July 29, 2019

Brown, Warren Demand Action Following "Damning' Blankenstein IG Report

Senators Call on HUD to Fire Blanksenstein, CFPB to Dismiss Political Appointees, and IG to Investigate Dismantling of Fair Lending Office under Blankenstein Tenure Investigation Reveals Blankenstein “may have abused his authority”

WASHINGTON, D.C. – U.S. Sen. Sherrod Brown (D-OH) – Ranking Member of the U.S. Senate Committee on Banking, Housing, and Urban Affairs – and Senator Elizabeth Warren (D-MA) – Ranking Member of the Banking Subcommittee on Financial Institutions and Consumer Protection – are demanding action from the Department of Housing and Urban  Development (HUD), the Consumer Financial Protection Bureau (CFPB), and the CFPB Inspector General following what the Senators call ‘damning’ findings from an investigation into the conduct of disgraced political appointee Eric Blankenstein during his time at the CFPB. Blankenstien was hired as Senior Counsel of HUD’s Office of General Counsel just one month after resigning from CFPB in the wake of racist and sexist blog posts that were uncovered by the Washington Post in 2018.
The initial investigation into Blankenstein’s conduct, performed by the Inspector General that oversees CFPB, found Blankenstein, “may have abused his authority,” “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.” Please find a redacted copy of the Inspector General Report HERE.
In response, Brown and Warren are demanding:
1.      The CFPB Inspector General open a follow-up investigation into the CFPB’s decision to dismantle the Office of Fair Lending and Equal Opportunity under Blankenstein’s time at the agency. In their request for the investigation, the Senators wrote:
“Based on these undisputed facts, we ask that you immediately open an investigation into the dismantling of OFLEO and its supervisory and enforcement functions. There are too many unanswered questions: Why did Mulvaney and Kraninger disregard the express statutory language of Dodd-Frank? Why did they hire Eric Blankenstein and put him in charge of the dismantling of OFLEO? Why did Kraninger keep Mr. Blankenstein in charge even after his racist and sexist statements became public? And were any of these decision made based on racial animus or an improper political agenda?”
Read the Senators’ Full Letter to the CFPB Inspector General HERE.
2.      HUD immediately fire Blankenstein, writing:
“Continuing to employ Mr. Blankenstein at a high-level position at HUD despite the troubling findings and conclusions of the IG’s report would send a disturbing message to your staff and the American people that HUD values protecting political allies over fulfilling the agency’s mission of eliminating housing discrimination, that it will shield political allies— including those who abuse their authority over career public servants—from consequences, and that you will hire individuals whose past statements and behavior should disqualify them from the privilege of a prestigious senior appointment.”
Read the Senators’ Full Letter to HUD Secretary Ben Carson HERE.
3.      CFPB dismiss political appointees and allow professional career staff to return to carrying out their work to protect consumers without political pressure. The Senators wrote:
“Mr. Blankenstein’s case lays bare the damaging effects of introducing large numbers of political appointees into an independent regulator. Mr. Mulvaney transformed the CFPB from a technocratic agency with a single political appointee, the Director, to an institution run by more than a dozen ideologically-driven political appointees . . . . It is now your responsibility to repair this situation. If you are serious about regaining the trust of the American public and CFPB career staff, you must eliminate the political appointees who have escaped appropriate screening, injected politics into regulatory and enforcement decisions, and impeded the CFPB’s mission as a consumer-first agency.”
Read the Senators’ Full Letter to CFPB Director Kathy Kraninger HERE.
The original investigation also revealed: 
·         Mick Mulvaney, who hired Mr. Blankenstein at the CFPB, saw the publishing of Mr. Blankenstein’s racist writings in the Washington Post as cause for celebration rather than admonishment.  According to the IG report, “Blankenstein described his encounter… as Mulvaney giving ‘him a high-five that morning in, sort of, celebration of the article that had come out the night before.’” Mick Mulvaney has now been promoted to Acting White House Chief of Staff with influence over the entire Executive Branch. The Senators expressed concern that he may have influenced HUD’s decision to hire Mr. Blankenstein at HUD in spite of his track record and the IG’s conclusions.  
·         Blankenstein asked a subordinate at the CFPB, while she was on leave, to provide a public statement of support amid the controversy of his racist statements. According to the report, the subordinate felt coerced to comply with the request in order to save the CFPB's Office of Fair Lending and Equal Opportunity, which at the time was the subject of a reorganization led by Mr. Blankenstein and other political appointees.