Republicans question firm filled with former CFPB officials

{mosads}The questions surround the founding of Fenway Summer, a new consulting and investment firm founded by Raj Date, the former second-ranking official at the CFPB, and staffed by a number of former high-ranking CFPB officials, including the bureau’s chief of staff.

Date left the CFPB in January, and founded the firm in March.

Date has said the firm will do no lobbying or compliance work, but Republicans are questioning whether the firm is turning profits by working around mortgage rules that the firm’s executives had a hand in creating.

The firm’s website lists its “signature investment” as originating mortgages that do not meet the definition of a “qualified mortgage” — a term ordered by the Dodd-Frank financial reform law and spelled out by the CFPB.

One of the agency’s biggest responsibilities stemming from Dodd-Frank was to define a qualified mortgage, or “QM.” The term was intended to identify mortgages that lenders could reasonably expect to be repaid, in an effort to rein in the risky mortgages that were prevalent before the housing bubble burst. Lenders that create mortgages that meet this standard are offered certain legal protections, and many lenders have said they do not plan to offer any mortgages that fall outside the definition to minimize their litigation risk. The CFPB finalized its QM rules in January, and then finalized some tweaks to the rule in July.

Republicans are no fans of the new rule, and blasted it in the letter as costly and burdensome. And the GOP remains staunchly opposed to the CFPB in general, even after finally agreeing to confirm Cordray as the bureau’s director earlier this month after blocking the pick for years.

They note that given Fenway Summer’s deep bench of former CFPB officials, it is “uniquely positioned” to do business tied to that rule.

“This conduct raises serious questions about the integrity of the CFPB’s rule making process and the conduct of some of its most senior former officials,” the lawmakers wrote. “We are deeply concerned that this close relationship between the CFPB and its former officials ultimately could harm consumers.”

The lawmakers do not claim in their letter that the former officials misbehaved during the rulewriting process at the CFPB, or that there has been inappropriate collusion between Fenway’s employees and the bureau today.

However, the lawmakers are demanding any communications tied to the drafting of that rule, information about where former CFPB staffers have landed, and any communications tied to the creation of Fenway Summer, or between the firm’s employees and the CFPB.

A CFPB spokesperson defended the agency’s rulewriting process as “transparent” with ample public input and outreach to stakeholders.

This post updated at 2:34 pm.