A Fighting Chance (29 page)

The baby was named Atticus Mann Tyagi, after Bruce (Mann). Bruce didn’t say much—that’s just his way—but I could tell he was proud as punch. He and A-Mann were now a team.

Nothing Personal

As I settled into my new job, I embarked on another round of visits to Congress. I wasn’t a political pro, but it didn’t take a genius to figure out that a lot of people were gunning for the agency to fail. I figured it was a good idea to talk to anyone in Congress who was willing to meet with me.

The early conversations had one element in common: Behind closed doors, both Republicans and Democrats said they understood that the country’s credit markets weren’t working. No one disputed that too many people had gotten cheated—they just disagreed over the right response.

One meeting in particular stands out. Spencer Bachus had represented Alabama’s Sixth Congressional District for nearly twenty years. He had a smooth southern accent and a thin smile. During the height of the financial crisis, he was privately briefed by top government officials. The news was bad: The economy was on the brink of collapse. The congressman’s response? According to
60 Minutes,
he shorted the market, and in a couple of days he nearly doubled his money. And now he was the ranking Republican on the House Financial Services Committee, which meant that he was next in line to be chairman of the committee if his party took back the House in the November elections.

The congressman agreed to meet with me soon after I took the CFPB post. He spoke movingly about people who had been swindled; he really seemed to feel their pain. He concluded by saying that if he had more courage, he’d go after the people who did that to families. In other words, if he stood up for the families who’d been hurt, he could find himself sidelined in Congress by the leadership of his own party. I was stunned by his use of the word
courage
and his small, tight smile.

As Congressman Bachus ushered me out of his office, he took my arm and leaned close to me. “I’ll go after the consumer agency, but I hope you understand, it isn’t personal.” He said it in a quiet, gentle tone, with his accent twanging through each syllable.

I took him to mean that he didn’t particularly disagree with the idea behind the agency. But politics was politics, and he was warning me that the agency would stay in the line of fire.

I thought that it may not be personal for you, but it
is
personal for me.

Airing the Dirty Laundry

The political knives were out, but we pushed on.

Everyone on the team understood what a special opportunity we had. We talked a lot about a twenty-first-century agency. We had a chance to build something really innovative and cutting-edge and maybe even reimagine parts of the federal government.

We started with the consumer complaint hotline.

Okay, complaint hotlines don’t exactly sound “cutting-edge” (more like “really boring to talk about”). But we were required by law to create one, and we got down to business right away to make sure it would be operational by the following summer.

First we had to answer a few questions. Should we create the hotline ourselves, or should we ask another government agency to run it? Should we outsource it to a private company? How much should we budget?

Everyone had an opinion, and most people had two or three. We spun our wheels for a few weeks, trying to fit the pieces together. One day I asked a different question: “What will the complaint hotline really do?”

After a little eyeball rolling, someone finally answered, “Uh, it’ll take complaints.”

I figured we could be stupid for a while. “Uh-huh. And what will we do with the complaints?”

“Uh, take them.”

“Take them where?”

“Oh, uh, make a record.”

“And then what?”

“Uh, what what?”

The conversation got dumber, but we eventually got to the key point: A lot of government agencies collect complaints from consumers, but to those who complained, the process often seems like a dead end. Angry consumers file complaints and nothing seems to happen.

I worried about the government’s consumer complaint departments. Rarely is an agency in Washington held accountable based on the quality of its response to consumer complaints. Agency budgets are perpetually tight, and the consumer complaint hotline can be an easy target for cuts. Besides, all government agencies face a basic problem with their complaint hotlines: No one has the resources to conduct an investigation every time a consumer has a problem. Even if an agency could help solve a problem for, say, one in one hundred people, the other ninety-nine consumers would always feel nothing had been done for them.

So the process for handling complaints too often evolved into little more than filling out a form and putting it on a stack of other forms. If the stack got high enough, maybe someone at the agency would investigate some particularly awful problem. But the vast majority of the other complaints would just lie there until they quietly expired.

Surely there had to be a better way.

To begin with, a twenty-first-century agency could use new technologies to take complaints online, tag them electronically, e-mail them to the appropriate bank—and then track what happened. If the bank settled quickly, we’d know it because they would have to send the information back to us; meanwhile, the customers could verify the response with a few clicks on a computer. If the bank resisted, we’d know that, too. Some banks would probably blow us off, and we’d have to work out our responses. But some might not—and that would mean that at least a few customers (hopefully a lot of them) would get their problems solved quickly and easily.

And what if we also made the complaint data
public
? And not just a little bit public, but public in a way that would expose exactly how consumers were getting cheated?

A lot of people thought the idea was nuts. After all, the big banks would
hate
this. It would be their worst nightmare come to life: we’d be taking their dirty laundry and airing it in public. As word about the idea began to leak, the bank lobbyists got more hostile. There was even talk of a lawsuit if we went ahead with the plan.

But we went ahead anyway. We figured that by telling the world how many complaints we’d received about each of the big banks and how those complaints were resolved, we might make the market for credit work better. Shoot, who knew? Maybe consumer groups or bloggers would start writing about which banks responded the fastest and which banks had the fewest complaints. Maybe banks would start treating customers a little better, and maybe the market would fix a lot of problems all by itself.

Of course, we wouldn’t publish the names and addresses of people who complained—privacy is important—but we could name the banks and tell how they treated their customers. Besides, if the hotline got a reputation for being really helpful, it would almost certainly attract a whole lot of customers who had problems, and then we’d really know what was going on out there. What was the latest scam? Which lenders and which products were generating the most complaints? The American people would tell us directly. They could be our eyes and ears, and we could focus our resources wherever their complaints led us.

The hotline also gave us an opportunity to lay down a marker: We intended to build this agency out in the open. No cozy deals behind closed doors. This would be the people’s agency, and we took transparency seriously.

As for the banks, here’s the way I saw it: If it turned out that they were a little scared about this new way of doing things, they could solve the problem by treating their customers better. So who would object?

I should have known the answer: Their pet senators and representatives would object. And sooner or later, that would mean trouble.

A Proud Profession

In early November 2010, most of Washington was focused on the midterm congressional elections, not least because the Tea Party had blasted onto the scene, riding a wave of antigovernment ire. But I was focused on a different election—the race for attorney general for the state of Ohio. Rich Cordray was running for reelection, and the race was tight. Rich had earned a reputation as a fierce consumer advocate, and he had led one major lawsuit against Bank of America and another against AIG.

The morning after Election Day, Dan came into my office with the news: Rich Cordray had lost. I jumped up and shouted: “Hurray!” (Sorry, Rich, that wasn’t very sensitive of me.) I waited a decent interval (forty-eight hours), then called him. Before long, Rich had agreed to be the head of enforcement for the new agency. I still believe that Ohio’s loss was America’s gain.

Rich’s work was just the beginning: the CFPB had a lot of pieces to put in place before it could get up and running. We were on the hook for setting up the consumer hotline, establishing a financial literacy department, and writing new regulations. We would be responsible for monitoring big banks, verifying that they were following consumer protection laws, and then holding them accountable when they didn’t. We were also required under Dodd–Frank to set up offices for seniors and military service members. In other words, we needed people—smart, courageous people—who were up for a fight.

From the day I arrived at Treasury, I was amazed by how many résumés were pouring in. First dozens then hundreds of them, so many that we lost count. Freshly minted college grads and experienced lawyers. Consumer advocates and military veterans. Bankers and bank protesters. We even had a cowboy apply. I was overwhelmed, and I felt just a bit of awe. Who knew that so many people were so eager to work for the government?

Government service had once been a proud profession. The jobs were widely respected. True, not all government service conjured up the heroism of working as a firefighter or a teacher. But I think positions in government were seen as requiring a little more dedication and loyalty than ordinary jobs. “Public service” evoked images of people with integrity, and the “service” part meant something real.

But over the past generation or two, many Americans had come to believe that government service was synonymous with bureaucracy and complacency. Ronald Reagan’s famous line—“The nine most terrifying words in the English language are: ‘I’m from the government and I’m here to help’”—had inflicted an injury, all the more painful because it came from the president of the United States. Every dismissive comment (“Well, what do you expect—it’s the
government
”) had left a small cut.

As I got to know more people in government service, it seemed to me that those complaints were pretty unfair. I met many, many dedicated people who obviously cared about doing a good job, people who had turned down higher-paying jobs in the private sector, people who spoke with pride about helping others. Even so, the bad rap persists. Just ask a bunch of the brightest college kids: “How many of you dream of working for the federal government someday?” Not enough hands go up.

I hoped that the new agency might have a chance to prove the cynics wrong. Sure, government fails sometimes. (By the way, corporations fail sometimes, too.) But I don’t believe that the response to government failure—such as the inept response to Hurricane Katrina or the slew of failures that led to the financial crisis—should be a snarky “I told you so” or a heavy sigh of resignation. No: the response should be
outrage
. The government—
our
government—should be held to a higher standard.

Let’s be honest: America is facing some really, really big challenges. Climate change, educating kids for the jobs of the future, taking care of an aging population—the list is long and daunting. And let’s also admit that our government isn’t perfect, and it can’t solve everything. But we’re going to need a well-functioning government if we’re to have a prayer of tackling these very complex problems.

America has faced difficult problems before—and we’ve solved them together. We passed laws to get children out of factories. We set up a system that allowed aging workers to retire with dignity. We built schools so that every child would have a chance for a better life, and we created a network of highway and mass transit systems so people could get to work. We built an astonishingly tough military, superb police forces, and squadrons of first-class professional firefighters.

No, the market didn’t build those things: Americans built them. Working through our government, we built them together. And as a consequence, we are all better off.

We can’t bury our heads in the sand and pretend that if “big government” disappears, so will society’s toughest problems. That’s just magical thinking—and it’s also dangerous thinking. Our problems are getting bigger by the day, and we need to develop some hardheaded, realistic responses. Instead of trying to starve government or drown it in the bathtub, we need to tackle our problems head-on, and that will require
better
government.

As I started setting up the agency, America was still in the depths of the Great Recession, and a lot of people needed jobs. But as I began to interview people, I realized that many of the candidates saw the consumer agency as a small beacon of hope, a sign that Americans really can work together to make things better. For many, this was more than just a job. Coming to work for the agency would give people a chance to make a difference.

I began to see that we had a real opportunity to put together a team of passionate, tough-minded people who had a fresh vision for how to change things. Maybe, just maybe, this agency could serve as yet another counterpoint to the familiar complaint that the government can’t do anything right.

Don’t Believe in Government

The new cadre of Tea Party–supported lawmakers shifted the political dynamic in Washington, and by January 2011 the Republicans had control of the House. I knew that if the banks kept the Republicans trained on attacking the agency, this would be very bad news. But I needed to get the agency set up, so I just kept plowing straight ahead.

I continued calling on members of the House and Senate, both Republican and Democrat. In January, I met with Representative Michael Grimm, a newly elected Republican from Staten Island, New York. In his early forties, he was serving in his first elected office. He told me all about himself. He’d joined the US Marines when he was nineteen, and he had been decorated for his service in Desert Storm. He got a degree from Baruch College, a public university in New York, went to law school, and then joined the FBI, where, among other things, he was part of the Financial Fraud Squad. He talked in animated terms about the great work he’d done with the FBI and the terrific training he’d received. Then he launched a small business and later became CEO of another business before running for office.