A Fighting Chance

This meeting would bring together many of the leaders of the nonprofit and advocacy groups dedicated to fighting for working families. Damon—and a lot of other longtime activists—knew that real reform was desperately needed. And they thought that all those who wanted to protect the financial interests of American consumers should start getting ready to fight back.

The meeting was held at the AFL-CIO headquarters in Washington. It was supposed to start at nine, but I was running late, so I started jogging through the lobby. The floor was hard and shiny, but I couldn’t keep my eyes off the building’s magnificent two-story mural: its monumental figures of working men and women were interlaced with small gold tiles that glinted in the morning sun. As I ran, the heel on my shoe slid sideways and I lost my balance. As I started falling, I vaguely wondered whether I’d be more likely to break a leg or knock out my front teeth—I figured it would depend on how I landed. But somehow, arms and legs flailing, I found my feet again just before crashing to the floor.

The meeting took place in the big conference room on the eighth floor. I’d never been there, but Damon had told me about it. The room had a balcony that looked out on the White House. During the Bush years, the AFL-CIO had been sternly cautioned that no one should step on the balcony or the sharpshooters might fire at them. So far, no one in the Obama White House had issued the same warning.

Every seat was taken, maybe seventy-five or so in total. I didn’t know most of the people in attendance, but I think there were representatives from civil rights organizations, consumer groups, labor unions, and religious groups that viewed economic security as part of their core mission. It was a hodgepodge of leaders from organizations populated by people I thought of as “the good guys”—those who spend their lives fighting for the well-being of regular folks.

When I stepped into the meeting, everyone was already seated and quiet. The room was dominated by a huge conference table, and sunlight coming from a long bank of windows running beside the table briefly blinded me. I had the sense of stepping onto a brightly lit stage before I was ready.

Damon had organized the meeting, and he sat at the head of the table. On his right was his boss, John Sweeney, the legendary seventy-four-year-old president of the AFL-CIO. On Damon’s left was an empty chair, which Damon motioned me into.

I’d never met Mr. Sweeney before, and I was surprised by how old he looked. His voice was thready and hoarse, barely above a whisper, and his body was bent. But like a good host, he welcomed us all, and when he spoke, no one moved. Here was a man who had organized millions of workers. Thirteen years earlier, he had risen to the presidency in the first contested election in the union’s history. His message to the group that morning was short and clear: This financial crisis is historic, and our country’s response should be historic. We should make the changes we need to make to protect the American worker. Then Damon turned to me. “Tell them.”

So this was it. There would be a lot of topics on the agenda today, from regulation of derivatives to international capital standards, and I had one brief chance to make my case.

I started talking about the idea of a consumer agency. It was a simple concept, but that shouldn’t fool anyone; it was pretty bold just the same. I wanted our government to create an entirely new agency, one whose purpose would be to rein in the financial institutions that were taking advantage of families across the country. The agency would serve as an aggressive watchdog, with the power to oversee and regulate all consumer lending—credit cards, mortgages, student loans, payday lending, car loans. Its sole mission would be to look out for the interests of families.

Big banks had perfected the art of circumventing new laws designed to protect people. I pointed out that more than a dozen federal laws already addressed issues involving consumer credit, but the responsibility for enforcing these laws was spread out among seven different federal agencies—seven! Moreover, each of those agencies had some other first job, like making sure the banking system was stable or administering housing policy. Not a single one of those agencies had as its primary job protecting consumers from dangerous credit products. Not one.

And there was another ugly problem: Guess who picked the regulators who had oversight responsibility for the individual banks? Often it was the banks themselves. Two federal banking regulators competed for business, and the more banks they signed up, the bigger their budgets became. The results shouldn’t have surprised anyone: regulators often tried to outdo each other to be the friendliest, which shifted their role from watchdog to lapdog.