WASHINGTON — The Consumer Financial Protection Bureau is losing senior officials faster than it can replace them, raising concerns that the agency may struggle to maintain the aggressive pace set during its nearly two years of existence.

In recent months more than a dozen senior officials have left the agency, including its chief of staff, Garry Reeder, and chief operating officer, Victor Prince.

In interviews with American Banker, several former CFPB officials offered differing reasons for the flood of departures, but many cited cultural clashes between their new agency and the regulators where they used to work. They also pointed to aggressive recruiting in the private market of agency personnel coupled with the expected turnover after an intense early few years.

Regardless of the reasons, there's a growing concern that the CFPB faces an uphill battle in devising sound rules and conducting examinations without retaining experienced personnel to help the agency follow through on its mission.

"It raises the question about their ability to put out the highest-quality, most thoughtful rules going forward," said a former CFPB employee, who spoke on condition of anonymity. "And clearly, it has an effect on how the industry perceives the agency."

The exodus appeared to gain momentum after the departure of CFPB's second-in-command, Raj Date, who resigned in late January after the agency's mortgage rules were released.

Since then the agency has lost several top officials, including Bart Shapiro, its senior advisor for the office of community banks and credit unions; Nicholas Rathod, its assistant director for intergovernmental and international affairs; Leslie Parrish, the program manager for payday and small-dollar loans; and Len Kennedy, a general counsel and senior advisor to the CFPB director.

Most recently, Benjamin Olson, the CFPB's deputy assistant director for its regulations office, left at the end of May to join BuckleySandler.

Though some turnover was expected, the sheer number of senior officials leaving worries bankers. They wonder who will fill those vacancies and how the new management will treat the industry. "Retaining experienced senior officials does tend to give bankers a level of comfort," said Alan Kaplinsky, who heads the consumer financial services practice at Ballard Spahr.

However, the CFPB argues the turnover has had no impact on its work.

"We have a deep bench of talent that extends across the bureau. Past departures and transitions, including those at the senior level, have not impacted our ability to carry out our work on behalf of American consumers," said Moira Vahey, a spokeswoman for the CFPB. "We are confident that this will remain the case."

Many former CFPB officials praise the agency's director, Richard Cordray, but cite structural issues and cultural clashes beyond his control as reasons for the agency's brain drain.

Created by the 2010 Dodd-Frank Act, the agency mostly hired new staff when it opened its doors in 2011, but also borrowed heavily from the banking agencies that were previously tasked with consumer compliance at financial institutions.

Rather than follow a similar structure of agencies that employees came from, the CFPB wanted to foster its own culture by putting vastly different teams in a single office with the idea it would create more synergy and a wider knowledge base. For example, the CFPB combined its supervision, enforcement and fair lending divisions into one office — an unheard-of move for the regulators who joined that division.

As a result, some former staff argued the combination — largely pulled from the prudential bank regulators, the Federal Trade Commission and the Securities and Exchange Commission — only created more confusion and dissension.

The division "doesn't quite know who (or what) it is," Ronald Rubin, a former CFPB enforcement attorney, wrote in a column in Bloomberg BNA earlier this year. "It is critical that supervision and enforcement figure out how to effectively complement each other. If they do not, their combination could actually prove counterproductive, and the division could end up being far less than the sum of its parts."

Rubin, a former SEC enforcement attorney, left the CFPB in September and is now a partner at the Hunton & Williams' office in Washington.

Those who seemed to feel the culture clash most were former bank regulators who came from the Federal Reserve Board and the Office of the Comptroller of the Currency. Many said they felt blamed for the financial crisis at the CFPB and struggled to capitalize on their past experience.

"There was a belief by a fair number of people early on that they could do this better and not valuing the experience of those who came from the prudential bank regulators," said a second former employee.

A different former CFPB official saw it the same way.

"Many people from other agencies, including myself to some extent, think those who transferred over either were not trusted or were viewed as part of the problem," the first official said.

The Dodd-Frank Act transferred some of the rulemaking responsibilities from prudential bank regulators over to the CFPB, including a team of Fed employees. Overall, the agency hired 66 employees from the entire Federal Reserve System when it opened in July 2011. Since then, 18 have left but the agency added at least six more from the Fed.

Several former agency officials also said the CFPB put an emphasis on ensuring all employees were considered equal stakeholders. While that was a laudable goal, they said, individual projects were vetted by multiple teams, which held up the process.

"Though equal sounds good, it had a downside in that it was very hard to get things done," said the first former employee.

As an example, the second former CFPB official said the process was so cumbersome that any pending rule was vetted by a team of roughly 40 people, some of whom had no consumer finance experience. "While it's good to get some people with no exposure, you don't want them to drive policy decisions, because they don't understand the risk or cost involved," said the second former employee, who pointed to the repeated amendments on the remittance rule as an example.

Many sources said that as time goes on, the agency will need to move away from its original mind-set to be more productive.

"When you take managers with very different viewpoints and require them to approve each other's decisions, you get bureaucratic gridlock," said Rubin in an interview. "I've never seen anyone better at getting people to compromise than Richard Cordray, but even he can't eliminate the trade-off between consensus and efficiency."

Despite these delays, the CFPB was known as one of the most aggressive regulators in terms of issuing rules and enforcement actions in its short lifespan. Former staffers say the agency's intense focus on its mission has helped it to meet regulatory deadlines regardless of turnover. Overall, the agency had a 9% attrition rate for fiscal year 2012, which some sources say was lower than what they expected.

Some former employees also argue the agency did the best it could at combining the culture of so many different agencies under a new organization with a different mission.

"The most important thing for any organization starting up is to make use of its people and calibrate skills and talents of everyone and mixing that together," said Allyson Baker, a former enforcement attorney at the CFPB. "The CFPB has done a good job of this."

Baker was at the agency for nearly two years before joining Venable in April as a partner in the firm's Washington office.

In an interview, Date said cultural issues were inevitable and analogous to private-sector mergers. "Like most bankers, I've been around my share of post-merger environments. But this was a startup plus a multiparty merger, plus a major strategic overhaul all at the same time," he said. "So we expected some cultural growing pains."

CFPB officials also highlighted the number of critical rules that have been completed during the past two years. "We have consistently met our deadlines, put in place strong rules of the road to fix the broken mortgage market, obtained $425 million in restitution for consumers, and handled more than 130,000 consumer complaints," the CFPB said in an emailed response.

The agency has also added personnel, growing to 1,200 employees, with 300 added in fiscal 2013 alone. That included hiring Catherine Galicia, a former senior counsel to the Senate Banking Committee, as assistant director for legislative affairs; and Ken Brevoort, the Federal Reserve Board's senior economist, as the CFPB's new economist.

"We have attracted, and continue to attract, talented staff from diverse backgrounds that are committed to our mission and want to work on issues directly impacting American consumers," the CFPB stated. "We have made attracting driven and talented professionals a priority. The bureau's accomplishments to date are a testament to this approach."

The agency's accomplishments, however, have also contributed to the turnover, making CFPB officials highly attractive to the private sector.

"Firms are very interested in recruiting people who have CFPB experience," Kaplinsky said. "If we can find the right person that's got enough experience at the CFPB, we'd be very, very interested."

Date is a case in point. He founded his own company, Fenway Summer, and hired five officials from the CFPB in just the past couple of months. Fenway's team includes Reeder; Chris Haspel, the CFPB's former senior advisor for mortgage servicing and securitization; and Mitchell Hochberg, a regulatory senior counsel.

Date said the CFPB has a higher attrition rate because it disproportionately attracted employees from elite firms who often transition every few years. "I always expected the CFPB to run dramatically higher in terms of early-year attrition than the prudential bank regulators. I expected attrition rates more consistent with top-flight professional service firms," Date said.

Kaplinsky agreed. "Any government agency, to some extent, is a revolving door, because many people who work for the government don't plan on doing that as a career," he said.

The agency likely will have new senior leadership shortly. It's doubtful Cordray will be confirmed by the Senate, where Republicans have demanded structural changes to the agency before approving any nominee. Meanwhile, Cordray's recess appointment, itself controversial, is due to expire at yearend, which will leave Steve Antonakes, the acting No. 2, in charge.

Some said there is internal anxiety about the culture and management, and point to CFPB employees' recent vote to unionize.

The unionization "reflects the fact that there are morale problems really throughout agency ... and that leadership has not really been focused enough on addressing concerns that the staff has," said the first former employee.

Going forward, however, sources say the union does add an outside influence on the agency's culture.

"Unionizing is counter to the original startup spirit and will have a huge effect on the bureau's culture," Rubin said. "Outsiders beyond management's control will now have an influence."

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