The Consumer Financial Protection Bureau,(CFPB), is not even 3 years old, but it, or at least some of its employees, are getting quite a raise. Authorized by Dodd-Frank in 2010 and formed in July of 2011, its jurisdiction covers everything from banks and credit unions to mortgage-servicing operations, payday lenders and securities firms. Until recently, its employee ratings system used a 1 to 5 scale to rate workers and pay raises were based, in part at least, on this merit scale. The problems began when a survey revealed by American Banker showed that the 4’s and 5’s went to white employees in a higher proportion than black or hispanic employees. 75% versus 58% and 65%.

While perhaps statistically significant, these are not overwhelming differences but in the CFPB, alarm bells went off and audits were done to root out the supposed discrimination. A “systematic disadvantage to various categories of employees” was denounced by CFPB Director Richard Cordray. The solution? Give a 5 to all who earned a 3 or more in their ratings in 2012 and 2013. And that will mean about $5 million more in pay raises at the Bureau. More than just another retreat from merit and towards political correctness, it’s a pre-emptive pork barrel. How do you ensure a diverse collection of perspectives that embrace a multiplicity of viewpoints and engage committed stakeholders? You spread lots of cash around! Because if you don’t the steady drum beats will sound in various corners of the media and your newly minted Bureau will be sullied before it has even reached its third birthday. At least, that seems to have been Director Cordray’s fears. So the CFPB made sure that merit was more about who you are than what you achieve. And in doing so, cultural and ethnic identity were pushed to the front of the organization, rather than how well they are achieving what they were mandated to do. Protect Consumers in the financial sector … or perhaps from the financial sector. It is interesting to note that one of the early promoters of the Bureau was then Harvard professor Elizabeth Warren. Her long journey from free market adherent to prime supporter of a strictly regulated financial industry has already borne fruit; a government agency that spends most of its recent time and energy making sure pay raises are spread carefully around the office. Sounds a little like Wall Street with one small difference; in the latter if your work is just a 3 out of 5, you rarely last long.

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