Updated | A group of Democrats, including presidential hopeful Sen. Elizabeth Warren of Massachusetts, are continuing to pressure the Consumer Financial Protection Bureau over a senior official’s ties to a conservative Christian group.
In a letter sent Wednesday to CFPB Director Kathleen Kraninger, Warren — along with Reps. Raja Krishnamoorthi of Illinois, Ayanna S. Pressley of Massachusetts and Katie Porter of California — demanded documents related to hiring Paul Watkins as director of the Office of Innovation, which has the power to grant fintech firms limited immunity from consumer protection laws.
“We have grave concerns about Mr. Watkins holding the authority to waive anti-discrimination laws given his prior employment at Alliance Defending Freedom (ADF) — a group that has been designated as a hate group by the Southern Poverty Law Center,” they wrote.
Watkins spent three years as senior legal counsel at ADF, a conservative Christian organization with a history of opposing LGBTQ rights. He joined the CFPB from the Arizona attorney general’s office, where he ran a “regulatory sandbox” program that allows fintech firms to apply for a regulatory safe harbor as they develop new financial services and products.
In a prior letter sent in June, Warren, Pressley and Porter pressed Kraninger to explain the decision to hire Watkins. Kraninger’s response asserted Watkins’ qualifications and affirmed the bureau’s commitment to diversity and inclusion, but did not address the Democrats’ specific questions. Krishnamoorthi’s signature may add more weight to this subsequent request, though: As chairman of the House Oversight subcommittee, he could subpoena the CFPB.
Porter also grilled Watkins over his connection to ADF at a House Financial Services fintech hearing in June. Watkins said he merely advised law students at ADF, and did not engage in advocacy or litigation on the group’s behalf.
Citing a Southern Poverty Law Center report that said the group “supports the re-criminalization of homosexuality and defends state-sanctioned sterilization of trans people,” Porter asked if Watkins agreed with those views. He responded that “the practices … mentioned are clearly unconstitutional and have no place in the United States.”
ADF lawyers filed an amicus brief in Lawrence v. Texas in 2003 arguing that the Supreme Court should uphold statutes criminalizing sodomy. ADF also defended state laws prohibiting gay marriage in an amicus brief in Obergefell v. Hodges, the 2015 Supreme Court decision that recognized same-sex marriage.
Wednesday’s letter alleges the Blackstone Legal Fellowship, the ADF program Watkins worked with, included as part of its curriculum a book written by an ADF co-founder titled “The Homosexual Agenda: Exposing the Principal Threat to Religious Freedom Today.”
“The SPLC attacks on ADF are false and mischaracterize our work. It’s unfortunate when public officials cite the thoroughly discredited SPLC—which some on the left have even called ‘everything that’s wrong with liberalism,’ ” Jeremy Tedesco, ADF senior counsel and vice president of U.S. advocacy, said in a statement. “ADF’s work protects the free speech, free exercise, and conscience rights of all Americans.”
The CFPB proposed expanding its no-action letter policy in December to allow firms to request assurances that their proposed products or services won’t be penalized as unfair, deceptive and abusive acts and practices.
The CFPB is also implementing a regulatory sandbox program where firms can apply for a two-year safe harbor from CFPB enforcement actions under anti-discrimination and consumer disclosure laws while developing new products or services. The sandbox’s protections would also insulate firms from enforcement actions by other federal or state regulators and private actions.
Watkins has argued that the sandboxes would not expose consumers to any additional risks given the amount of scrutiny firms in them would be under, even though they would not face enforcement actions.
A Porter aide disagreed. “The purpose of sandboxes is to selectively lift regulatory requirements from firms judged to need that reprieve because of their newness to the market,” the aide said in an email.
The letter asks the CFPB to divulge the fintech companies and trade associations that have applied for no-action letters, trial disclosure waivers and admittance to the sandboxes. It also asks for documents related to Watkins’ work at ADF and his hiring to run CFPB’s Office of Innovation.
The CFPB did not immediately respond to a request for comment.
Note: This story was updated with ADF comment.