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CFPB Employee Rating Disparities Go Beyond Just Race, Agency Says

WASHINGTON — The Consumer Financial Protection Bureau released an internal report on Monday that showed "statistically significant disparities" in employee evaluations based not just on race, but also age, location, tenure, and whether staffers were part of the agency's union. 

As a result, the CFPB said it was scrapping its current system and would pay most agency employees as if they received the highest rating available at the time of their evaluation. Ultimately, the remediation to its staff is expected to cost between $5 million to $5.5 million, a spokesman said.

In an e-mail to all employees, CFPB Director Richard Cordray acknowledged the disparities, saying there "was no single factor that caused this result."

"We have determined that there were broad-based disparities in the way performance ratings were assigned across our employee base in both 2012 and 2013," Cordray wrote. "These differences indicate a systemic disadvantage to various categories of employees that persisted across divisions, offices, and other employee characteristics."

The report's release comes ahead of a hearing Wednesday by a House subcommittee probing allegations of retaliation and discrimination among employees at the CFPB. The Financial Services' oversight subcommittee has subpoenaed two agency officials and one representative of the National Treasury Employees Union to testify.

The ratings disparities were first made public by American Banker in a March 6 article that found African-Americans and other minority employees were far more likely to receive lower evaluations than white employees. The more than 1,100 employees were rated on a scale of 1 to 5; the agency grants greater benefits, including raises and benefits, to those who receive higher scores.

The story relied on an 2013 internal agency report that found 74.6% of whites received ratings of 4 or 5 compared to 65.2% of Hispanics and 57.6% of African-Americans. One-fifth of white employees, or 20.7% received a 5, compared with 10.5% of African-Americans, the report said.

The new report released Monday was a "deeper review," Cordray said. It confirmed there were disparities among employee evaluations by race, but said that the problems were far more extensive than previously known, including additional criteria like age and location.

The report found that "the average ratings for black and Hispanic employees were lower than the average ratings for white and Asian employees. The difference was statistically significant in both instances."

The report said the average white employee received a 3.94 rating, compared with 3.81 for Asian employees, 3.69 for Hispanics and 3.63 for blacks.

Additionally, the report concluded that "ratings for white employees are more concentrated around the 4 and 5 ratings levels than black and Hispanic employees, and ratings for black and Hispanic  employees are concentrated in the 3 rating level."

For the first time, the report also broke down a disparity in evaluations according to age. It found that employees less than 40 years old received an average rating of 3.94, while older employees received an a rating of 3.78 on average.

The disparity was even greater for employees who were part of a union versus those who were not. Nonunionized employees received an average rating of 4.04; unionized employees received an average 3.79 rating.

Disparities were also present depending on whether the employee worked at the CFPB's headquarters versus out in the field or at a regional office. Employees at the agency's D.C. headquarters received an average 3.95 rating, compared with 3.63 for employees outside that area.

Newer staff on average also received worse evaluations: a 3.69 rating for employees with less than one year of tenure, compared with 3.92 for employees who had worked at the agency for one year or longer.

(The report found there was not a statistically significant disparity related to gender. Women employees received an average 3.89 rating compared to 3.83 for men.)

"In sum, our performance ratings system did not meet our own objectives and expectations," the report said. "The analyses we undertook found statistically significant disparities indicating that employees were more likely to receive higher or lower overall performance ratings based on their race, age, pay grade, bargaining unit membership eligibility, tenure or whether they worked within the agency. For these reasons, we have decided to revisit our approach to our performance management program."

As for why its rating system didn't function as planned, the report said that while "well-intentioned," the evaluation system "was too sophisticated for a new agency like the CFPB," which was growing rapidly since it officially opened its doors in 2011. It said many managers did not even use the system until the fall of 2013 and lacked adequate training.

"Although the fiscal year 2013 performance management system included mechanisms to ensure fair and equal treatment of individual employees, it lacked policies and procedures for addressing more systemic problems in real time," the report said.

The CFPB said it would remediate payment to any CFPB employee — except senior leadership — who received a 3 or 4 summary performance rating in fiscal years 2012 or 2013. Such staffers will be paid as if they received a 5 at the time of their evaluation, including merit and lump sum payments.

"We recognize this remediation addresses the outcome of the performance review system rather than the underlying system itself," Cordray wrote in his e-mail. "To accomplish the latter goal will require more time, but we are committed to doing it.  By self-identifying and self-correcting these issues, we are holding ourselves accountable to the same standards of fairness that we expect of our regulated entities."


(7) Comments



Comments (7)
This is crazy. The differences are minimal, showing that some of all categories are rated 4-5. If all the percentages were equal, it would be more suspicious. 3.63 is the lowest average, showing that at least 50% are getting 4s and 5s. Ratings should be comparative - these show that all categories are rated higher that average. And if a problem is suspected - give everyone a 2.5 - it is crazy to give everyone a 5. New workers should expect a lower average rating unless everyone starts a job being perfect? What would are we living in? And unfortunately, non-unionized workers, on average, have a higher work ethic as well. Rank the rankers and make adjustments as needed - but stop giving everyone a gold medal. Their incentive to improve just went to zero.
Posted by ccorcoran | Monday, May 26 2014 at 7:04AM ET
I will also point out that the people who may have participated in (or tolerated) the pattern or practice of discrimination at the CFPB also received the biggest bonus that they can get. Now, again, where is the Justice in that? So, is that how it works for the CFPB, the people who generate (or tolerate) the fair lending issues at lenders in the US are all supposed to get the biggest bonuses?

Maybe some of the qui tam lawyers can look into that (but the CFPB is probably immune) - or better yet, the Federal Reserve's Inspector General can look into this further.
Posted by jpodvin | Tuesday, May 20 2014 at 2:17PM ET
Why not reduce the salaries and bonuses to that of the lesser paid saving money instead of spending another 5 million of taxpayer funds? This regulatory group, a fantacy of Mr. Dodd and Mr. Frank with the help of Ms. Warren, is unecessary in the first place. The community banks are over regulated by regulators that do not have a vested interest in the process other than to use their congressional given powers to harrass the industry. In community banking for over 62 years, it is sad that it now takes 21 pages of printed documents to open an account. That everywhere one goes, doctor, cash a check, use a credit card, open a bank account, enter some sports arenas,board and airplane, one has to provide a picture identification but to vote you do not provide anything. It is the liberals who lack experience and hands on knowledge about running a bank, who promote not identifiction for voters in order to allow takers of taxpayer funds to vote these same people into office. Our founding fathers are shivering in their graves over the way this once wonderful nation is now being abused by the current administration and its leaders.
Posted by Alfred Kreps | Tuesday, May 20 2014 at 1:33PM ET
Give them credit for acknowledging the issue, but blaming it on an evaluation system that "was too sophisticated" cannot explain the disparities and a pattern of discrimination. And is this how the CFPB will address suspected discrimination in lending - by requiring lenders to assume that all applicants have A+ credit scores? The remediation is too convenient, and taxpayers will be saddled with it for years.
Posted by MrPotter | Tuesday, May 20 2014 at 12:31PM ET
In the real world, everyone is not the MVP. There is only one - ask LeBron. However, in the CFPB, everyone is the MVP and get's the biggest bonus. Somewhere in the CFPB there is the worst rated examiner/analyst/manager, etc. and that person just got the biggest bonus that they can get.

Now is that Justice?
Posted by jpodvin | Tuesday, May 20 2014 at 11:03AM ET
jpodvin asks the right question. The answer is that the press supported this ridiculous and dangerous agency and structure. Wasn't the lack of accountability the root cause of the financial crisis? The CFPB is accountable to no one.
Posted by kvillani | Tuesday, May 20 2014 at 10:48AM ET
This could only happen in the Government and in an agency designed to have minimal oversight. My question is what would happen if a mortgage lender, mortgage servicer or a bank did this? What would regulators say about that? Is this safe and sound? "Everyone get's the biggest bonus that they can get because there are disparities in the system." There are no perfect systems. The money ($5+ million) that they are spending here is money that the Federal Reserve would return to the Treasury at the end of the year to pay off our Country's enormous debt. This result negatively impacts all taxpayers. Who is the oversight body for the CFPB - Congress? The President? Why doesn't the Press ask some questions about this!
Posted by jpodvin | Tuesday, May 20 2014 at 10:37AM ET
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