Senate Dems to Mulvaney: How did embattled aide get CFPB job?

Register now

Senate Democrats on Wednesday called for acting Consumer Financial Protection Bureau Director Mick Mulvaney to explain the vetting process that led to the hiring of a political appointee whose past incendiary writings have caused upheaval at the agency.

Sen. Sherrod Brown of Ohio, the lead Democrat on the Senate Banking Committee, as well as 12 other Democratic senators, including Sen. Elizabeth Warren of Massachusetts, sent a letter to Mulvaney asking him to explain how Eric Blankenstein, the CFPB’s policy director of supervision, enforcement and fair lending, was hired.

Blankenstein wrote on blog posts in 2004 that people who use racial slurs are not necessarily racists and dismissed most hate crimes as “hoaxes.” After the writings were first revealed in a Washington Post report last week, three senior officials and the bureau’s union withdrew their support for him.

“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,” Brown wrote in the letter. “Only after an outcry from CFPB career staff did Mr. Blankenstein send a note apologizing for the 'framing' and 'tone' of his arguments — but he did not apologize for his defense of racial slurs, nor did he apologize for reflexively disbelieving victims of hate crimes.”

Separately, Blankenstein canceled a previously scheduled meeting of his division for Thursday, saying many of the bureau's staff "may have questions about the events of the last few days," and that top managers "are working on next steps," he wrote in an email obtained by American Banker. "Your patience is appreciated."

Blankenstein was not hired through the competitive service process, but rather chosen by Mulvaney as one of a dozen political appointees brought in to “shadow” career staff at the agency to implement President Trump’s policy agenda.

Senate Democrats asked Mulvaney to respond to nearly a dozen questions about Blankenstein, including whether Mulvaney was aware of the writings before hiring Blankenstein, who recommended him for the job, and what due diligence was used to vet all of the political appointees.

“Were all established guidelines related to background checks or other due diligence adhered to in evaluating Mr. Blankenstein’s appointment?” the letter stated. “Was Mr. Blankenstein asked about past statements on social media, websites, or other public forums?”

Mulvaney sent an email late Tuesday to CFPB staff in which he acknowledged the controversy and defended a planned reorganization of the fair-lending office despite calls by Patrice Ficklin, who runs that office, to halt any changes given the outcry over Blankenstein.

“I want to briefly address the recent concerns raised regarding Eric Blankenstein,” Mulvaney wrote in a four-paragraph email obtained by American Banker. “First of all, I just wanted to let everyone know that, obviously, I am aware of it, and have been giving it considerable attention since Friday when I received Patrice’s email. I hope everyone understands that this a unique circumstance from a management perspective and that this matter needs to be handled with the utmost professionalism.”

Mulvaney has given differing accounts of his effort to effectively demote the fair-lending office. In February, he tried to strip the office of its enforcement authority, which is mandated by the Dodd-Frank Act, but was stopped in part by the CFPB’s union. At a conference in September, however, he said the CFPB “is still very much in the fair-lending business."

“I will not be undoing the changes,” Mulvaney wrote in the recent email. “I recognize this is not the result that some of you may have wanted. But I stand by my decision and we will proceed accordingly.”

Mulvaney has until Oct. 22 to respond to the questions raised by Senate Democrats. The CFPB has not filed any fair-lending enforcement actions in 11 months, since Mulvaney was named by President Trump to lead the bureau.

The CFPB declined to comment for this article.

For reprint and licensing requests for this article, click here.