As deputy director of the consumer Financial Protection Bureau, Raj Date helped craft a slew of new mortgage rules, including the strict underwriting criteria required for a home loan to be considered a "qualified mortgage" entitled to extra cover against borrower lawsuits.
So was it yet another example of Washington's revolving door when Date got together this spring with fellow CFPB veterans and formed a company, called Fenway Summer, that will deal in mortgages that don't meet QM standards?
A group of Republican lawmakers certainly seems to think so. In a letter to Date this summer, five members of the House Oversight and Financial Services committees complained that his role in the drafting of the QM rules gives his firm an advantage in making non-QM loans.
"Simply put, it appears that former CFPB employees are now offering financial products in a market sector created by the very rules they were in a position to influence while working in senior leadership positions at the CFPB," says the letter, which was signed by Reps. Darrell Issa, Jeb Hensarling, Shelley Moore Capito, Jim Jordan and Patrick McHenry.
The unspoken but heavily implied accusation is that Date and others somehow influenced the creation of the QM rule so that they could take advantage of it later.
It's a narrative seemingly fit for the times. Indeed, there is much debate over what happens after officials leave government service. (It should be noted that all five lawmakers who signed the Date letter have had staffers who now lobby Congress on behalf of the private sector.)
Date has pledged not to lobby the CFPB either on behalf of his firm or its advisory clients. If that's the case, then Michael Smallberg, an investigator with the nonpartisan Project for Government Oversight, says Date's situation has little in common with classic revolving-door conflicts, which typically arise when former government officials use insider knowledge to weaken agency policies.
"If he isn't representing clients before the agency or telling companies how to circumvent agency rules, we don't see a big problem here," Smallberg says.
Date, for his part, argues that it would have been impossible for him or anyone else to guide the QM rule to a specific outcome or make determinations that would maximize the potential to profit from it later on. "I can't imagine a way to manipulate a federal rule-making for your own personal benefit," Date says. "And I certainly know I didn't."
Some bankers have voiced concern that the new rules mean it will be much harder for lenders to profitably make non-QM loans. If Date succeeds in proving them wrong by doing well for himself in the space, he says it won't be because of anything he was privy to at the CFPB.
"There is no secret QM rule," Date says. "Agency rulemakings are done in full public view. Congress required the rule. The Fed proposed the rule. And then there were literally thousands and thousands of public comments. After all of that, the notion that there is something available under the surface and magically visible only to me is just not true."