Employees of the Consumer Financial Protection Bureau are tasked with writing rules and regulating consumer protection in the financial services industry. Since the CFPB’s founding multiple now-former officials have started or joined private financial services firms that CFPB could regulate. This trend has been dubbed a “brain drain” as some top officials have departed the CFPB to work for private financial consultants and law firms.
Raj Date and Fenway Summer
The most prominent CFPB employee to turn to the private sector is former Deputy Director (and interim Director) Raj Date. Date served in several other leadership positions during the CFPB’s earliest stages, and is credited with managing much of the bureau’s initial strategies and operations. In January 2013, Date left the CFPB and created his own private consumer finance advisory firm, Fenway Summer LLC.
Since Date launched Fenway Summer in April 2013, he has recruited at least a handful of key CFPB employees to join his company. Chief of Staff Garry Reeder, Senior Advisor for Servicing and Securitization Chris Haspel, and Senior Counsel Mitch Hochberg have all joined Fenway Summer. On Fenway Summer’s website, six upper-level employees are profiled by highlighting their previous work at the CFPB.
|Former CFPB Officials and Employees||Current Employment in Private Sector|
|Raj Date, Deputy Director||Fenway Summer, Founder and Managing Partner|
|Garry Reeder, Chief of Staff||Fenway Summer, Partner and Head of the Advisory Practice|
|Chris Haspel, Senior Adviser for Mortgage Servicing and Securitization||Fenway Summer, Partner and Head of Capital Markets|
|Mitch Hochberg, Senior Counsel in Office of Regulations||Fenway Summer, Partner and General Counsel|
|Alison Miller, Deputy Executive Secretary||Fenway Summer, Director|
|Sean O’Mealia, Project Manager||Fenway Summer, Director|
|Neil Peretz||BillFloat, General Counsel|
|Michael Gordon, Deputy General Counsel||Lawyer at WilmerHale|
|Marla Blow||Consumer Financial Advisor at Fenway Summer|
|Rick Hackett||Partner at Hudson Cook LLP|
|Peter Carroll||Quicken Loans|
While serving as Deputy Director and interim Director of the CFPB, Date was at the forefront of formulating and implementing the rules surrounding the government’s role regarding mortgage products for borrowers. At the bureau, Date developed a unique and acute understanding of the mortgage industry.
Upon creating Fenway Summer, Date now offers mortgage products to borrowers “who don’t meet the CFPB’s qualified mortgages standards.” The company offers loans to certain borrowers who are blocked from borrowing due to the bureau’s standards. While the CFPB seeks to “protect” consumers with strict regulations, Fenway Summer and other consulting firms work to circumnavigate those laws.
Neil Peretz left his position as an enforcement attorney with the CFPB to serve as the General Counsel for BillFloat, a company that offers short-term loans online. He transitioned to BillFloat in August 2013, right around the same time that CFPB Director Richard Cordray said that the CFPB planned to crack down on such short-term online lenders. Cordray called such loans “debt traps,” but BillFloat will now have the expertise of Peretz to help navigate CFPB regulations.
The Regulatory Compliance Consultants
Former CFPB officials have landed jobs at firms that provide regulatory consulting on matters directly related to the CFPB. This means former CFPB staff members can profit by helping clients navigate through the web of bureaucratic red tape they themselves helped create.
Based on the existence of CFPB consulting, there is clearly demand for privileged knowledge on the ins and outs of this regulatory behemoth. Here are examples of former CFPB employees who now work for firms that provide regulatory consulting on CFPB-related issues:
- Michael Gordon—the former Deputy General Counsel for the CFPB is now a partner at the law firm WilmerHale. WilmerHale boasts having “exceptional knowledge and board experience in dealing with the CFPB issues in the regulatory, examination and enforcement contexts.” Given the fact that they have a former Deputy Counsel for the CFPB on staff, we are sure they are right.
Wilmer Hale says also claims they, “have helped clients anticipate and comply with the enormous number of new and revised regulations issued by the CFPB.” Unfortunately, not every American business owner can afford high-powered consultants to comply with “the enormous number of new and revised regulations” the CFPB creates.
- Rick Hackett—the former Assistant Director for the Office of Installment and Lending Markets is now a partner at Hudson Cook LLP, a law firm that offers compliance services on federal and state laws. Some of the financial products the firm assists include mortgage lending, credit cards, personal property lending and credit insurance—products that the CFPB now has jurisdiction over.
- Marla Blow—a former Assistant Director at the CFPB, is now a consumer financial advisor at Fenway Summer. Fenway Summer has a mortgage venture that originates non-qualified mortgages (mortgages that do not meet the CFPB’s “Qualified Mortgage” standards).
The “Brain Drain”
Some other CFPB employees have brief employment stints at the agency. According to POLITICO, 13 regulations attorneys transferred to the CFPB from the Federal Reserve, and 10 have already left the bureau. Former CFPB enforcement lawyers Ronald Rubin and Allyson Baker have each left the agency to join private law firms. Other crucial departures include Bart Shapiro; Benjamin Olsen; and Leonard Kennedy, the former CFPB General Counsel and senior adviser to Director Corday. Each of these individuals has now joined one of various private companies.
The turnover rate at the CFPB erodes its ability to effectively regulate the financial industry, as tasked by the Dodd-Frank Act. The American Banker magazine found that the CFPB had a 9 percent attrition rate for fiscal year 2012 and, as shown above, some former staff now work for companies subject to CFPB’s jurisdiction.