By Charlene Crowell ( TriceEdneyWire.com) – Recent and stunning disclosures of racially-offensive writings by a high-ranking official at the Consumer Financial Protection Bureau (CFPB) has unleashed an escalating barrage of criticisms, including calls for the official to be fired and more probing questions regarding the agency’s commitment to fair lending. Since a September 28 Washington Post article first reported how Eric Blankenstein, CFPB’s Policy Director for Supervision, Enforcement and Fair Lending, used a pen name in blogs dating as far back as 2004, a spate of fury has been unleashed. Disguising his authorship, Blankenstein claimed that the use of the N-word was not racist, and further alleged that most hate crimes were hoaxes. A subsequent New York Times article alleged that people who perpetuated the Obama birther conspiracy are not racist either, and noted that as late as 2016, Blankenstein’s personal Twitter account posted racially charged comments. Keep in mind that Blankenstein was hand-picked by CFPB head Mick Mulvaney. Patrice A. Ficklin, a CFPB career staff member and Director of its Office of Fair Lending and Equal Opportunity reports to Blankenstein and is quoted in the Post article. Ficklin said, “And while he has been collegial, thoughtful and meticulous, I have had experiences that have raised concerns that are now quite alarming in light of the content of his blog posts — experiences that call into question Eric’s ability and intent to carry out his and his Acting Director’s repeated yet unsubstantiated commitment to a continued strong fair lending program under governing legal precedent.” By October 1, Anthony Reardon, National President of the National Treasury Employees Union, advised CFPB of its dissatisfaction with the Blankenstein blogs. “There should be zero tolerance for comments that Blankenstein has admitted authoring and nothing less than swift and decisive action is called for,” said Reardon. “That someone with a history of racially derogatory and offensive comments has a leadership position at CFPB reflects poorly on CFPB management and your commitment to fulfilling the mandate of the agency to ensure that discriminatory and predatory lending practices are stopped.” Two days later, on October 3, the Center for Responsible Lending (CRL) publicly called for Blankenstein to be fired. “Mr. Blankenstein must be removed from his post and this must be combined with a demonstrable commitment by CFPB head Mick Mulvaney to fair lending,” said Yana Miles, CRL’s Senior Legislative Counsel. “Thus far, the Mulvaney approach has been worse than inaction – it has been an appalling retreat from enforcing anti-discrimination laws…. The enduring legacy and present-day experience of financial discrimination is the key driver of the racial wealth gap. Vigorously addressing this is a legal and moral imperative.” A second civil rights organization agreed with CRL’s call for Blankenstein’s termination. “Eric Blankenstein’s racist and sexist remarks show that he is not fit to lead the CFPB Office of Fair Lending,” said Vanita Gupta, president and CEO of The Leadership Conference on Civil and Human Rights. “Our nation’s history of financial discrimination is the key factor in the growing racial wealth gap.” “Entrusting Blankenstein given his history of racially derogatory remarks will undermine progress for fair lending efforts to close the gap,” continued Gupta. “If the CFPB is serious about eradicating discrimination, it must immediately remove Blankenstein, and must ensure that it is led by a person with a demonstrated commitment to civil rights enforcement. His writings make clear that Mr. Blankenstein is not that person.” The same day, another pivotal development occurred. A letter signed by 13 U.S. Senators representing 11 states wrote Mulvaney, demanding answers to a series of questions no later than October 22. The questions span Mulvaney’s personal awareness of the writings, the guidelines and procedures used to fill the position, whether a Member of Congress, or an executive branch employee recommended his hiring, what action he intends to take as Acting Director and more. In part, the Senators’ letter states, “We are deeply concerned that you have placed a person with a history of racist writing at a senior position within the Consumer Financial Protection Bureau…Mr. Blankenstein was not hired through the competitive service process like most CFPB employers; he is one of your hand-selected political appointees. Further, you have specifically tasked him with overseeing the CFPB’s fair lending supervision and enforcement work at a time when you have decided to restructure the Office of Fair Lending and Equal Opportunity.” The letter was signed by Senators Richard Blumenthal (D-CT), Cory Booker (D-NJ), Sherrod Brown (D-OH), Maria Cantwell (D-Washington State), Kirsten Gillibrand (D-NY), Kamala Harris (D-CA), Edward Markey (D-MA), Catherine Cortez Masto (D-NV), Jack Reed (D-RI) Mark Warner (D-VA), Robert Menendez (D-NJ), Elizabeth Warren (D-MA), and Ron Wyden (D-OR). Even before the Blankenstein scandal, Mulvaney’s actions and inactions at the CFPB have brought a series of concerns by civil rights and consumer advocates alike. Particularly noteworthy among their stated concerns under Mulvaney include: CFPB has yet to issue any violations of the Equal Credit Opportunity Act; The Bureau declared an intent to ignore the Disparate Impact standard, a long-standing legal test that holds the effects of discrimination, not the intent are legal violations; Personally praised the repeal of anti-discrimination auto lending guidance; Sided with payday lenders in their challenge of the Bureau’s payday rule promulgated under the previous director; Announced the Bureau’s fair lending office would be stripped of its supervisory and enforcement powers; and Relegated the development of regulation on fair lending for minority and women-owned businesses to a low-level concern. It took decades of vigilant struggle for civil rights, fair lending, and consumer protection to be codified in federal laws. It is time to remind the CFPB and all federal agencies that they have a duty to uphold the nation’s fair lending laws – regardless of personal beliefs. Charlene Crowell is the Center for Responsible Lending’s Communications Deputy Director. She can be reached at Charlene.firstname.lastname@example.org.
By Charlene Crowell (Communications Director, Center for Responsible Lending)
Record-breaking, back-to-back hurricanes in Houston and Florida brought unprecedented winds and rains affecting millions of Americans. Yet another storm just as brutal, but financial in nature, is raging and affects at least 143 million Americans: that’s the Equifax data breach that took place from mid-May to July of this year.
On July 29, Equifax, one of the three major credit reporting corporations, discovered that unauthorized data access had occurred. Yet it was not until September 7 when the multi-national data breach was announced publicly. This massive cybersecurity breach includes federal income tax records, as well as employee records for government employees and those of Fortune 500 firms. Even recipients of major government programs like Medicare, Medicaid, and Social Security are affected.
For consumers, the personal information exposed to fraud and identity theft could mean a lifetime of closely monitoring and defending personal data to fight theft, fines and more. For businesses, questions will emerge as to whether millions of credit accounts were fraudulently opened and additionally whether they will be held partially responsible for its perpetuation.
In reaction to this cybercrime, a surge of federal class action lawsuits are going after Equifax. As many as 50 have been filed in at least 14 states and the District of Columbia as of September 12. The Federal Bureau of Investigation is reportedly examining what went wrong from a criminal perspective. On the civil side of the law, the Consumer Financial Protection Bureau (CFPB) is beginning its own independent investigation.
Now a growing number of bipartisan inquiries from Capitol Hill are demanding to know why these breaches of personally identifiable information (PII) came about, what actions Equifax took, and what the global firm intends to do on behalf of consumers whose names, birth dates, addresses, Social Security numbers and drivers’ licenses are all in jeopardy. Equifax also knew that an estimated 209,000 credit card holders and some 182,000 consumers in the U.S. who have a dispute on file with a creditor also had comprised PII.
“This hack into sensitive information compiled and maintained by Equifax is one of the largest data breaches in our nation’s history and someone has to be held accountable,” said Congresswoman Maxine Waters, the Ranking Member of the House Financial Services Committee in an article for “Business Insider.”
“Given the important role credit scores play in the lives and financial futures of hardworking Americans, Congress must diligently examine the way our credit reporting agencies are operating and impose additional statutory and regulatory reforms to protect the integrity of the country’s credit reporting system,” Waters continued.
In a September 11 letter to Richard F. Smith, Equifax’s Chairman and Chief Executive Office, the Chair and Ranking Member of the Senate Finance Committee went further to pose a series of questions to be answered by September 26. Issues raised in the letter include binding arbitration clauses that deny affected consumers the right of class action lawsuits, the firm’s security systems and controls, how consumers can expect to be officially notified, and what, if any, protections Equifax will offer to affected consumers.
“The scope and scale of this breach appears to make it one of the largest on record, and the sensitivity of the information compromised may make it the most costly to taxpayers and consumers,” wrote Senators Orrin Hatch, Senate Finance Chair and Ron Wyden, the committee’s Ranking Member.
The following day, September 12, another letter to Equifax included questions on what data changes to Equifax’s security plans and procedures were made as this breach now becomes its third one in only two years; the letter was signed by 24 Members of Congress, who serve on the House Energy and Commerce Committee and represent 15 states. Three are also members of the Congressional Black Caucus: Representatives G.K. Butterfield of North Carolina, Brooklyn’s Yvette Clarke and Bobby L. Rush of Chicago.
“Your company profits from collecting highly sensitive personal information from American consumers—it should take seriously its responsibility to keep data safe and to inform consumers when its protections fail,” wrote the representatives.
“The massive Equifax data breach is one of the largest in our country’s history, affecting half of the United States population and nearly three-quarters of consumers with credit reports,” said Chi Chi Wu of the National Consumer Law Center. “A security freeze is the most effective measure against “new account” identity theft, because it stops thieves from using the consumer’s stolen information.”
To follow Wu’s advice, consumers will need to contact all three of the major credit reporting bureaus and request that no new accounts be opened in their names. Once requested, consumers will not be able to easily apply for new credit accounts or apply for a loan. An additional layer of precaution would be to contact every creditor and request that respective accounts be flagged for unusual or new credit activity. Detailed information on how consumers caught in the Equifax breach can take these and other steps to protect their credit is available on the Federal Trade Commission’s website.
The Consumer Financial Protection Bureau also has another consumer-friendly rule that Congress is currently fighting: preserving the right for consumers to file lawsuits when financial disputes could not be resolved otherwise. Announced on July 10, Richard Cordray, CFPB Director explained why the rule is important.
“Arbitration clauses in contracts for products like bank accounts and credit cards make it nearly impossible for people to take companies to court when things go wrong,” said CFPB Director Richard Cordray. “These clauses allow companies to avoid accountability by blocking group lawsuits and forcing people to go it alone or give up. Our new rule will stop companies from sidestepping the courts and ensure that people who are harmed together can take action together.”
Days later on July 20, Capitol Hill lawmakers turned to a seldom-used option, the Congressional Review Act, to deny the rule from taking effect. Sen. Mike Crapo, Chair of the U.S. Senate Committee on Banking, Housing and Urban Affairs Committee and Rep. Jeb Hensarling, Chair of the House Committee on Financial Services announced a coordinated legislative attack to roll back CFPB’s arbitration rule. The law allows Congress to fast track a veto of new federal regulation with limited debate and a simple majority vote in each chamber.
On July 25, the House passed its resolution on a highly-partisan vote of 231-190. To date, the Senate has yet to take a corresponding vote.
“The Equifax data breach is yet another reason to support the CFPB’s arbitration rule that would restore consumers’ day in court,” noted Melissa Stegman, a senior policy counsel with the Center for Responsible Lending (CRL). “When a company has injured consumers, it should not also decide whether those affected have a right to pursue justice. Although Equifax claimed it will not assert arbitration in the aftermath of its data breach, consumers must be able to challenge corporate wrongdoing in the courts and Congress should cease its efforts to quash the rule.”