'It is an issue for all of us': Dissent spreads at CFPB over top aide's writings

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What started as a single senior official at the Consumer Financial Protection Bureau voicing concerns about blog posts written 14 years ago by a top agency political appointee is rapidly becoming a rising chorus of discontent.

Kirsten Donoghue, the CFPB’s assistant director of enforcement, became the second senior leader at the agency to question the fitness of Eric Blankenstein, her boss as policy director of supervision, enforcement and fair lending, after his past writings were uncovered that used a racial slur for African-Americans and suggested most hate crimes were “hoaxes.”

“The language used, and sentiments expressed, are completely unacceptable and call into question Eric’s ability to lead the fair lending program specifically, and the division generally,” Donoghue wrote in an email to staff late Friday, which was obtained by American Banker.

She joins another official who reports to Blankenstein — Patrice Ficklin, the CFPB’s assistant director of fair lending and equal opportunity — who earlier on Friday withdrew her previous support for him.

Importantly, however, Donoghue said her feelings were shared by the entire enforcement division of roughly 100 attorneys, suggesting a revolt against the top Trump administration official in charge of enforcing anti-discrimination laws in all consumer lending transactions.

“This morning I met with Eric to express my concern,” wrote Donoghue. “I have also spoken to Patrice to express my support and to let her know that I, and Enforcement, stand with her and her team. As I told her, this is not just her issue, or just a fair lending issue. It is an issue for all of us.”

The Washington Post first reported Wednesday that Blankenstein used a pen name to express his controversial views in blog posts in 2004 and 2005. That included suggesting that those who used racial slurs were not necessarily racists and that hate crimes were far more likely to be hoaxes than real.

Ficklin initially supported Blankenstein in the Post story, but recanted on Friday in a note to staffers after she read the blog posts.

“I have had experiences that have raised concerns that are now quite alarming in light of the content of his blog posts — experiences that call into question Eric’s ability and intent to carry out his and the acting Director’s repeated yet unsubstantiated commitment to a continued strong fair lending program under governing legal precedent,” Ficklin wrote in an email, a copy of which was obtained by American Banker.

Other staffers have also joined Ficklin and Donoghue. Several emails from CFPB employees, obtained by American Banker, express similar doubts, with one going so far as to call for Blankenstein’s resignation.

"This is intolerable," wrote a CFPB enforcement attorney, who requested that the CFPB's union demand that Mick Mulvaney, the bureau's acting director, call for Blankenstein's resignation.

"I have spoken with several colleagues — many of them women and people of color — who were deeply offended by Mr. Blankenstein’s language," the attorney wrote in an email obtained by American Banker. "They can’t fathom continuing to work under Mr. Blankenstein’s direction; and they have lost all faith in his ability to carry out the Bureau’s enforcement of our fair-lending laws in a manner that credibly ensures the protection of women, people of color, and other historically disadvantaged political minorities."

The attorney called Blankenstein's writings "repugnant, racist blog posts."

"The posts include, among other things, him using the n-word and questioning whether use of the n-word is 'inherently racist,' " the attorney wrote.

Blankenstein has not renounced his past writings, but instead pushed back against the criticism.

“The need to dig up statements I wrote as a 24-year-old, show that in the eyes of my critics I am not guilty of a legal infraction or neglect of my duties, but rather just governing while conservative,” he told The Wall Street Journal on Thursday.

Gail Wisely, president of the CFPB's union, Chapter 335 of the National Treasury Employees Union, said in an email obtained by American Banker that Blankenstein’s past writings "indicate he cannot oversee fair lending law enforcement."

"His failure to apologize is perhaps most troubling," Wisely wrote. "Moreover, minority employees working under him are now working in a hostile environment which is something the union cannot tolerate. As such the fair lending [reorganization] must stop and he must go."

Blankenstein is one of a dozen political appointees — known inside the agency as “politicos,” — named by Mulvaney earlier this year to shadow senior career officials hired by his Democratic predecessor Richard Cordray.

Blankenstein is shadowing Chris D’Angelo, the CFPB’s associate director of supervision, enforcement and fair lending. Though both Ficklin and Donoghue technically report to D’Angelo, Blankenstein is effectively in charge, according to multiple sources.

It is unclear whether the outrage among the CFPB enforcement staff will put pressure on Mulvaney to take action. The CFPB did not respond to requests for comment.

In February, Mulvaney announced a reorganization that would have stripped the fair-lending office of its enforcement authority, which is mandated by the Dodd-Frank Act. But that effort has been delayed by the agency's union.

Ficklin has asked Mulvaney to hold off on reorganizing the fair-lending office.

“In light of my concerns I am asking the acting Director to pause the proposed reorganization of the Office of Fair Lending and Equal Opportunity," she wrote. "I no longer have faith that the Bureau’s obligation to enforce the fair lending laws will be faithfully discharged in the currently-contemplated reorganized structure."

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Enforcement Enforcement actions Sexual orientation discrimination Racial Bias Mick Mulvaney CFPB