Several blog readers have "bugged" me about the recent articles concerning the eyebrow-raising expenditures of the CFPB that were recently lambasted by the conservative watchdog group Judicial Watch. MarketWatch ran a story last week on the group's findings and CNNMoney (and some of the trade press) picked up on the kerfuffle this week. When I say "bugged," I mean asked me to engage in grave and heinous snarkbaggery on the CFPB, in a fashion they've come to expect. However, after carefully considering the matter and giving the CFPB the benefit of the doubt, I've decided to be not only judicious in my comments, but generous, as well.
Who am I kidding?
Among the more amusing findings was the expenditure by the CFPB of $4,500 in tuition to send six CFPB lawyers to a basic banking law class. While the CFPB claimed that these expenses were merely to pay for ongoing continuing legal education requirements imposed by the various state (and DC) bars in order to retain a license to practice law, the choice of the basic course overflows with irony.
In pursuing the invitation to enroll, Enforcement Attorney Christina Coll emailed Acting Litigation Deputy Deborah Morris on May 4, 2011, saying: "This looks like an awesome agenda for a banking world novice like me." While Ms. Coll's salary is unknown, according to records previously uncovered by Judicial Watch, other Enforcement Attorneys received starting salaries as high as $173,000 per year.
The fact that CFPB paid to train its attorneys in banking law fundamentals at taxpayer expense appears to contradict congressional testimony from then-interim CFPB head, and current Massachusetts Senate candidate, Elizabeth Warren in 2011 regarding the experience level of the agency's highly paid attorneys.
During a May 24, 2011 hearing, U.S. Rep. Ann Marie Buerkle asked why starting salaries at the agency exceeded Office of Personnel Management (OPM) standards by up to 90%: "How do you justify that kind of a disparity in salaries between a government worker and the folks that are going to be hired by your regulatory agency?" asked Rep. Buerkle. Warren defended the salaries, saying the consumer bureau is competing with the financial services industry for talent and "we'll never be able to pay like the financial services industry pays."
I, too, have to obtain CLE credits each year. I do so by teaching, writing, and speaking on an area of the law related to "banking." That's one of the reasons that this blog title contains the words "bank lawyer." I'm living proof of the theory that if you sit a monkey at a typewriter for decades, he'll eventually bang out something readable. On the other hand, to claim that you need to pay high salaries to attract hired guns with the necessary banking law expertise who then need to attend a basic course on banking law that's taught buy outside "experts" because the hired guns are "novices" on the law of the industry they're supposed to be experts on, strikes some as odd, others as downright laughable.
Warren might have a point regarding the private sector salaries if we were discussing people possessed of the degree of expertise that Ms. Warren implied the Bureau was seeking. If you're hiring a banking novice for $173,000 a year, you're overpaying, whether you're comparing the CFPB to the private sector or to a government agency. Moreover, twenty-one starting salaries of $225,000 and more does seem a bit steep, even for the most powerful, lightly supervised federal bureaucracy ever created.
The criticism of $465,000 in expenditures for sign language services might have an explanation. I expect that this contract originated when Cherokee Princess Liz ("Fauxcahontas") Warren was expected to lead the charge. She likely wanted to ensure that she could fully protect her "peeps" from the depredations of predatory lenders and the lawyers who love them. I get that. In addition, the CFPB has only used $54,000 of the $465,000 thus far. Unfortunately, an anonymous source claims that this amount was not used to assist an actual person with disabilities, but to train the CFPB's pet orangutan Koko to sign "I Love Liz," "Banks Are Bad," and "Workers Of The World Unite! You Have Nothing To Lose But Your Chains!" Unfortunately, I cannot verify that claim.
One of my correspondents claimed that their favorite part of the CNNMoney article was the "clarification" at the end.
Clarification: While Judicial Watch criticized the CFPB for using taxpayer dollars on these expenses, the CFPB says it does not use taxpayer money since it is funded by the Federal Reserve.
Yes, the CFPB is funded by the Federal Reserve, which is required by law to turn over its annual net income, after paying dividends to its member banks and making certain other deductions, to the US Treasury. Therefore, every dollar wasted by the CFPB is one less dollar saved for the US taxpayer. That makes the "clarification" contention by the CFPB disingenuous, at best. However, let's give the CFPB the benefit of the doubt. They wouldn't know that the Federal Reserve pays tens of billions of dollars a year into the US Treasury unless they had a basic understanding of the way the US banking system works, and, as we've seen, their employees are "novices" when it comes to such matters.
CFPB delenda est!