A Fighting Chance

One answer was to run straight up the middle and hit the biggest targets, and that’s exactly what Rich Cordray did. Rich was fearless, and he led by example. Among other things, he investigated Capital One for misleading customers about the costs of “free” add-ons to their credit cards—“free” services that actually cost customers a total of $140 million. (He ultimately forced Capital One to send the hidden fees back to every customer—and not one customer had to file papers or ask for a refund because the checks came automatically in the mail. Rich and his team also hit up the company to pay an additional $25 million fine.)

We also tried hard to make sure that the agency’s staff would never forget who they served: regular people. We made plans for people from different corners of the agency—including the director—to have a chance to listen in to the work of the complaint hotline and read consumers’ feedback. The idea was to do more than gather the bare numbers, but also to hear the stories, to hear how people described their problems with financial institutions and what they believed were fair resolutions. We built an open website and talked to people around the country. We met regularly with representatives from consumer groups so we could make every effort to weigh their concerns against what we heard from the big banks and their trade associations. We wanted the voices of consumers to echo loudly through the halls of the agency, at least as loudly as those of the bankers.

I figured it this way: Every day the wind would blow over this agency from one direction. We would hear the voices of those who were organized, those who had money, and those who were powerful. If we weren’t careful, their point of view would eventually seep into every crack and crevice in the place. We needed a strong wind from the other direction. We needed to create an agency that would be transparent about our mission, our goals, and the work we were doing—so that the public could call us out if we fell short.

I hoped—and I still hope—that the agency would be a place where the mission was part of the air that every employee breathed every day: We exist to serve the people.

One-Page Mortgage

In spring 2011, we had another breakthrough when Pat McCoy and a number of other staffers sat behind a one-way mirror in a test lab just outside Baltimore. Pat—who was a professor at the University of Connecticut and had written a book called The Subprime Virus (what a title!)—was now leading the agency’s mortgage policy division.

The backstory on how Pat and her team came to be behind the mirror that day takes a little explanation. The mortgage crisis made it clear that untold numbers of people had ended up with mortgages they didn’t understand, partly because a thicket of paperwork had been used to hide extra fees and confusing terms. Too many homeowners (like Flora) had trusted what they’d been told by their mortgage broker, and they didn’t understand until far too late that the fine print committed them to something entirely different. When their payments skyrocketed, many homeowners couldn’t afford to keep paying their mortgage and had to either refinance (and pay a gigantic fee) or give up their house.

Dodd–Frank called for rules to simplify the mortgage process, and I set an ambitious goal early on. I told Pat’s group: Let’s create a short, easy-to-read disclosure, and let’s keep it to just one page. A simple mortgage form—one that a customer could easily read and understand—could go a long way toward making homeowners safer.

People (maybe even the whole mortgage team!) thought I was crazy. One page? In Washington, it’s not possible to requisition a copy machine in one page. But I figured we should think big—or in this case, think short.

Our first drafts of a one-page mortgage were clunky and unreadable. Why? Federal law had long required certain disclosures that had been designed with the best of intentions—to protect consumers. But over the years, the disclosures had become a tangled mess: there were pages and pages of legal mumbo jumbo, and it was difficult for us to untangle them. The team was working hard, but they kept putting in lousy language that the law seemed to require.

It took a while, but eventually we came up with something that worked. The staff drafted and redrafted, testing versions on friends and co-workers. They consulted with design people. They modified and rejiggered.

And when they had the first draft of the form ready for public viewing, Pat’s team did something that, as far as I knew, no federal banking regulator had ever done before: The team put two competing drafts of the form on our new CFPB website and asked the public to help evaluate them. I think Pat hoped to get maybe a few hundred responses—after all, mortgage forms aren’t exactly prime-time TV. But no: we got more than twenty-seven thousand responses.

After we put out the draft forms, we got a lot of input from the bankers. Many of the credit unions and smaller community banks (and some of the big banks, too) sold honest, simple mortgages, and they loved the draft forms. They figured that a simple form that made it easier to comparison shop would help them compete against the slick operators.