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CFPB Tales Told Out of School (Updated)

posted by Adam Levitin

Former CFPB enforcement attorney Ronald Rubin has a lengthy attack on the CFPB in the National Review. It's got lots of sultry details, but there's nothing new and verifiable in the piece.  Instead, it's all tales told out of school, unverifiable personal anecdotes by Rubin, who seems to have an particular axe to grind with certain other CFPB staffers, and an ideological one too. Incredibly, Rubin, a former Managing Director for legal and compliance at Bear Stearns, holds up the oft-feckless SEC as a model of good enforcement practice, and criticizes the CFPB for any departures from that practice. 

The point of the piece seems to be that the CFPB is an agency gone rogue and that this wouldn't have happened if the CFPB had just been structured as a bi-partisan commission. That's hogwash. Assume that everything Rubin claims is true and correct. Even if so, every single problem Rubin identifies in the piece could just as easily have occurred at a bi-partisan commission. Partisan hiring? Of course that can happen because the staff hiring decisions (other than those of the personal staffs of the commissioners) are done by the commission chair and people the chair has selected. Secrecy and stonewalling Congress? We see allegations about that regarding agencies all the time (and that from agencies not facing partisan witch-hunts). Unhappy employees? Check. Pressure on regulated firms to settle enforcement actions? Check. Claims of discrimination by employees? Check. These are problems that can occur at any agency, irrespective of its structure or funding. 

Rubin's conclusions just don't follow from his non-verifiable personal evidence. Indeed, the very fact that the CFPB hired people like Rubin and Leonard Chanin (whose politics were well known when he was hired) seems to belie Rubin's claims of partisan hiring practices; Rubin is, after all, a guy who went from the CFPB to be a Republican staffer for the House Financial Services Committee. (Indeed, one has to wonder if any political slant from the staff is a function of the applicant pool.  I suspect few hard-core Republicans apply for positions at CFPB. By way of anecdote, a long-time Senate staffer who was largely sympathetic to the Bureau told me that she couldn't work there because it would cost her all of her Hill connections because the CFPB is so toxic to Republicans.)

No, Rubin's conclusions don't follow from his gossipy tales, but they do follow form his anti-regulatory world view, whose "primary influences were my business-school professors at the University of Chicago, the epicenter of free-market capitalism." Uh-huh.   

Update:  I knew something felt strange about this piece when I read it at first, but only now is it clear:  Rubin seems to have violated legal professional ethics requirements by breaching client confidentiality. There's a reason one doesn't see this sort of kiss-and-tell piece very often, and that's because of confidentiality requirements. 

Recall that Rubin wasn't just some random CFPB employee.  He was an attorney for the CFPB. The agency was his client. That means he owed and continues to owe the CFPB certain duties. Among those is a duty of confidentiality (ABA Model Rule of Professional Conduct 1.6).  There are certain exceptions to that duty, but it's pretty clear that none apply here. There's no exception for political dislike. Even if Rubin thought that the CFPB were unconstitutional, there's no exception for that. The exception for "to comply with other law or court order," is not meant to cover questions about agency constitutionality (the answer to which hasn't changed an iota since Rubin's employment at the CFPB began).

The duty of confidentiality extends to former clients (ABA Model Rule of Professional Conduct 1.9(c)). There's an exception to the confidentiality requirement for "when the information has become generally known," but that doesn't cover Rubin's disclosures. And if there were any doubt about whether these rules apply to government attorneys, just look at ABA Model Rule of Professional Conduct 1.11(a)(1), which provides that "a lawyer who has formerly served as a public officer or employee of the government ... is subject to Rule 1.9(c)."

I don't know if the CFPB requires its attorneys to sign a confidentiality agreement like the one for DOJ attorneys, but I have trouble reading Rubin's piece without thinking that if his statements are accurate that his article appears to be a breach of his duty of confidentiality to a former client, disclosing both client's confidential litigation strategy and other confidential communications, including those that might be subject to attorney-client privilege. The confidentiality of those communications is not Rubin's to waive.

I doubt the CFPB will file an ethics complaint against Rubin, and the ethics issue doesn't speak to the veracity of Rubin's claims, but I know that if I were a client I wouldn't feel comfortable hiring an attorney with such a demonstrably loose tongue. 


As it turns out, clients need not worry themselves with whether to hire Ron Rubin, since he's no longer employable in the private sector.

We're going to see a lot of this kind of stuff over the next few years. It is fairly obvious early on in Rubin's piece that his goal is to discredit Elizabeth Warren. With Warren being a presumptive 2020 front-runner, there will be endless efforts by Republicans to disparage anything that she has touched in any way -- and the CFPB has the biggest bullseye of all on it as a result.

The cynic/conspiracy theorist in me wonders if Rubin took the job, concealing his politics and ideology in the hiring process as he admits he did, for the intended purpose of being a "mole" looking for ways to undermine the agency. It would be consistent with his indication that it is somehow illegitimate to consider whether a job applicant supports the mission of the organization. We know who else feels the same way; the incoming administration has already nominated a number of cabinet secretaries who are on record as being opposed to basic goals of their agencies.

FJP--Warren's not the target (at least not immediately). The target is Cordray, for a "for cause" removal.

Adam, I suggest both can be true at the same time. Removing Cordray is just a means to two ends: abolishing the CFPB and discrediting Warren.

1. Rubin proved at Bear Stearns that there was no reason to take anything he said seriously, yet he's still considered to be one of the Serious People, which speaks volumes as to why everything is so screwed up.
2. Given who Rubin shills for, there is no way he'll get even a slap on the wrist for committing an ethics violation that would land a real lawyer in deep kimchi.

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