Former CFPB official 'may have abused his authority': Inspector general

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A former Consumer Financial Protection Bureau official criticized for racially charged writings is drawing more ire from Senate Democrats over allegations that he may have improperly leaned on a subordinate to come to his defense.

Sens. Sherrod Brown, D-Ohio, and Elizabeth Warren, D-Mass., on Monday called for the ouster of Eric Blankenstein, now a senior counsel at the Department of Housing and Urban Development. They were responding to a CFPB inspector general report that he "may have abused his authority" during the fallout last year over revelations he used a racial slur in an incendiary blog 14 years ago.

The report says Blankenstein "used his position ... to request that a subordinate, provide a statement in his support" to The Washington Post, which was reporting on his past writings.

Blankenstein, a politcal appointee, “may have misused his position for private gain,” and “created the appearance of a violation of the Standards of Ethical Conduct for Employees of the Executive Branch,” according to the redacted 14-page inspector general report released by Brown and Warren.

Blankenstein, who headed the CFPB's fair-lending office for 18 months, resigned from the bureau in May and a month later joined the HUD's Office of General Counsel.

The senators have asked for HUD to fire Blankenstein, for the CFPB to dismiss all political appointees and for the inspector general to investigate the dismantling of the CFPB’s Office of Fair Lending, which was stripped of its enforcement powers by former acting CFPB Director Mick Mulvaney. Blankenstein was the CFPB’s former policy director of supervision, enforcement and fair lending, at the time.

“Based on these undisputed facts, we ask that you immediately open an investigation into the dismantling" of the CFPB’s Office of Fair Lending and Equal Opportunity "and its supervisory and enforcement functions. There are too many unanswered questions,” Brown and Warren wrote in a letter to the inspector general.

In a letter to HUD Secretary Ben Carson, the senators questioned why Blankenstein was allowed to resign from the CFPB and move to another government job.

“Continuing to employ Mr. Blankenstein at a high-level of position at HUD despite the troubling findings and conclusions of the inspector general’s report would send a disturbing message,” Brown and Warren wrote.

Blankenstein first came under fire in September after the Post reported he had used a pen name in blog posts from 2004 suggesting that people who use racial slurs are not necessarily racist and that most hate crimes were “hoaxes.”

The inspector general investigation focused on whether Blankenstein misused his position or engaged in gross mismanagement by asking Patrice Ficklin, the director of the Office of Fair Lending, to send a statement of support to the Post before the story ran.

Ficklin initially was quoted by the Post supporting Blankenstein, but pulled her support two days later saying she had not read the original blog posts at the time

The inspector general found no evidence of coercion but stated that "Blankenstein may have induced [her] to provide the statement." However, Ficklin stated that she felt she "had to provide the statement to preserve" the fair-lending program, it said.

Ficklin's name is redacted in the inspector general report, but she was identified based on past comments at the time.

After the Post article ran, Blankenstein tried to defuse the furor by sending an email to staff saying he had used a "poor choice of words" and that the "tone and framing of my statements reflected poor judgment,” but he did not apologize or resign.

The report also described how Blankenstein had asked Mulvaney whether he should resign. According to Blankenstein's account in the report, Mulvaney told him that he "wasn't going anywhere," that he was "fine with it" and, "You got smeared by the Washington Post."

“Blankenstein described his encounter … as Mulvaney giving ‘him a high-five that morning in, sort of, celebration of the article,’ ” the report said.

Brown and Warren also sent a letter Monday to CFPB Director Kathy Kraninger, questioning why Blankenstein was allowed to resign from the CFPB rather than be terminated. The latter would have prevented him from getting another government job. The senators also asked Kranginger to eliminate all political appointees.

“Blankenstein’s case lays bare the damaging effects of introducing large numbers of political appointees into an independent regulator,” the senators wrote.

“Political appointees do not have the same hiring requirements as career staff and are often chosen for their political views, rather than their expertise. That appears to have been the case with Mr. Blankenstein, who was put in charge of the CFPB’s supervision, enforcement and fair-lending offices and a workforce of hundreds of career staff, despite minimal experience with bank supervision, management or knowledge of the relevant consumer and anti-discrimination laws.”

Before joining the CFPB in 2018, Blankenstein spent six months as an assistant general counsel in the U.S. Trade Representative’s office, and had been a lawyer for eight years at Williams & Connolly.

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