A Fighting Chance

That spring, Secretary Geithner appeared before the Senate Banking Committee to testify about the economic state of the country. Senator Shelby used the opportunity to question him repeatedly about the role that I had played in the controversy over how the banks should be penalized. The secretary never wavered. He backed me up, verifying that he had asked for my involvement. It would have been easy for him to point a finger or just stay silent, but he didn’t. Secretary Geithner and I had had our differences, but when the consumer agency came under attack by the Republicans, he had our back.

I had no doubt—zero—that the banks should be held accountable for breaking the law. And I thought the repeated grilling about my role in trying to hold these banks accountable was ridiculous. It was so obviously a concerted effort to distract attention from the terrible behavior of the banks. Even so, I worried that I would make some little misstatement in a hearing and cause a problem for the agency. The attacks—the constant demands for e-mails and the endless prep sessions—sucked up time, time that should have been spent on solving real problems. And all the political nonsense distracted from what should have been the focus: Would the big banks ever be held accountable, and would they ever be forced to repair the damage they had done to so many families?

Who Will Be the Director?



As the spring rolled on, two questions came up more and more: When would the president nominate a permanent director for the CFPB? And who would he pick? The new director wouldn’t report to Tim Geithner; he or she would be confirmed by the Senate and run an independent agency.

After spending many months setting up the agency, I realized that I had come to love this job. I had never thought I would love any job as much as I loved teaching, but it had happened. I loved the difference we were making; I loved the feeling that we had a chance to level the playing field for people who needed it. We were just getting started, and I felt worse and worse about the prospect of leaving the agency. So I took a deep breath and asked if the president would let me stay.

Once again, I had a round of talks with various of President Obama’s senior advisors. The conversations generally ran to a pattern. First came the nice stuff: They told me I was doing a great job setting up the agency. That I was an effective consumer advocate. That the agency was getting lots of praise for its work. Lots of nice words, always followed by “but.” As in: “But … for some reason, you are like a red-hot poker in the eye of the Republicans.” According to the president’s team, the Republicans in the Senate were still adamantly opposed to me. Worse, the Republicans would never even let the issue come to a vote, so there was no way I could get confirmed.

So I tried a different tack: If I can’t get confirmed, would the president consider appointing me during a congressional recess? The tenure of a recess appointment is limited by law, but it could give me up to two years in the job of director while we established the agency’s course. The answer was the same: No. The president wanted a director to be confirmed through the proper channels.

The rumors continued to swirl through the press, and speculation that the president would name me grew over time. In May, Senator Shelby and the other Senate Republicans decided to apply a little counterpressure. They sent a letter to the president saying they would not agree to confirm anyone to be the director unless their demands were met. Their demands? They all added up to one thing: The agency must be substantially weakened.

The Republicans included a lot of items on their wish list, but one was the most telling: They insisted that Congress have control over the agency’s funding. In US history, no banking regulator has ever been funded through Congress; instead, the regulatory agencies had covered their costs directly or indirectly through banking fees. The reason is pretty obvious: to keep the regulators safe from political pressures. But the Republicans informed the president that Congress (and, of course, the banks) wanted to determine how much food the consumer watchdog would get. They knew that a starving watchdog wouldn’t be nearly as big a threat.

Some people saw that letter as a declaration of war (Washington style, that is). Never in history had a minority in the Senate “pre-rejected” a presidential nominee just because they didn’t like the agency he or she was due to run. The Republican minority was using the filibuster threat to try to change the law of the land—a law that a majority of the Senate had passed, a majority of the House had passed, and the president had signed. Progressives were outraged, and a number argued that this was the right moment for the president to fight back: He should nominate me, have a showdown with the Senate Republicans, and then, if needed, make a recess appointment.