A Fighting Chance

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.