IG: Former CFPB Official May Have Abused Position

Eric Blankenstein may have abused his former position at the CFPB when he encouraged a subordinate to write a public and supportive email after Blankenstein’s racist blog posts were unveiled, the agency’s Inspector General said, in a report released by Senate Democrats.

The Inspector General said that Blankenstein, who has since gone onto to work at the Department of Housing and Urban Development, may have abused his position as CFPB policy associate director when he pushed for the supportive email. And the report said that may also have resulted in Blankenstein using his authority for personal gain.

The report was dated May 7 but was not made public until Senate Banking ranking Democrat Sherrod Brown of Ohio and committee member Elizabeth Warren (D-Mass.) released it Monday.

The senators called on HUD Secretary Benjamin Carson to fire Blankenstein and asked CFPB Director Kathy Kraninger to reestablish the agency’s Office of Fair Lending and Equal Opportunity, which was disbanded when Blankenstein was at the agency.

The Washington Post reported in October that Blankenstein had written racist blogs and had said that the majority of hate crimes are hoaxes.

Democratic senators, the labor union representing some CFPB employees and consumer groups immediately called for Blankenstein’s firing, saying he should not oversee fair lending issues if he took such positions.

Blankenstein asked a subordinate at the CFPB for an email of support and then-Acting CFPB Director Mick Mulvaney refused to fire him. In fact, Mulvaney gave Blankenstein a show of support after the story was published and told him he had been smeared by the Washington Post, the Inspector General said.

Blankenstein later went to work in the general counsel’s office at HUD.

The two senators sent a letter to the CFPB’s Inspector General on Monday asking for an investigation into Mulvaney’s dismantling of the separate fair lending office and his decision to move it into his office, with Blankenstein in charge.

And they asked for a probe into why Kraninger kept Blankenstein at the agency even after Mulvaney left.

In a separate letter, they asked Carson to fire Blankenstein.

“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,” the senators wrote.

Finally, the senators asked Kraninger to fire the political appointees that Mulvaney had hired.

“Mr. Blankenstein’s troubling tenure at the CFPB demonstrates the damage that turning over important functions at independent regulators to political appointees can cause to consumers and CFPB employees and we strongly urge you to dismiss CFPB’s political appointees and return the agency to the design intended by Congress,” the senators wrote.