would you just use the next minute or so to try 
and do that.
    Mr. Cordray. Thank you, Congresswoman. I don't mind tough 
oversight. I have been used to it in this Congress, and I 
appreciate it, actually. I do like an occasional opportunity to 
set the record straight if I am given the opportunity.
    First of all, for our performance review system, we 
determined that there were issues and concerns there about fair 
treatment of our own employees. We took the initiative.
    We have scrapped that program based on the Deloitte report, 
which we took seriously. Although it was just a piece of the 
Deloitte report, we did our own further detailed analysis to 
come to our own conclusions. And we are remediating employees 
around that system.
    We have changed the management structure of the Bureau to 
create more conscious focus on the issues of ongoing culture 
and equity and fairness. And we have made other changes, such 
as considerably more training for the managers, and counseling, 
and other types of things that I think are needed and 
appropriate.
    We also are trying to give the processes for adjudicating 
individual employee disputes and grievances the opportunity to 
work, make sure that those are worked through, that they are 
resolved appropriately, when other process needs to go on 
beyond that to anywhere else, that is followed appropriately 
and scrupulously.
    Mr. Duffy. The gentlelady's time has expired.
    The Chair now recognizes the gentleman from Illinois, Mr. 
Hultgren, for 5 minutes.
    Mr. Hultgren. Thank you, Mr. Chairman.
    Director Cordray, I would like to discuss Angela Martin's 
new settlement. According to news reports, I hear she received 
a lump-sum payment and a new assignment as a military affairs 
liaison outside of D.C. In exchange, she agreed to drop all of 
her claims against the Bureau.
    On June 18th, Chairman McHenry asked you why, in light of 
this settlement, the Bureau continued to employ Scott Pluta. 
You responded that you ``have no basis for disciplining Scott 
Pluta'' and that Ms. Martin's allegations against him have not 
been proven.
    I find this interesting and want to understand the Bureau's 
position regarding settlement agreements.
    Looking at the press release for 2 of your most recent 
enforcement actions, on July 10th, you announced settlement 
with ACE Cash Express. In your release, you say that ACE used 
false threats, intimidation, and harassing calls to bully 
payday borrowers into a cycle of debt.
    Here is another from April 9th: You announced a settlement 
with Bank of America. You say Bank of America both deceived 
consumers and unfairly billed consumers for services not 
performed.
    Both cases settled before they went to court. And although 
both cases involved lump-sum payments, the consent orders both 
stipulate that neither company admit wrongdoing.
    My question, Mr. Director, is: How can you have it both 
ways? Is it fair to claim that companies have engaged in 
unproven wrongdoing when you are a plaintiff, but it is unfair 
to lead to conclusions when the tables are turned?
    Mr. Cordray. Yes. I don't think the two are comparable at 
all. When we resolve these matters after the differences that 
both of the cases you described and no apologies for us being 
tough on behalf of protecting consumers, that is our job, as I 
see it. But at that point in those cases, we have engaged in a 
full investigation of the facts, often extensive depositions, 
document review, and really gotten at the facts. Often, it has 
been based on an examination that preceded the examination, and 
those facts are pretty well-established. That is the difference 
between the two.
    Mr. Hultgren. Let me ask you about this.
    Mr. Cordray. Mere allegations, on the other hand, are 
something different. Okay.
    Mr. Hultgren. Moving on, my time is going by quickly. Did 
you have a chance to watch the video from our hearing on April 
2nd with Angela Martin?
    Mr. Cordray. I did. I have watched all of the subcommittee 
hearings.
    Mr. Hultgren. Did Angela Martin lie to Congress?
    Mr. Cordray. I have no reason to have a point of view on 
that one way or the other. I don't have any particular instance 
that--
    Mr. Hultgren. So watching the video, you didn't see that 
she had lied to Congress? There was nothing--
    Mr. Cordray. There was a lot talked about in the hearing 
about matters of which I don't have complete knowledge or full 
knowledge. So it is kind of useless to ask me that. But I have 
no reason to--
    Mr. Hultgren. You will not really answer whether she lied 
or not lied, nor will you--
    Mr. Cordray. I am not going to characterize any of my 
employees as lying. I don't understand why that is helpful and 
I do not--
    Mr. Hultgren. Let me go on to this, then.
    On April 17th, you issued a new EEO policy for employees, 
announcing that you had zero tolerance for workplace 
discrimination and retaliation.
    You stand by that policy, don't you?
    Mr. Cordray. That is very much my policy. Yes.
    Mr. Hultgren. Then, why has your office done nothing to 
hold Scott Pluta accountable for his actions? Why has no 
manager been disciplined by the Bureau for discriminating or 
retaliating against employees?
    Does this encourage an unhealthy and unaccountable 
management culture that has resulted in widespread maltreatment 
of employees? Do you believe you owe Angela Martin and others 
an apology for the way that they have been treated?
    Mr. Cordray. What you are talking about are allegations. 
Okay? One side of a story. All right? It may be comfortable for 
you to jump to conclusions about scapegoating people, but I 
can't do that, as the head of the Bureau.
    Mr. Hultgren. There was a settlement here. There was 
something there. If there weren't facts to it, if there wasn't 
truth--
    Mr. Cordray. Something there was--
    Mr. Hultgren. Sadly, you have done nothing to hold them 
accountable.
    Mr. Cordray. Something there was to reach a productive 
result for Ms. Martin, which I believe--
    Mr. Hultgren. I think a productive result for your 
employees would be hold those who are responsible accountable. 
We are seeing nothing to hold Scott Pluta accountable.
    Mr. Cordray. If there were a basis for doing so, I would do 
so. But I am not going to scapegoat people just to satisfy you 
or anyone else. I am not going to do that. It is not 
appropriate.
    Mr. Hultgren. I am not asking you to satisfy me, although 
you are responsible to my constituents--that is who I am 
representing up here--but, also, people who are struggling with 
much of what the Bureau is doing.
    Let me get to one last thing in the last minute that I 
have.
    Mr. Cordray. And benefiting by it as well, I would say.
    Mr. Hultgren. In my hands, I have one last email you sent 
to Bureau employees on April 7th. In the email, you say you 
watched the April 2nd hearing in its entirety and describe the 
congressional oversight process as painful at times. Incredibly 
though, you use the same email to single out Scott Pluta for 
special thanks.
    Mr. Director, what kind of message do you think your email 
sends to employees when you acknowledge watching Angela 
Martin's testimony and then thank the very manager who 
retaliated against her? What kind of culture do you think this 
engenders at the Bureau?
    Mr. Cordray. I try to treat my employees the same way we 
will treat financial institutions--commend them on things they 
do well, and criticize them on things they don't do well, and 
treat them fairly based on the facts. That is my hope and 
intention, and that is the way I have always treated employees 
at local, State, and Federal levels of government.
    Mr. Hultgren. It doesn't seem like it.
    Mr. Cordray. You disagree.
    Mr. Hultgren. My time has expired. I yield back. Thank you, 
Mr. Chairman.
    Mr. Cordray. I guess you have a different viewpoint based 
on a few hours of hearing allegations. That is all you have to 
go on.
    Mr. Duffy. The gentleman's time has expired.
    Mr. Green has advised me that he wants to reserve his time, 
so I am not being unfair.
    The Chair recognizes the gentleman from Kentucky, Mr. Barr, 
for 5 minutes.
    Mr. Barr. Director Cordray, I want to follow up on the last 
set of questions that we were talking about, the 
indemnification policy within the Bureau.
    As Mr. Fincher noted, earlier this year, in April, you 
issued an indemnity and reimbursement policy for your managers.
    I think your testimony earlier was that the taxpayer is 
paying for these lawyers that you are hiring to defend your 
managers. Is that right?
    Mr. Cordray. It is something that I have seen done in State 
Government, local government, Federal Government, and private 
sectors.
    Mr. Barr. Yes, sir.
    I heard that testimony, and that is no doubt the case. You 
say it is common in private companies to have these 
indemnification policies. What is different here is that the 
taxpayers are paying for it.
    And let me just ask you this: How many lawyers work at the 
Consumer Financial Protection Bureau?
    Mr. Cordray. A number work there, but that doesn't meet the 
situation. As I told you, I have been hired by the Justice 
Department to represent individuals when they are--
    Mr. Barr. Right.
    Mr. Cordray. --when their interests are adverse to the 
organization.
    Mr. Barr. But do private companies typically--
    Mr. Cordray. And so, you can't have any of the lawyers--
    Mr. Barr. In carrying out their indemnification policies, 
do private companies hire the most expensive lawyers in 
America?
    And, with all respect, this is a very fine law firm. Your 
manager hired the co-chairman of the department over there at 
Akin Gump. He is listed as a Super Lawyer, the best lawyers in 
America for criminal defense, white collar. He is the co-leader 
of the firm's white-collar defense and corporate investigations 
practice.
    He has represented a U.S. District Judge, a former U.S. 
Attorney, two U.S. Senators, and a senior Member of the U.S. 
House. He represented major league baseball in investigations 
of Pete Rose. So you hired a pretty darn good lawyer from a 
pretty darn good law firm.
    And the taxpayer is paying how much on an hourly rate for 
this lawyer?
    Mr. Cordray. Sir, I am just trying to wrap my mind around 
the premise of your question, which as I recall was do I think 
that private companies hire the most expensive lawyers in the 
country. And my answer is who else do you think else hires the 
most expensive lawyers?
    Mr. Barr. I am just wondering--
    Mr. Cordray. They do.
    Mr. Barr. I am just wondering, with all of the lawyers in 
your agency, why you devote so much of scarce taxpayer 
resources to defending managers who are accused of retaliation?
    And, by the way, you don't provide lawyers to the rank-and-
file employees of the Bureau who are alleging the retaliation. 
Again, the culture of this seems very toxic.
    Mr. Cordray. You have completely misunderstood the point. 
Okay?
    First of all, the lawyers in the Bureau can't represent 
Bureau employees in matters where they are potentially adverse 
to the Bureau. They are just all disqualified from that. That 
is not in the cards.
    Second, the employees have a union that represents them in 
grievances. They have lawyers that they use to represent them.
    Mr. Barr. I bet the union doesn't have the resources to 
hire the top lawyer and top law firm in the country.
    Mr. Cordray. I don't know about individual hiring choices. 
I am not involved in that.
    Mr. Barr. At any rate, let's talk about--
    Mr. Cordray. The point is, people have representation. They 
are entitled to it.
    Mr. Barr. Sure. But your agency is full of lawyers.
    But, anyway, whistleblowers--how you treat whistleblowers 
is an important issue. And the Bureau's official congressional 
inquiry policy says, ``CFPB staff shall confer with CFPB's 
Office of Legislative Affairs in advance of providing any 
internal documents or any information to a Member of Congress 
or congressional staff.' I assume that would be this 
investigatory subcommittee.
    Also, ``The policy has no exception for whistleblowers.'' 
Again, what kind of message does that send to your employees 
that if they are going to be a whistleblower, before they come 
to us investigating these matters, they have to check in with 
management.
    Mr. Cordray. I don't think that is the case. I think you 
have had plenty of people come to you and they haven't had to 
check with our legislative office in advance.
    Mr. Barr. Well, that is your policy.
    Mr. Cordray. No. No. You are just taking that out of 
context.
    Mr. Barr. Am I?
    Mr. Cordray. I don't know.
    Mr. Barr. It says, ``CFPB staff shall confer.'' ``Shall.'' 
``Mandatory.''
    Mr. Cordray. And the people who came to you, did they check 
with our legislative office first? Do you even know whether 
they did or didn't?
    Mr. Barr. Did they violate your policy?
    Mr. Cordray. What is that?
    Mr. Barr. Did they violate your policy?
    Mr. Cordray. No. Have there been any actions for violations 
of the policy? Do you know of any?
    Mr. Barr. No. Do you know of any--let's just--
    Mr. Cordray. Or is this just purely hypothetical?
    Mr. Barr. To your question, let me just read to you what 
one of the anonymous whistleblowers says to us: ``I am writing 
an anonymous statement to inform the committee of my 
experiences. I am writing to you anonymously because, if I were 
to use my name, I fear that I would be singled out for 
continuing retaliation by current managers at CFPB. Other 
African-American employees have told me they would like to come 
forward, but they know that they would be targeted for 
retaliation if they were to do so.''
    So, again, I think that the fact that you are hiring 
expensive lawyers to defend your managers, the fact that you 
have a policy that rank-and-file members have to come and check 
in with you--
    Mr. Cordray. No. No. You are just not understanding my 
point. Maybe it is on purpose. I don't know. But the lawyers at 
the agency cannot represent the agency in matters where there 
is potential conflict with the agency. I am sure that--
    Mr. Duffy. The gentleman's time has expired.
    Mr. Barr. The fact that you are hiring the most expensive 
law firm--
    Mr. Duffy. The gentleman's time has expired.
    Mr. Cordray. In terms of the document you just read from, I 
am not sure what it is. It has never been shared with me. How 
would I have any idea what--
    Mr. Duffy. The gentleman's time has expired.
    The Chair now recognizes the gentleman from Pennsylvania, 
Mr. Rothfus, for 5 minutes.
    Mr. Rothfus. Thank you, Mr. Chairman.
    Director Cordray, earlier, when Congressman Duffy started 
his questions, he asked you a question about a statement that 
Mr. Scott Pluta had made, and he asked you a pretty 
straightforward question, whether or not you agreed with Scott 
Pluta's characterization of the work of this committee as 
``political theater.''
    You did not say, ``I agree with that.'' You did not say, 
``I disagree with that.'' You did not say, ``Yes.'' You did not 
say, ``No.'' You said, ``I hope that would not be the case.''
    Mr. Cordray. That is my view. I hope that would not be the 
case.
    Mr. Rothfus. Is this hearing today political theater?
    Mr. Cordray. I hope that would not be the case.
    Mr. Rothfus. That is a yes-or-no question.
    Mr. Cordray. It is just a matter of vague opinion that 
someone might give. I don't know what to say about that.
    Mr. Rothfus. You told Congressman Hultgren that you watched 
Angela Martin's testimony.
    Mr. Cordray. I have watched all the subcommittee hearings, 
so I obviously take them seriously and consider them to be 
oversight.
    Mr. Rothfus. The question for you is: Was Angela Martin's 
testimony political theater?
    Mr. Cordray. As I said, I paid attention closely myself to 
the subcommittee hearings. This is oversight of my agency. I am 
the responsible party to the agency.
    Mr. Rothfus. This is frustrating.
    Mr. Cordray. I don't regard--
    Mr. Rothfus. Are you aware of whether any of your senior 
managers commenting on our oversight efforts said, ``Congress 
can't do s---''--I am not going to say the word because I don't 
want my kids--
    Mr. Cordray. Sir, I don't know where this is coming from. I 
have never heard this before. Is this an allegation? Is this 
somehow documented evidence? What are you referring to?
    Mr. Rothfus. This is what we are hearing, that--and the 
fact that you wouldn't say that you don't think that Angela 
Martin's testimony was political theater--I am trying to 
understand the culture of what is going on at the CFPB.
    And we have somebody saying, one of your senior managers 
saying about our oversight efforts, ``Congress can't do s---,'' 
blank, four-letter word.
    Are you aware of them--anybody ever saying that?
    Mr. Cordray. I am not. So you are just saying something 
that I have no idea whether it has any basis in fact or is, in 
fact, true.
    Mr. Rothfus. Does the Federal Reserve Inspector General 
have independent access to your email servers?
    Mr. Cordray. Yes. I believe so. I don't know that they have 
been actively engaged in overseeing it.
    Mr. Rothfus. We will ask you to follow up on that because, 
if they don't have independent access, I am going to ask you to 
commit to providing the Fed Inspector General with independent 
access--
    Mr. Cordray. Certainly, as I have said, I take 
congressional oversight very seriously, and I am the 
responsible party for it. I would hope that it would not ever 
degenerate into political theater.
    It was the case today, I was told on the way over here, 
that some document that I have never seen, some 20-page 
document, was leaked by someone to the media, a half-hour 
before the hearing, designed to make the Bureau look bad, and 
not shared with us so that we could do anything about it.
    Mr. Rothfus. Ms. Martin testified--
    Mr. Cordray. So that doesn't strike me as part of the 
process.
    Mr. Rothfus. Let me ask you this: Ms. Martin testified that 
the intake section within the Office of Consumer Response was 
known as the ``plantation'' because most, if not all, of the 
employees within that section were African-American.
    Prior to Ms. Martin's testimony, did you ever hear that 
phrase used to describe any office at the Bureau?
    Mr. Cordray. No. I never had. And I want to say a couple of 
things because that has been misused and misinterpreted.
    There have been suggestions that management referred to the 
unit as that. That has never been the case, as far as I can 
tell.
    There are also allegations that people in that unit never 
get a chance for advancement, never get a chance for promotion. 
That is factually false.
    There have, in fact, been about 50 promotions of people in 
the intake section, several of them multiple times--
    Mr. Rothfus. Do you deny--
    Mr. Cordray. So the factual testimony there was erroneous.
    Mr. Rothfus. Do you deny that people use the term ``the 
plantation?''
    Mr. Cordray. I don't know one way or another about that.
    Mr. Rothfus. So you have taken no action to investigate the 
use of that term?
    Mr. Cordray. What was said was--and just listening to the 
testimony--that this was a unit where people were stuck there 
and had no chance to advance and that somehow--
    Mr. Rothfus. You never heard it referred to as the 
``plantation?''
    Mr. Cordray. Not until that hearing. No.
    Mr. Rothfus. Did you take any action after you heard that 
to ask questions about whether--
    Mr. Cordray. Yes, I did. I did. And what I found is, what 
was alleged in that hearing was, ``Gee, nobody ever gets 
promoted. Nobody ever has a chance to advance. They are just 
kind of stuck there.'' That is not true.
    Mr. Rothfus. Have you told people at the CFPB--
    Mr. Cordray. People have been promoted to management. 
People have been promoted outside--
    Mr. Rothfus. --not to use language like that?
    Mr. Cordray. I'm sorry?
    Mr. Rothfus. Have you told people at the CFPB, your 
managers, never to use language like that? Anybody?
    Mr. Cordray. Both that and the other allegation that cannot 
be substantiated. It is hearsay about the--
    Mr. Rothfus. Why was Dennis Slagter removed as head of the 
Office of Human Capital?
    Mr. Cordray. Beg your pardon?
    Mr. Rothfus. Why was Dennis Slagter removed as head of the 
Office of Human Capital?
    Mr. Cordray. That was a personnel move within the agency to 
a different position that really had nothing to do with this.
    Mr. Rothfus. Was he demoted?
    Mr. Cordray. I don't believe he was. It was a different 
move within the agency. It had nothing to do with this.
    Mr. Duffy. The gentleman's time has expired.
    The Chair now recognizes the gentleman from Texas, Mr. 
Green, the ranking member of this subcommittee, for 5 minutes.
    Mr. Green. Thank you, Mr. Chairman.
    Mr. Cordray, do you think that we should treat the 
regulated the same way we treat the regulators, meaning do you 
think we ought to be fair to everybody?
    Mr. Cordray. I do think that is one of the premises that 
underlined these hearings as they began, which is that we 
should treat our own employees the same way we treat the 
industry in fair lending matters. And I embrace that, which is, 
in part, why we ended up changing our performance review system 
and remediating employees just as we would do with a company 
that we felt was potentially having issues with the fair 
lending laws.
    Mr. Green. I think that Congress should be fair to 
regulators and the regulated alike. We have had extensive 
hearings with reference to the CFPB. I believe you have 
appeared more than 50 times, and you have addressed any number 
of questions from various areas of concern that, quite frankly, 
many were not things that you had knowledge about. You weren't 
privy to what actually happened, but you have done your best to 
address these things.
    And because I think it is fair to address the regulated to 
the same extent that we address the regulators, I would ask: Do 
you think that we would have the top person at Goldman Sachs 
sitting here addressing questions about sexual assault at 
Goldman Sachs, as has been alleged? Just an allegation.
    Do you think we would have the top person at Goldman Sachs 
here to address how Goldman Sachs' employees and managers mock 
the intelligence of women?
    Do you think that we would have the top person at Goldman 
Sachs seated here before the full committee addressing issues 
about pay and how women are alleging that they are receiving 
less pay for the same work that men are doing? Just an 
allegation.
    Do you think that we would have the top person at Goldman 
Sachs appearing before Congress to ask about social activities 
that take place at bars and clubs after hours, about escort 
services, about people who are hired to come to parties? These 
are allegations.
    These allegations relate to an entity that comes under the 
purview of the jurisdiction of this committee.
    I am honored that my friends have said that they want to 
get to the bottom of discrimination and they have said in 
words, perhaps not as explicit as I am about to say, that this 
is not singling out the CFPB. This is not about trying to bring 
down the CFPB. They have made it clear that they want to get to 
the bottom of these allegations of discrimination.
    So since we want to be fair in Congress--and I believe we 
do--I have asked that we bring someone before this committee so 
that we can start to talk about some of these allegations at 
Goldman Sachs. It seems fair to me that Goldman Sachs would be 
treated the same way the CFPB is being treated.
    I haven't heard Goldman Sachs complain about the way the 
CFPB is being treated. As a matter of fact, I haven't heard any 
of the regulated complain about the way these hearings are 
taking place. I would assume that, since they are not 
complaining, perhaps they are acquiescing, at minimum, and they 
find reason to think that these hearings are not totally 
inappropriate.
    So, we have sent a letter. And I am going to ask at this 
hearing and I will be asking at future hearings, ``Where are we 
on the Goldman Sachs case? When are we going to hear not only 
about the regulators, but also the regulated?''
    Invidious discrimination ought not exist anywhere. We ought 
to do all that we can to eliminate it everywhere. We have 
worked with you, and I trust that we will be working with some 
of these other regulated entities, including Goldman Sachs.
    Mr. Duffy. The gentleman's time has expired.
    I would join the ranking member in asking that both the CEO 
of Goldman Sachs and President Obama come to this committee and 
explain the allegations of paying women less in their 
organizations.
    Mr. Cordray, thank you for being here today.
    Mr. Green. Mr. Chairman, if I may, since you referred to my 
comments--and I appreciate your kind words--let me just accept 
your invitation to have the CEO of Goldman Sachs appear.
    Mr. Duffy. How about the President?
    Mr. Green. I will be more than honored to address issues 
related to the Presidency, but our committee doesn't have 
jurisdiction over the President. We have jurisdiction over 
Goldman Sachs, however.
    And since you have connoted and indicated that you are 
amenable to doing this, I would like for the record to reflect 
it, and I would like for you and other Members to work with you 
to see if we can't get started and see if we can't get Goldman 
Sachs here.
    Mr. Duffy. And I will join you when we bring the President 
in as well, both of them, with the allegations of paying women 
unfairly.
    With that, Mr. Cordray, thank you for coming in today.
    We trust that anyone else who comes forward before this 
committee would not be retaliated against by the CFPB. Do I 
have your commitment on that? I am sure from your testimony 
today the answer to that would be ``yes.''
    Mr. Cordray. And that has been what you have seen over the 
last few months since others have testified.
    Mr. Duffy. And the answer is ``yes?'' No one else will be 
retaliated against?
    Mr. Cordray. The answer is ``yes.''
    Mr. Green. Mr. Chairman, if I may, a point of inquiry. It 
appears that we have gone into a third round of questioning--
    Mr. Duffy. I will just--
    Mr. Green. Just equal time, Mr. Chairman. That is all I 
ask.
    And with that request, let me suggest that--back to the 
comment about Goldman Sachs and the President, again, we have--
    Mr. Duffy. I gave you--
    Mr. Green. This would be my time. This would be my time--
    Mr. Duffy. I gave the ranking member--
    Mr. Green. I understand. But I was tolerant. You entered 
into a third round. So let us continue.
    Mr. Duffy. If you want to do a third round, we can do a 
third round. But I gave you time--
    Mr. Green. We can do as many rounds as you would like, Mr. 
Chairman, but let me be fair to myself. I will not tolerate 
unfairness against myself. In fairness to me, I want to make 
the record clear.
    We have jurisdiction over Goldman Sachs. We don't have 
jurisdiction--this committee has jurisdiction over all of the 
financial entities that are regulated. And I think that we 
ought to bring Goldman Sachs in. I am pleased that you agree--
    Mr. Duffy. I would disagree, that we don't have 
jurisdiction over the CFPB and the Administration.
    But let's leave that alone. Maybe we can talk about that 
after the committee hearing.
    Thank you for coming in, Mr. Cordray.
    The Chair notes that some Members may have additional 
questions for this witness, 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 this witness and to place his 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.
    With that, the hearing is adjourned.
    [Whereupon, at 6:05 p.m., the hearing was adjourned.]
    
                            A P P E N D I X



                             July 30, 2014
[GRAPHIC] [TIFF OMITTED]