CFPB official under fire for past writings on race resigns

A senior political appointee at the Consumer Financial Protection Bureau has resigned following controversy over writings more than a decade ago in which he used a racial slur for African-Americans and claimed the majority of hate crimes were hoaxes.

Eric Blankenstein, the CFPB’s policy director for supervision, enforcement and fair lending, said in an email Wednesday to agency employees that he had decided to “take another position” after working at the bureau for 18 months. Blankenstein wrote that details of his next job “are still being finalized.” His last day at the CFPB will be May 31.

Blankenstein came under fire when The Washington Post first reported last year that he had used a pen name in blog posts in which he suggested that people who use racial slurs are not necessarily racist and that most hate crimes were “hoaxes.” In his writings, Blankenstein referred to a University of Virginia proposal to impose harsh penalties for acts of intolerance as “racial idiocy.”

In the blog, he wrote, “Fine ... let’s say they called him a n -----,” spelling out the slur.

The revelation sparked an uproar at the agency and led to recriminations with CFPB employees, consumer groups and some lawmakers arguing that the blogs disqualified Blankenstein from a leadership position at the agency. Blankenstein's duties included overseeing the bureau’s fair-lending office.

Former acting CFPB Director Mick Mulvanay, who hired Blankenstein along with roughly a dozen political appointees, ultimately referred the matter to the CFPB's inspector general. Details of that inquiry are still unclear. The CFPB did not respond to a request for comment.

Blankenstein never renounced his views. Rather, he rather sought to explain that in 2004 he and a friend had started a blog called “Two Guys Chatting” to discuss issues of the day.

Some prominent agency employees, including Patrice Ficklin, the director of the agency's fair-lending office, initially defended Blankenstein, but recanted her support once she read the full 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,” she wrote in an email to staffers.

Since Blankenstein arrived at the CFPB, public enforcement actions and restitution to consumers have plummeted. Blankenstein spearheaded a review of the bureau's outstanding enforcement actions and nonpublic investigations.

He had scant experience in consumer finance before joining the agency. Blankenstein previously had worked for six months as an assistant general counsel in the office of the U.S. Trade Representative. Before that, he was an associate at Williams & Connolly for eight years.

Blankenstein said he appreciated the "hard work and dedication" of his colleagues at the CFPB.

“It has been my privilege to serve the American people here to further the bureau’s mission of protecting consumers and ensuring safe, fair, and competitive markets for consumer financial products and services,” Blankenstein wrote in a four-sentence email to CFPB Director Kathy Kraninger.

Kraninger, who has been on the job just over four months, declined early in her tenure to say if Blankenstein would remain at the CFPB.

Kraninger responded by sending an email to staff thanking Blankenstein "for his willingness to serve and his sincere efforts to support effective leadership transition at the Bureau."

"He has made significant contributions to the intellectual rigor of supervision and enforcement processes and policies that will extend well beyond his tenure making a lasting, positive impact on our work," Kraninger wrote.

David Bleicken, the acting associate director for supervision, enforcement and fair lending, will run the division until a successor is named.

Kraninger said she will be posting "a vacancy announcement shortly" for the position of associate director for supervision, enforcement and fair lending.

Sen Sherrod Brown, the top Democrat on the Senate Banking Committee, said in a tweet that "Eric Blankenstein should've been fired for his hateful, reprehensible and disgusting blog posts."

Allowing him to resign is a serious moral and managerial failure that sends a signal to consumers that the CFPB will look the other way when it comes to discrimination.

— Sherrod Brown (@SenSherrodBrown) May 15, 2019