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Westlake Legal Group > Consumer Financial Protection Bureau

Michael Bloomberg Leans Left With Plan to Rein in Wall Street

Westlake Legal Group 18db-newsletter-bloomberg-copy-facebookJumbo-v2 Michael Bloomberg Leans Left With Plan to Rein in Wall Street Presidential Election of 2020 Federal National Mortgage Assn (Fannie Mae) Federal Home Loan Mortgage Corp (Freddie Mac) Consumer Financial Protection Bureau Bloomberg, Michael R Banking and Financial Institutions

Michael R. Bloomberg is proposing to crack down on the industry where he made his name — and fortune.

The former mayor of New York and Democratic presidential candidate announced an ambitious financial policy plan on Tuesday that includes imposing a tax on financial transactions and toughening restrictions on risky banking practices.

Perhaps the most surprising proposal, given the billionaire’s close personal ties to Wall Street movers and shakers, is a plan for the Justice Department to create a dedicated team to fight corporate crime by “encouraging prosecutors to pursue individuals, not only corporations, for infractions.”

“The financial system isn’t working the way it should for most Americans,” said Mr. Bloomberg in a statement. “The stock market is at an all-time high, but almost all of the gains are going to a small number of people.”

Mr. Bloomberg’s plan appears to repudiate positions he has taken on financial oversight over the years, when he often argued that rules aimed at reforming Wall Street were bad for the economy.

The new proposals suggest how far to the left Democratic presidential hopefuls considered moderates have felt they needed to tack. This is especially so for Mr. Bloomberg, a former Salomon Brothers trader whose estimated $63 billion fortune came from selling data to Wall Street.

In 2010, for instance, Mr. Bloomberg urged Democratic lawmakers not to get too tough on banks, and he criticize the so-called Volcker Rule, which prevented banks from making risky trades for themselves rather than clients. He called the proposed new restrictions “shortsighted,” with the potential to reduce middle-class jobs.

A spokeswoman for the Bloomberg campaign rejected allegations of flip-flopping.

“Context matters,” she said. When the Volcker Rule was introduced, “Mike was skeptical of regulators’ ability to divine traders’ intent,” which was how the law required regulators to judge investments, she added. Mr. Bloomberg’s new plan would focus “on the outcome of speculative trading — big gains and losses — rather than on traders’ intent.”

Some of Mr. Bloomberg’s other views on financial regulations have taken heat in recent days. He has had to defend comments he made in 2008 linking the financial crisis to the end of redlining, the discriminatory housing practice in which banks made it harder for people of color to borrow to buy a home.

In 2011, he said, “It was not the banks that created the mortgage crisis. It was, plain and simple, Congress who forced everybody to go and give mortgages to people who were on the cusp.”

But as he seeks to shore up his argument as the choice for moderate Democrats in the 2020 race, Mr. Bloomberg has shifted gears.

As part of his Wall Street plan, he is now embracing a tax of 0.1 percent on all financial transactions, a position that he shares with fellow candidates Mr. Sanders, Ms. Warren and Pete Buttigieg, as well as Representative Alexandria Ocasio-Cortez. Last year, Ms. Ocasio-Cortez co-sponsored a bill in the House that called for such a tax.

The surcharge on trading, meant to raise money to pay for social programs like expanded health care coverage, has been roundly criticized by the sort of pro-business groups that Mr. Bloomberg had long been sympathetic to, like the U.S. Chamber of Commerce.

But the spokeswoman for the Bloomberg campaign argued that such a tax “is an effective and relatively painless way to raise more tax revenue from the wealthy,” citing its use in Britain and Hong Kong. A 2018 analysis by the Joint Committee on Taxation estimated that a tax similar to the one proposed by Mr. Bloomberg would raise $777 billion over 10 years, albeit with a lot of uncertainty around “how much transactions would drop in response to a tax.” Any drop in trading would probably be bad for Bloomberg L.P., the company that feeds investors data and helps them arrange the buying and selling of securities.

Much of Mr. Bloomberg’s plan is an effort to bolster or restore elements of the 2010 Dodd-Frank law which, like the Volcker Rule, were reversed or reduced under President Trump. For example, Mr. Bloomberg proposes making stress tests for banks more stringent and reinstating the requirement to produce annual “living wills,” which are complex documents that detail how banks would unwind their operations in a bankruptcy.

Elsewhere in his plan, Mr. Bloomberg says he would merge Fannie Mae and Freddie Mac, two government-owned housing giants. He would strengthen consumer protections that govern payday lending and financial advisers, as well as give the Consumer Financial Protection Bureau oversight of auto lending and credit reporting. Borrowers of student loans would be automatically enrolled into income-based repayment plans with payments capped at 5 percent of disposable income.

Progressive critics are likely to argue that Mr. Bloomberg’s proposals don’t go far enough. Some Democrats have proposed a wealth tax, while Ms. Warren has called for a complete overhaul of the private equity industry and Mr. Sanders wants to break up the big banks.

The first test of Mr. Bloomberg’s convictions in regulating Wall Street could come at Wednesday’s Democratic debate in Las Vegas, which is expected to be the first time he will appear onstage alongside his presidential rivals. The billionaire qualified for the contest today thanks to a national poll that put his support at 19 percent, up from only 4 percent in the same survey in December. He trailed only Mr. Sanders, who had 31 percent.

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Consumer Bureau’s Complaints Database Is ‘Here to Stay,’ Director Says

Westlake Legal Group 19cfpb1-facebookJumbo Consumer Bureau’s Complaints Database Is ‘Here to Stay,’ Director Says Mulvaney, Mick Kraninger, Kathy Consumer Protection Consumer Financial Protection Bureau Banking and Financial Institutions

The Consumer Financial Protection Bureau will continue to publish its database of consumer complaints about financial companies, ending — for now — a battle over public access to one of the agency’s most powerful tools.

“The database is here to stay,” Kathleen Kraninger, the bureau’s director, said Wednesday at a consumer conference in Rosemont, Ill., outside Chicago.

Since 2011, the bureau has maintained an open and searchable record of more than one million consumer accusations of inaccurate bills, illegal fees, improper overdraft charges, mistakes on loans and a long list of other issues. Companies have complained that the database unfairly harms their reputations by spreading unverified negative information, but consumer advocates say it’s a vital tool for spotting problems and patterns of bad conduct.

Consumer groups had worried that the database — which contains information the bureau is legally required to collect — could be made private as the bureau shifted in a business-friendly direction under President Trump, who has pushed to reduce government regulation.

Mick Mulvaney, Mr. Trump’s acting chief of staff, who ran the bureau temporarily, suggested shielding the complaints data from public view. He told a banking conference last year, “I don’t see anything in here that says I have to run a Yelp for financial services sponsored by the federal government.”

When Mr. Mulvaney initiated a public call for feedback on the bureau’s complaint process, more than 26,000 people, companies and advocacy groups responded. Ms. Kraninger called that outpouring of comments “staggering” and persuasive.

Ms. Kraninger said that the database would remain public and that the bureau would add new features to help consumers contact companies and research answers to common questions. The bureau will also release data visualization and analysis tools to help people interpret the data in context.

“These are the kind of tools that our researchers already use internally, and I think making them available to the public will greatly improve the functionality of the database,” she said.

In a rare moment of alignment, industry trade groups and consumer advocacy organizations were cautiously optimistic about Ms. Kraninger’s announcement.

“I’m gratified that the complaint narratives will remain public and hope that the C.F.P.B. will continue to encourage consumers to submit complaints when they face problems,” said Lauren Saunders, associate director of the National Consumer Law Center.

The U.S. Chamber of Commerce called Ms. Kraninger’s plans “a step in the right direction.” Richard Hunt, the chief executive of the Consumer Bankers Association, said the changes Ms. Kraninger outlined would help make the bureau’s complaints system fairer.

While consumer advocates were heartened by the preservation of the public database on Wednesday, they were lining up to criticize another decision Ms. Kraninger made this week. On Tuesday, she flipped the bureau’s position in a court fight about its independence, joining critics who say its leadership structure is unconstitutional.

The legislation that created the consumer bureau contained a provision saying that the bureau’s director could be removed only for cause, defined as “inefficiency, neglect of duty or malfeasance.” That provision has been repeatedly challenged in court by adversaries who have said it gives the bureau’s director too much unchecked power — a position the Justice Department took early in Mr. Trump’s presidency.

The bureau had resisted, maintaining that its structure was legally permissible — until this week. Consumer groups including the National Consumer Law Center and Public Citizen criticized Ms. Kraninger’s reversal, saying it undermined Congress’s ability to create independent agencies.

In her speech on Wednesday, Ms. Kraninger urged the Supreme Court to take up a case involving Seila Law, a California firm that has asked the court to hear its challenge to the agency’s structure, including the terms of the director position.

“My decision to no longer defend the removal provision does not mean that the bureau will stop its work,” she said. “We will continue to defend the actions that the bureau takes now and has taken in the past.”

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Elizabeth Warren Is Completely Serious

The first time I met Elizabeth Warren, she had just come home from a walk with her husband and her dog at Fresh Pond, the reservoir near her house in Cambridge, Mass. It was a sunny day in February, a couple of weeks after Warren announced her candidacy for president, and she was wearing a navy North Face jacket and black sneakers with, as usual, rimless glasses and small gold earrings. Her hair had drifted a bit out of place.

The dog, Bailey, is a golden retriever who had already been deployed by her presidential campaign in a tweet a week earlier, a pink-tongued snapshot with the caption “Bailey will be your Valentine.” Warren started toweling off his paws and fur, which were coated in mud and ice from the reservoir, when she seemed to realize that it made more sense to hand this task over to her husband, Bruce Mann.

In the kitchen, Warren opened a cupboard to reveal an array of boxes and canisters of tea. She drinks many cups a day (her favorite morning blend is English breakfast). Pouring us each a mug, she said, “This is a fantasy.” She was talking about the enormous platform she has, now that she’s running for president, to propagate policy proposals that she has been thinking about for decades. “It’s this moment of being able to talk about these ideas, and everybody says, ‘Oh, wait, I better pay attention to this.’” She went on: “It’s not about me; it’s about those ideas. We’ve moved the Overton window” — the range of ideas deemed to merit serious consideration — “on how we think about taxes. And I think, I think we’re about to move it on child care.”

Her plan, announced in January, would raise $2.75 trillion in revenue over 10 years through a 2 percent tax on assets over $50 million and a higher rate for billionaires. Warren wants to use some of that money to pay for universal child care on a sliding scale. As she talked, she shifted around in her chair — her hands, her arms, her whole body leaning forward and moving back. Onstage, including at TV town halls, she prefers to stand and pace rather than sit (she tries to record six miles a day on her Fitbit), and sometimes she comes across as a little frenetic, like a darting bird. One on one, though, she seemed relaxed, intent.

Warren moved to Cambridge in 1995 when she took a tenured job at Harvard Law School, and 11 years later, Mann, who is a legal historian, got a job there, too. By then they had bought their house; Warren’s two children from a previous marriage, her daughter, Amelia, and son, Alexander, were already grown. The first floor is impeccable, with a formal living room — elegant decorative boxes arranged on a handsome coffee table — a cozy sunroom and a gleaming kitchen with green tile countertops. When Warren taught classes at Harvard, she would invite her students over for barbecue and peach cobbler during the semester. Some of them marveled at the polish and order, which tends not to be the norm in faculty homes. Warren says she scoops up dog toys before people come over.

For her entire career, Warren’s singular focus has been the growing fragility of America’s middle class. She made the unusual choice as a law professor to concentrate relentlessly on data, and the data that alarms her shows corporate profits creeping up over the last 40 years while employees’ share of the pie shrinks. This shift occurred, Warren argues, because in the 1980s, politicians began reworking the rules for the market to the specifications of corporations that effectively owned the politicians. In Warren’s view of history, “The constant tension in a democracy is that those with money will try to capture the government to turn it to their own purposes.” Over the last four decades, people with money have been winning, in a million ways, many cleverly hidden from view. That’s why economists have estimated that the wealthiest top 0.1 percent of Americans now own nearly as much as the bottom 90 percent.

As a presidential candidate, Warren has rolled out proposal after proposal to rewrite the rules again, this time on behalf of a majority of American families. On the trail, she says “I have a plan for that” so often that it has turned into a T-shirt slogan. Warren has plans (about 20 so far, detailed and multipart) for making housing and child care affordable, forgiving college-loan debt, tackling the opioid crisis, protecting public lands, manufacturing green products, cracking down on lobbying in Washington and giving workers a voice in selecting corporate board members. Her grand overarching ambition is to end America’s second Gilded Age.

[Elizabeth Warren has lots of plans. Together, they would remake the economy.]

“Ask me who my favorite president is,” Warren said. When I paused, she said, “Teddy Roosevelt.” Warren admires Roosevelt for his efforts to break up the giant corporations of his day — Standard Oil and railroad holding companies — in the name of increasing competition. She thinks that today that model would increase hiring and productivity. Warren, who has called herself “a capitalist to my bones,” appreciated Roosevelt’s argument that trustbusting was helpful, not hostile, to the functioning of the market and the government. She brought up his warning that monopolies can use their wealth and power to strangle democracy. “If you go back and read his stuff, it’s not only about the economic dominance; it’s the political influence,” she said.

What’s crucial, Roosevelt believed, is to make the market serve “the public good.” Warren puts it like this: “It’s structural change that interests me. And when I say structural, the point is to say if you get the structures right, then the markets start to work to produce value across the board, not just sucking it all up to the top.”

But will people respond? Warren has been a politician for only seven years, since she announced her run for the Senate in 2011 at age 62. She’s still thinking through how she communicates her ideas with voters. “The only thing that worries me is I won’t describe it in a way that — ” she trailed off. “It’s like teaching class. ‘Is everybody in here getting this?’ And that’s what I just struggle with all the time. How do I get better at this? How do I do more of this in a way that lets people see it, hear it and say, ‘Oh, yeah.’”

ImageWestlake Legal Group 23mag-Warren-04-articleLarge-v2 Elizabeth Warren Is Completely Serious Trump, Donald J Sanders, Bernard Presidential Election of 2020 Presidential Election of 2016 Politics and Government Law and Legislation Harvard University Consumer Financial Protection Bureau Blacks Biden, Joseph R Jr Banking and Financial Institutions

Warren at a rally in May at Laney College in Oakland, Calif.CreditSeptember Dawn Bottoms for The New York Times

In the months after Donald Trump’s stunning victory in 2016, Warren staked out territory as a fierce opponent of the president’s who saw larger forces at play in her party’s defeat. While many Democratic leaders focused on Trump himself as the problem, Warren gave a series of look-in-the-mirror speeches. In the first, to the executive council of the A.F.L.-C.I.O. on Nov. 10, she said that although there could be “no compromise” on standing up to Trump’s bigotry, millions of Americans had voted for him “despite the hate” — out of their deep frustration with “an economy and a government that doesn’t work for them.” Later that month, she gave a second speech behind closed doors to a group that included wealthy liberal donors and went hard at her fellow Democrats for bailing out banks rather than homeowners after the 2008 financial crisis. In another speech, in February 2017, to her ideological allies in the Congressional Progressive Caucus, Warren said: “No matter how extreme Republicans in Washington became, Democrats might grumble or whine, but when it came time for action, our party hesitated and pushed back only with great reluctance. Far too often, Democrats have been unwilling to get out there and fight.”

Warren fought in those early months by showing up at the Women’s March and at Logan Airport in Boston to protest Trump’s travel ban. On the Senate floor, opposing the nomination of Jeff Sessions to be Trump’s first attorney general, she read a letter by Coretta Scott King criticizing Sessions for his record of suppressing the black vote in Alabama, and Republican leaders rebuked her and ordered her to stop. The moment became a symbol of the resistance, with the feminist meme “Nevertheless, She Persisted,” a quote from the majority leader, Mitch McConnell, defending the move to silence her. Warren helped take down Trump’s first choice for labor secretary, the fast-food magnate Andy Puzder (he called his own employees the “bottom of the pool”), and she called for an investigation of the Trump administration’s botched recovery efforts in Puerto Rico after Hurricane Maria.

But somewhere along the way to announcing her candidacy, Warren’s influence faded. She was no longer the kingmaker or queenmaker whose endorsement Hillary Clinton and Bernie Sanders avidly sought during their 2016 primary battle. When Warren failed to endorse Sanders, the left saw her decision as an act of betrayal, accusing her of propping up the Democratic establishment instead of trying to take it down. (When I asked Warren if she had regrets, she said she wasn’t going to revisit 2016.) Sanders emerged as the standard-bearer of the emboldened progressive movement.

Trump, meanwhile, was going after Warren by using the slur “Pocahontas” to deride her self-identification in the 1980s and ’90s as part Native American. In the summer of 2018, he said that if she agreed to take a DNA test in the middle of a televised debate, he would donate $1 million to her favorite charity. Warren shot back on Twitter by condemning Trump’s practice of separating immigrant children from their parents at the border (“While you obsess over my genes, your Admin is conducting DNA tests on little kids because you ripped them from their mamas”). But a few months later, she released a video saying she had done the DNA analysis, and it showed that she had distant Native American ancestry. The announcement backfired, prompting gleeful mockery from Trump (“I have more Indian blood than she has!”) and sharp criticism from the Cherokee Nation, who faulted her for confusing the issue of tribal membership with blood lines. Warren apologized, but she seemed weaker for having taken Trump’s bait.

Sanders is still the Democratic candidate with a guru’s following and a magic touch for small-donor fund-raising, the one who can inspire some 4,500 house parties in a single weekend. And he has used his big policy idea, Medicare for All, to great effect, setting the terms of debate on the future of health care in his party.

With four more years of Trump on the line, though, it’s Joe Biden — the party’s most known quantity — who is far out in front in the polls. Challenging Biden from the left, Warren and Sanders are not calling wealthy donors or participating in big-money fund-raisers. Sanders has been leading Warren in the polls, but his support remains flat, while her numbers have been rising, even besting his in a few polls in mid-June. Warren and Sanders are old friends, which makes it awkward when her gain is assumed to be his loss. Early in June, an unnamed Sanders adviser ridiculed Warren’s electability by calling her DNA announcement a “debacle” that “killed her,” according to U.S. News & World Report. A couple of weeks before the first Democratic primary debates, on June 26 and 27, I asked her what it was like to run against a friend. “You know, I don’t think of this as competing,” she responded. It was the least plausible thing she said to me.

In March, Warren demonstrated her appetite for challenging the economic and political dominance of corporate titans by going directly at America’s biggest tech companies. In a speech in Long Island City, Queens — where local protesters demanded that Amazon drop its plan to build a big new campus — Warren connected the companies’ success at smothering start-up rivals to their influence in Washington. She remarked dryly that the large amounts that businesses like Facebook, Google, Amazon and Apple spend on lobbying is a “good return on investment if they can keep Washington from enforcing the antitrust laws.” She wants to use those laws to break up the companies instead — a move that no other major American politician had proposed.

After Warren started talking about the four tech giants, along with other critics, the Trump administration let it be known that it was scrutinizing them for potential antitrust violations. Conservatives have suspected social media platforms of bias against them for years, and with concerns about privacy violations escalating, big tech was suddenly a bipartisan target. Warren has specifics about how to reduce their influence; she wants to undo the mergers that allowed Facebook, for example, to snap up WhatsApp, rather than compete with it for users. Warren could unleash the power to bring major antitrust prosecutions without Congress — an answer to gridlock in Washington that’s crucially woven into some of her other plans too. (Warren also favors ending the filibuster in the Senate.) Warren wants to prevent companies that offer an online marketplace and have annual revenue of $25 billion or more from owning other companies that sell products on that platform. In other words, Amazon could no longer sell shoes and diapers and promote them over everyone else’s shoes and diapers — giving a small business a fair chance to break in.

“There’s a concerted effort to equate Warren with Bernie, to make her seem more radical,” says Luigi Zingales, a University of Chicago economist and co-host of the podcast Capitalisn’t. But Wall Street and its allies “are more afraid of her than Bernie,” Zingales continued, “because when she says she’ll change the rules, she’s the one who knows how to do it.”

Warren’s theory of American capitalism rests on two turning points in the 20th century. The first came in the wake of the Great Depression, when President Franklin D. Roosevelt seized the chance to protect workers and consumers from future economic collapse. While the New Deal is mostly remembered for creating much of the nation’s social safety net, Warren also emphasizes the significance of the legislation (like the Glass-Steagall Act) that Democrats passed to rein in bankers and lenders and the agencies (the Securities and Exchange Commission and the Federal Deposit Insurance Corporation) that they put in place to enforce those limits. Warren credits this new regulatory regime, along with labor unions, with producing a golden era for many workers over the next four and a half decades. Income rose along with union membership, and 70 percent of the increase went to the bottom 90 percent. That shared prosperity built, in Warren’s telling, “the greatest middle class the world had ever known.”

At rallies, Elizabeth Warren takes a photo with every supporter who wants one. At Laney College, she stayed for two hours, meeting nearly 1,000 people.CreditSeptember Dawn Bottoms for The New York Times

Then came Warren’s second turning point: President Ronald Reagan’s assault on government. Warren argues that Reagan’s skill in the 1980s at selling the country on deregulation allowed the safeguards erected in the 1930s to erode. Republicans seized on the opening Reagan created, and Democrats at times aided them. (Bill Clinton signed the repeal of Glass-Steagall in 1999.) That’s how the country arrived at its current stark level of inequality. “The system is as rigged as we think,” Warren wrote in her 2017 book “This Fight Is Our Fight” — in a riposte to Barack Obama, who insisted it was not, even as he recognized the influence of money in politics. This, Warren believes, is what Trump, who also blasted a rigged system, got right and what the Democratic establishment — Obama, both Clintons, Biden — gets wrong.

The challenge for Warren, going up against Trump, is that his slogan “drain the swamp” furthers the longstanding Republican goal of discrediting government, whereas Warren criticizes government as “a tool for the wealthy and well connected,” while asking voters to believe that she can remake it to help solve their problems. Hers is the trickier, paradoxical sell.

Warren faces a similar challenge when she tries to address the fear some white voters have that their economic and social status is in decline. Trump directs his supporters to blame the people they see every day on TV if they’re watching Fox News: immigrants and condescending liberal elites. Warren takes aim at corporate executives while pressing for class solidarity among workers across race and immigration status. Trump’s brand of right-wing populism is on the rise around the world. As more people from the global south move north, it’s harder than ever to make the case to all workers that they should unite.

It’s a classic problem for liberals like Warren: Workers often turn on other workers rather than their bosses and the shadowy forces behind them. “Populism is such a slippery concept,” Michael Kazin, a historian at Georgetown University and author of “The Populist Persuasion: An American History,” told me. “The only real test is whether you can be the person who convinces people you understand their resentment against the elites. Trump did enough of that to win. Bernie Sanders has shown he can do it among young people. Can Elizabeth Warren pull it off? I’m not sure.”

It’s an inconvenient political fact for Warren that she’s far more associated with Harvard and Massachusetts, where she has lived for the last 25 years, than with Oklahoma, the childhood home that shaped her and where her three brothers still live and her family’s roots are multigenerational. If you include Texas, where Warren lived in her early 20s and for most of her 30s, she spent three formative decades far from the Northeast.

When she was growing up, Warren’s father worked as a salesman at Montgomery Ward and later as a janitor; neither of her parents went to college. (White women in this group broke for Trump by 61 percent in 2016, and white men supported him by 71 percent.) In the early 1960s, when Warren was 12, her father had a heart attack and lost his job in Oklahoma City. One day, after the family’s station wagon was repossessed, her mother put on the one formal dress she owned, walked to an interview at Sears and got a job answering phones for minimum wage. This has become the story that Warren tells in every stump speech. She uses it to identify with people who feel squeezed.

There’s another story that Warren tells in her book about the implications, for her own life, of her family’s brush with financial ruin. Warren was going to George Washington University on a scholarship — “I loved college,” she told me. “I was having a great time” — when an old high school boyfriend, Jim Warren, reappeared in her life.

He asked her to marry him and go to Texas, where he had a job at IBM. Warren knew her mother wanted her to say yes. “It was the whole future, come on,” she told me. “I had lived in a family for years that was behind on the mortgage. And a secure future was a good man — not what you might be able to do on your own.”

Warren dropped out of college to move to Houston with her new husband. “It was either-or,” she said. Many women who make this choice never go back to school. But Warren was determined to become a teacher, so she persuaded Jim to let her finish college as a commuter student at the University of Houston for $50 a semester. After her graduation, they moved to New Jersey for Jim’s next IBM posting, and she started working as a speech therapist for special-needs children.

Warren was laid off when she became pregnant, and after her daughter was born, she talked Jim into letting her go to law school at Rutgers University in Newark (this time the cost was $450 a semester). After she had her son, she came to terms with the fact that she wasn’t cut out to stay home. “I wanted to be good at it, but I just wasn’t,” she told me.

Warren at George Washington University, in a dress she made herself.Creditvia the Warren campaign

In the late 1970s, she got a job at the University of Houston law school. She and her husband moved back to Texas. A couple of years later, when their daughter was in elementary school and their son was a toddler, the Warrens divorced. In her book, Warren writes about this from Jim’s perspective: “He had married a 19-year-old girl, and she hadn’t grown into the woman we both expected.” (Jim Warren died in 2003.)

Two years later, Warren asked Mann, whom she had met at a conference, to marry her. He gave up his job at the University of Connecticut to join her in Houston. At the university, Warren decided to teach practical classes, finance and business. In 1981, she added a bankruptcy class and discovered a question that she wanted to answer empirically: Why were personal bankruptcy rates rising even when the economy was on the upswing?

At first, Warren accepted the assumption that people were causing their own financial ruin. Too much “Tommy, Ralph, Gucci and Prada,” a story in Newsweek called “Maxed Out” later declared. Along with two other scholars, Jay Westbrook and Teresa Sullivan, Warren flew around the country and collected thousands of bankruptcy-court filings in several states. “I was going to expose these people who were taking advantage of the rest of us by hauling off to bankruptcy and just charging debts that they really could repay,” she said in a 2007 interview with Harry Kreisler, a historian at the University of California, Berkeley. But Warren, Westbrook and Sullivan found that 90 percent of consumer bankruptcies were due to a job loss, a medical problem or the breakup of a family through divorce or the death of a spouse. “I did the research, and the data just took me to a totally different place,” Warren said.

That research led to a job at the University of Texas at Austin, despite the doubts some faculty members had about her nonselective university degrees. (Mann worked at Washington University in St. Louis.) They finally managed to get joint appointments at the University of Pennsylvania in 1987, and she stayed there until 1995.

During this period, Warren was registered as a Republican. (Earlier, in Texas, she was an independent.) Her political affiliation shifted around the time she began working on bankruptcy in Washington. More than one million families a year were going bankrupt in the mid-’90s, and Congress established the National Bankruptcy Review Commission to suggest how to change the bankruptcy code. The commission’s chairman, former Representative Mike Synar of Oklahoma, asked Warren, now at Harvard Law School, to be his chief policy adviser. “I said, ‘No, not a chance, that’s political,’” Warren said in her interview with Kreisler. “I want to be pure. I want to be pristine. I don’t want to muddy what I do with political implications.”

But Synar persuaded Warren to join his team. It was a critical juncture. Big banks and credit-card companies were pushing Congress to raise the barriers for consumers to file for bankruptcy and harder for families to write off debt. Bill Clinton was president. He had run — much as Warren is running now — as a champion of the middle class, but early in his first term he began courting Wall Street. He didn’t want to fight the banks.

Warren flew back and forth from Boston to Washington and to cities where the commission held hearings. It was her political education, and the imbalance of influence she saw disturbed her. The banks and lenders paid people to go to the hearings, wrote campaign checks and employed an army of lobbyists. People who went bankrupt often didn’t want to draw attention to themselves, and by definition, they had no money to fight back.

By 1997, Warren had become a Democrat, but she was battling within the party as well as outside it. In particular, she clashed with Joe Biden, then a senator from Delaware. Biden’s tiny state, which allowed credit-card companies to charge any interest rate they chose beginning in 1981, would become home to half the national market. One giant lender, MBNA, contributed more than $200,000 to Biden’s campaigns over the years, according to the Center for Responsive Politics. Biden strongly supported a bill, a version of which was first introduced in 1998, to make it more expensive to file for bankruptcy and more difficult to leave behind debt. He was unpersuaded by Warren’s charts and graphs showing how the change would increase the financial burden on families. “I am so sick of this self-righteous sheen put on anybody who wants to tighten up bankruptcy,” Biden said during a Senate hearing in 2001.

The bankruptcy battles continued, and when Warren testified against the proposed changes to the bankruptcy code before the Senate in 2005, Biden called her argument “very compelling and mildly demagogic,” suggesting that her problem was really with the high interest rates that credit-card companies were allowed to charge. “But senator,” Warren answered, “if you are not going to fix that problem” — by capping interest rates — “you can’t take away the last shred of protection from these families” that access to bankruptcy offers. The bill passed two months later.

Biden’s team now argues that he stepped in to win “important concessions for middle-class families,” like prioritizing payments for child support and alimony ahead of other debt. When I asked Warren in June about Biden’s claim, she pursed her lips, looked out the window, paused for a long beat and said, “You may want to check the record on that.” The record shows that Warren’s focus throughout was on the plight of families who were going bankrupt and that Biden’s was on getting a bill through. He supported tweaking it to make it a little less harmful to those facing bankruptcy, and the changes allowed it to pass.

Warren in the 1970s, when she practiced law out of her home.Creditvia the Warren campaign

In the years since it became law, the bankruptcy bill has allowed credit-card companies to recover more money from families than they did before. That shift had two effects, Matthew Yglesias argued recently in Vox. As Biden hoped, borrowers over all benefited when the credit-card companies offered slightly lowered interest rates. But as Warren feared, the new law hit people reeling from medical emergencies and other unexpected setbacks. Blocked from filing for bankruptcy, they have remained worse off for years. And a major effort to narrow the path to bankruptcy may have an unintended effect, according to a 2019 working paper released by the National Bureau of Economic Research, by making it harder for the country to recover from a financial crisis.

In 2001, a Harvard student named Jessica Pishko, an editor of The Harvard Women’s Law Journal, approached Warren about contributing to a special issue. She didn’t expect Warren to say yes. Students saw Warren as an example of female achievement but not as a professional feminist. “She didn’t write about anything that could seem girlie,” Pishko remembers. “She wasn’t your go-to for feminist issues, and she was from that era when you didn’t put pictures of your kids on your desk” to show that you were serious about your work. But Warren wanted to contribute. “She said: ‘I’m doing all this research on bankruptcy, and I want to talk about why that’s a women’s issue. Can I do that?’”

The paper Warren produced, “What Is a Women’s Issue?” was aggressive and heterodox. In it, she criticized the NOW Legal Defense and Education Fund for singling out Biden for praise in its annual report because he championed the Violence Against Women Act, which made it easier to prosecute domestic abusers. Warren thought his support for that law did not compensate for his role in pushing through the bankruptcy legislation, which she believed hurt women far more. “Why isn’t Senator Biden in trouble with grass-roots women’s groups all over the country and with the millions of women whose lives will be directly affected by the legislation he sponsors?” she asked. The answer raised “a troubling specter of women exercising powerful political influence within a limited scope, such as rape laws or equal educational opportunity statutes.

Warren wanted feminism to be wider in scope and centered on economic injustice. She urged students to take business-law classes. “If few students interested in women’s issues train themselves in commercial areas, the effects of the commercial laws will not be diminished, but there will be few effective advocates around to influence those policy outcomes,” she wrote. “If women are to achieve true economic equality, a far more inclusive definition of a women’s issue must emerge.”

She challenged standard feminist thinking again when she published her first book for a lay audience (written with her daughter), “The Two-Income Trap,” in 2003. Warren argued that in the wake of the women’s movement of the 1970s, millions of mothers streamed into the workplace without increasing the financial security of their families. Her main point was that a family’s additional income, when a second parent went to work, was eaten up by the cost of housing, and by child care, education and health insurance.

Conservatives embraced her critique more enthusiastically than liberals. Warren even opposed universal day care for fear of “increasing the pressure” to send both parents to work. She has shifted on that point. The child-care proposal she announced this February puts funds into creating high-quality child care but doesn’t offer equivalent subsidies to parents who stay home with their children. Warren says she’s responding to the biggest needs she now sees. More and more families are squeezed by the cost of child care; not enough of it is high quality; the pay for providers is too low. Warren is framing child care as a collective good, like public schools or roads and bridges.

“The Two-Income Trap” got Warren onto “Dr. Phil,” giving her a taste of minor stardom and the appeal of a larger platform. When the financial crisis hit, she moved to Washington’s main stage. At the invitation of Harry Reid, the Senate majority leader at the time, Warren led the congressional oversight panel tasked with overseeing the $700 billion Troubled Asset Relief Program that Congress created to save the financial system. In public hearings, Warren called out Timothy Geithner, Obama’s Treasury secretary, for focusing on bailing out banks rather than small businesses and homeowners. Through a spokeswoman, Geithner declined to comment for this article. In his memoir, he called the oversight hearings “more like made-for-YouTube inquisitions than serious inquiries.”

But Warren could see the value of the viral video clip. In 2009, Jon Stewart invited her on “The Daily Show.” After throwing up from nerves backstage, she went on air and got a little lost in the weeds — repeating the abbreviation P.P.I.P. (the Public-Private Investment Program) and at first forgetting what it stood for. She felt as though she blew her opportunity to speak to millions of viewers. Stewart brought her back after the break for five more minutes, and she performed well, clearly explaining how the country forgot the lessons of the Great Depression and the dangers of deregulation. “We start pulling the threads out of the regulatory fabric,” Warren said. She listed the upheavals that followed — the savings and loan crisis of the 1980s and 1990s, the collapse of the giant hedge fund Long-Term Capital Management in 1998 and the Enron scandal a few years later. “And what is our repeated response?” Warren said. “We just keep pulling the threads.” Now that the government was trying to save the whole economy from falling off the cliff, there were two choices: “We’re going to decide, basically: Hey, we don’t need regulation. You know, it’s fine, boom and bust, boom and bust, boom and bust, and good luck with your 401(k). Or alternatively, we’re going to say, You know, we’re going to put in some smart regulations … and what we’re going to have, going forward, is we’re going to have stability and some real prosperity for ordinary folks.”

Stewart leaned forward and told Warren she had made him feel better than he had in months. “I don’t know what it is that you just did right there, but for a second that was like financial chicken soup for me,” he said.

“That moment changed my life,” Warren later said. Stewart kept inviting her back. In 2010, Congress overhauled and tightened financial regulation with the Dodd-Frank Act. In the push for its passage, Warren found that she had the leverage to persuade Democratic leaders to create a new agency, the Consumer Financial Protection Bureau. Its job is to safeguard people from malfunctioning financial products (like predatory loans), much as the government protects them from — to borrow Warren’s favorite analogy — toasters that burst into flames. Warren spent a year setting up the C.F.P.B. When Obama chose Richard Cordray over her as the first director because he had an easier path to Senate confirmation, progressives were furious.

Warren at the California Democratic Party State Convention this spring.CreditSeptember Dawn Bottoms for The New York Times

Warren was an unusual political phenomenon by then: a policy wonk who was also a force and a symbol. In 2012, she was the natural choice for Democrats recruiting a candidate to run against Senator Scott Brown of Massachusetts, a Republican who had slipped into office, after Ted Kennedy’s death, against a weak opponent. Warren had another viral moment when a supporter released a homemade video of her speaking to a group in Andover. “You built a factory out there?” Warren said, defending raising taxes on the wealthy. “Good for you. But I want to be clear: You moved your goods to market on the roads the rest of us paid for; you hired workers the rest of us paid to educate; you were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn’t have to worry that marauding bands would come and seize everything at your factory, and hire someone to protect against this, because of the work the rest of us did.” Brown called Warren “anti-free enterprise,” and Obama, running for re-election, distanced himself in an ad shot from the White House (“Of course Americans build their own businesses,” he said). But Warren’s pitch succeeded. She came from behind in the race against Brown and won with nearly 54 percent of the vote.

[How the Trump administration dismantled the C.F.P.B.]

Voters of color could determine the results of the 2020 presidential election. In the primaries, African-Americans constitute a large share of Democrats in the early-voting state of South Carolina and on Super Tuesday, when many other states vote. In the general election, the path to the presidency for a Democrat will depend in part on turning out large numbers of people of color in Southern states (North Carolina, Virginia, possibly Florida) and also in the Rust Belt, where the post-Obama dip in turnout among African-Americans contributed to Hillary Clinton’s squeaker losses in Wisconsin and Pennsylvania.

Warren has work to do to persuade people of color to support her. In the last couple of Democratic primaries, these voters started out favoring candidates who they thought would be most likely to win, not those who were the most liberal. Black voters backed Hillary Clinton in 2008 until they were sure Barack Obama had enough support to beat her, and in 2016 they stuck with her over Bernie Sanders. This time, they have black candidates — Kamala Harris, Cory Booker and Wayne Messam — to choose from. And voters of color may be skeptical of Warren’s vision of class solidarity transcending racial division. As it turned out, Warren’s case that most white people voted for Trump because of economic distress, and “despite the hate,” as she said right after the election, didn’t really hold up. A study published last year found that among white voters, perceived racial or global threats explained their shift toward Trump better than financial concerns did. What does that say about the chances of winning as a liberal who tries to take the racism out of populism?

When Warren makes the case about what needs to change in America by leaning on the period from 1935 to 1980, she’s talking about a time of greater economic equality — but also a period when people of color were excluded from the benefits of government policies that buoyed the white middle class. In a video announcing that she was exploring a presidential bid, Warren acknowledged that history by saying that families of color today face “a path made even harder by generations of discrimination.” For example, the federal agency created during the New Deal drew red lines around mostly black neighborhoods on maps to deny mortgage loans to people who lived in them.

Warren spoke about this problem years before she went into politics. Redlining contributed to the racial wealth gap, and that had consequences Warren saw in her bankruptcy studies — black families were more vulnerable to financial collapse. Their vulnerability was further heightened by subprime and predatory lending. In “The Two-Income Trap,” Warren called these kinds of loans “legally sanctioned corporate plans to steal from minorities.”

In March, Warren took a three-day trip to the South. She started on a Sunday afternoon, with a town hall — one of 101 she has done across the country — at a high school in a mostly black neighborhood in Memphis. It’s her format of choice; the questions she fields help sharpen her message. The local politicians who showed up that day were African-American, but most of the crowd was white.

The next morning, Warren drove to the Mississippi Delta. Her husband, Mann, was on spring break from teaching and along for the trip. Warren’s staff welcomes his presence because Warren loves having him with her and because he’s willing to chat up voters (who often call him “Mr. Warren”). In the small town of Cleveland, Miss., Warren sprang out of her black minivan in the parking lot of a church to shake the hand of an African-American state senator, Willie Simmons. They were meeting for the first time: He had agreed to take her on a walking tour after her campaign got in touch and said she wanted to learn about housing in the Delta.

Simmons and Warren set off down a block of modest ranch houses, some freshly painted, others peeling, preceded by TV crews and trailed by the rest of the press as her aides darted in to keep us out of the shot. The scrum made conversation stagy, but Simmons gradually eased into answering Warren’s questions. He pointed out cracks in the foundations of some houses; the lack of money to repair old buildings was a problem in the Delta. They stopped at a vacant lot. The neighbors wanted to turn it into a playground, but there was no money for that either.

Warren nodded and then took a stab at communicating her ideas to the local viewers who might catch a few of her words that night. She hit the highlights of the affordable housing bill she released in the Senate months earlier — 3.2 million new homes over 10 years, an increase in supply that Moody’s estimated would reduce projected rents by 10 percent. When the tour ended, Simmons told the assembled reporters that he didn’t know whom he would support for president, but Warren got points for showing up and being easy to talk to — “touchable,” he said.

That night, Warren did a CNN town hall at Jackson State University, the third historically black college she has visited this year. Warren moved toward the audience at the first opportunity, walking past the chair placed for her onstage. She laid out the basics of her housing bill, stressing that it addressed the effects of discrimination. “Not just a passive discrimination,” Warren said. “Realize that into the 1960s in America, the federal government was subsidizing the purchase of homes for white families and discriminating against black families.” Her bill included funds to help people from redlined areas, or who had been harmed by subprime loans, buy houses. The audience applauded.

Warren at the rally in Oakland, Calif.CreditSeptember Dawn Bottoms for The New York Times

Warren also said that night that she supported a “national full-blown conversation” about reparations for slavery and Jim Crow. She saw this as a necessary response to the stark wealth gap between black and white families. “Today in America — because of housing discrimination, because of employment discrimination — we live in a world where the average white family has $100 and the average black family has about $5.” Several Democratic candidates have said they support a commission to study reparations. Ta-Nehisi Coates, author of the influential 2014 Atlantic article “The Case for Reparations,” said in a recent interview with The New Yorker that Warren was the candidate whose commitment seemed real because she had asked him to talk with her about his article when it came out years ago. “She was deeply serious,” Coates said.

Warren is often serious and doesn’t hesitate to convey her moral outrage. “I’ll own it,” she told me about her anger. She talked about women expressing to her their distress about sexual harassment and assault. “Well, yeah,” Warren said. “No kidding that a woman might be angry about that. Women have a right to be angry about being treated badly.”

Trump gets angry all the time; whether a woman can do the same and win remains a question. Warren’s campaign is simultaneously working in another register. On Twitter, it has been posting videos of Warren calling donors who have given as little as $3. They can’t believe it’s her. When the comedian and actress Ashley Nicole Black tweeted, “Do you think Elizabeth Warren has a plan to fix my love life?” Warren tweeted back and then called Black, who finished the exchange with a fan-girl note: “Guess who’s crying and shaking and just talked to Elizabeth Warren on the phone?!?!? We have a plan to get my mom grandkids, it’s very comprehensive, and it does involve raising taxes on billionaires.”

After Trump’s election, Warren and Sanders said that if Trump followed through on his promise to rebuild the economy for workers and their families, they would help. If Trump had championed labor over corporations, he could have scrambled American politics by creating new alliances. But that version of his presidency didn’t come to pass. Instead, by waging trade wars that hurt farm states and manufacturing regions more than the rest of the country, Trump has punished his base economically (even if they take satisfaction in his irreverence and his judicial appointments).

Warren has been speaking to those voters. In June, she put out an “economic patriotism” plan filled with ideas about helping American industries. By stepping into the vacuum for economic populism the president has left, Warren forced a reckoning on Fox News, Trump’s safe space on TV, from the host Tucker Carlson. Usually a Trump loyalist, he has recently styled himself a voice for the white working class.

Carlson opened his show by using more than two minutes of airtime to quote Warren’s analysis of how giant American companies are abandoning American workers. Carlson has warned that immigrants make the country “poorer and dirtier” and laced his show with racism, but now he told his mostly Republican viewers: “Ask yourself, what part of the statement you just heard did you disagree with?” He continued, “Here’s the depressing part: Nobody you voted for said that or would ever say it.” The next day, a new conservative Never Trump website called The Bulwark ran a long and respectful essay called “Why Elizabeth Warren Matters.”

A month earlier in Mingo County, W.Va., where more than 80 percent of voters cast a ballot for Trump, Warren went to a local fire station to talk about her plan for addressing the opioid crisis. It’s big: She wants to spend $100 billion over 10 years, including $50 million annually for West Virginia, the state with the highest rate of deaths from drug overdoses. In Trump’s latest budget, he has requested an increase of $1.5 billion to respond directly to the epidemic. Against a backdrop of firefighters’ coats hanging in cinder-block cubbies, Warren moved among a crowd of about 150. Many hands went up when she asked who knew someone struggling with opioids. She brought up the role of “corporations that made big money off getting people addicted and keeping them addicted.” People with “Make America Great Again” stickers nodded and clapped, according to Politico.

If Warren competes for rural voters in the general election (if not to win a red state then to peel off enough of them to make a difference in a purple one), her strong support for abortion rights and gun control will stand in her way. Lately, she has framed her argument for keeping abortion clinics open in economic terms, too. “Women of means will still have access to abortions,” she said at a town hall on MSNBC hosted by Chris Hayes of the effects of new state laws aimed at closing clinics. “Who won’t will be poor women, will be working women, will be women who can’t afford to take off three days from work, will be very young women.” She finished by saying, “We do not pass laws that take away that freedom from the women who are most vulnerable.”

Biden and Sanders have been polling better with non-college-educated white voters than Warren has. David Axelrod, the former Obama strategist and political commentator, thinks that even if her ideas resonate, she has yet to master the challenge of communicating with this group. “She’s lecturing,” he said. “There’s a lot of resistance, because people feel like she’s talking down to them.”

Warren didn’t sound to me like a law professor on the trail, but she did sound like a teacher. Trying to educate people isn’t the easiest way to connect with them. “Maybe she could bring it down a level,” Lola Sewell, a community organizer in Selma, Ala., suggested. “A lot of us aren’t involved with Wall Street and those places.”

Warren may also confront a double bind for professional women: To command respect, they have to prove that they’re experts, but once they do, they’re often seen as less likable. At one point, I asked Warren whether there was anything good about running for president as a woman. “It is what it is,” she said.

When I first talked with Warren in February, when her poll numbers were low, I wondered whether she was content with simply forcing Democratic candidates to engage with her ideas. During the 2016 primaries, when Warren did not endorse Sanders, she wanted influence over Hillary Clinton’s economic appointments should she win the presidency. Cleaving the Democratic administration from Wall Street — that was enough at the time. She could make a similar decision in 2020 or try to get her own appointment. If Warren became Treasury secretary, she could resuscitate the Consumer Financial Protection Bureau, which Trump has worked to declaw, and tip all kinds of decisions away from banks and toward the families who come to her town halls and tell her about the loans they can’t pay.

By mid-June, however, when I went to Washington to talk to Warren for the last time, she was very much in the race. New polls showed her in second place in California and Nevada. She had more to lose, and perhaps as a result, her answers were more scripted, more like her speeches.

Warren, like everyone in the race, has yet to prove that she has the political skills and broad-enough support to become president. But a parallel from another country suggests that perhaps bearing down on policy is the best strategy against right-wing populism. Luigi Zingales, the University of Chicago economist, comes from Italy, and he feared Trump’s rise back in 2011, having watched the ascension of Silvio Berlusconi, the corrupt billionaire tycoon who was elected prime minister of Italy in the 2000s as a right-wing populist. After Trump’s victory in 2016, Zingales pointed out in a New York Times Op-Ed that the two candidates who defeated Berlusconi treated him as “an ordinary opponent,” focusing on policy issues rather than his character. “The Democratic Party should learn this lesson,” Zingales wrote. He now thinks that Warren is positioned to mount that kind of challenge. “I think so,” he said, “if she does not fall for his provocations.”

Warren and I met in her Washington apartment. The floor at the entrance had been damaged by a leak in the building, and the vacuum cleaner was standing next to the kitchen counter. I said I was a bit relieved by the slight disarray because her house in Cambridge was so supremely uncluttered, and she burst out laughing. She sat on the couch as we spoke about the indignities to come, the way in which her opponents — Biden, Trump, who knew who else — would try to make her unrecognizable to herself. What would she do about that? Warren leaned back and stretched her feet out, comfortable in gray wool socks. “The answer is, we’ve got time,” she said. “I’ll just keep talking to people — I like talking to people.”

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Feature: Mick Mulvaney’s Master Class in Destroying a Bureaucracy From Within

One rainy afternoon early in February 2018, a procession of consumer experts and activists made their way to the headquarters of the Consumer Financial Protection Bureau in Washington to meet Mick Mulvaney, then the bureau’s acting director. The building — an aging Brutalist layer cake, selected by the bureau’s founders for the aspirational symbolism of its proximity to the White House, one block away — was under renovation, and so each visitor in turn trudged around to a side entrance. Inside the building, Mulvaney had begun another kind of reconstruction, one that would shift the balance of power between the politically influential industries that lend money and the hundreds of millions of Americans who borrow it.

Three months earlier, President Trump installed Mulvaney, a former congressman from South Carolina, as the C.F.P.B.’s acting director. Elizabeth Warren, who helped create the agency in the wake of the 2008 financial crisis, envisioned it as a kind of economic equalizer for American consumers, a counter to the country’s rising structural inequality. Republicans had come to view her creation as a “rogue agency” with “dictatorial powers unique in the American republic,” as the party’s 2016 platform put it. In Congress, Mulvaney had established himself as an outspoken enemy of the bureau, describing it, memorably, as a “joke” in “a sick, sad kind of way” and sponsoring legislation to abolish it.

Some of those invited to the meeting in February had picketed outside the bureau’s headquarters on Mulvaney’s first day at work. Their unease had only grown as Mulvaney ordered a hiring freeze, put new enforcement cases on hold and sent the Federal Reserve, which funds the C.F.P.B., a budget request for zero dollars, saying the bureau could make do with the money it had on hand. Within weeks, Mulvaney announced that he would reconsider one of the bureau’s major long-term initiatives: rules to restrict payday loans, products that are marketed to the working poor as an emergency lifeline but frequently leave them buried in debt. “Anybody who thinks that a Trump-administration C.F.P.B. would be the same as an Obama-administration C.F.P.B. is simply being naïve,” Mulvaney told reporters. “Elections have consequences at every agency.”

Mulvaney was also aware that appearances have consequences. For agency heads, it is important to appear open to all points of view about their regulatory decisions, especially if they end up having to defend them in court. In February, he agreed to meet with his critics in person. Thirty or so people gathered around a conference table as rain lashed the windows. Mulvaney, who is 51, has close-cropped hair and a bulldog countenance that befits his manner. A founder of the House’s hard-line Freedom Caucus, he can be sarcastic, even withering, in hearings and speeches. But Mulvaney struck a placating tone with his guests. He kept his opening remarks brief, according to six people who attended the meeting. Important things at the bureau would not change, he reassured them. “I’m not here to burn the place down,” he insisted. Mulvaney said he did not intend to discuss his plans for the payday-loan rule with them but encouraged everyone to share their views.

Many of Mulvaney’s guests came from advocacy groups, like Americans for Financial Reform and the Center for Responsible Lending, that often did battle with Washington’s powerful financial-industry lobby. But the meeting also included a dozen religious leaders, among them officials from national evangelical and Baptist organizations, whose members tend to be among Trump’s most loyal supporters. These leaders viewed payday lending as not only unfair but also sinful, and they had fought against it across Trump country — in deep-red South Dakota, on the same day Trump won the presidency, voters overwhelmingly approved a ballot measure effectively banning payday loans. The ministers had planned carefully for their moment with Mulvaney, and for 20 minutes they took turns detailing the harm that payday lending had inflicted on their neighborhoods and congregations. Eventually they gave the floor to the Rev. Amiri B. Hooker, who led an African-American church near Mulvaney’s old congressional district.

“I told him I was from Kershaw County,” Hooker told me recently, recalling his exchange with Mulvaney. “He smiled and asked how were the good folks from Kershaw.” When Hooker pastored in Lake City, an hour away from Kershaw, a quarter of his congregation either had taken out payday loans themselves or knew someone who had. He told Mulvaney about an 84-year-old congregant in Lake City whom, during a week that she was so sick that she missed services, he saw hobbling toward him down the street. “She said, ‘I had to go pay my bill,’ ” Hooker recalled. The woman had taken out a $250 loan almost three years earlier to cover her granddaughter’s heating bill. She was still paying it off, Hooker told Mulvaney, at a cost of $75 a month, rolling over the loan into a new one each time.

[How cities make money by fining the poor.]

Despite his earlier reticence, Mulvaney seemed eager to offer his own view of how the bureau ought to operate. It wasn’t up to the federal government to stop people from taking the kind of credit that suited them, he suggested: “There’s no reason people should be taking these loans — but they do.” He pointed out that there wasn’t anyone in the room from North Carolina, where payday lending was illegal. They should plead their case to state officials. “You have a place to go to address payday loans, and it’s not me,” he said, according to multiple attendees. As the C.F.P.B.’s acting director, he wouldn’t stop enforcing the law as written. He only wanted a more efficient bureau, he explained, one steeped in evidence-based decision-making, one that educated consumers to make good decisions on their own. Mulvaney provided few details about how it would all look, but he promised the pastors he would follow up to let them know which way he decided to go on payday-loan regulation. “I’ve never heard from him,” Hooker says.

In the months that followed, Mulvaney’s vision for the Consumer Financial Protection Bureau would become clearer. This account of Mulvaney’s tenure is based on interviews with more than 60 current or former bureau employees, current and former Mulvaney aides, consumer advocates and financial-industry executives and lobbyists, as well as hundreds of pages of internal bureau documents obtained by The New York Times and others. When Mulvaney took over, the fledgling C.F.P.B. was perhaps Washington’s most feared financial regulator: It announced dozens of cases annually against abusive debt collectors, sloppy credit agencies and predatory lenders, and it was poised to force sweeping changes on the $30 billion payday-loan industry, one of the few corners of the financial world that operates free of federal regulation. What he left behind is an agency whose very mission is now a matter of bitter dispute. “The bureau was constructed really deliberately to protect ordinary people,” says Lisa Donner, the head of Americans for Financial Reform. “He’s taken it apart — dismantled it, piece by piece, brick by brick.”

Mulvaney’s careful campaign of deconstruction offers a case study in the Trump administration’s approach to transforming Washington, one in which strategic neglect and bureaucratic self-sabotage create versions of agencies that seem to run contrary to their basic premises. According to one person who speaks with Mulvaney often, his smooth subdual of the C.F.P.B. was part of his pitch to Trump for his promotion to White House chief of staff — long one of the most powerful jobs in Washington. Mulvaney’s slow-rolling attack on the bureau’s enforcement and regulatory powers wasn’t just one of the Trump era’s most emblematic assaults on the so-called administrative state. It was also, in part, an audition.

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Elizabeth Warren testifying on Capitol Hill in 2011.CreditJoshua Roberts/Bloomberg, via Getty Images

The Consumer Financial Protection Bureau emerged from a liberal concern that the American political economy was increasingly defined by inequality and consumer debt. As a young academic in the 1980s, Warren began studying how and why some Americans ended up taking on more debt than they could handle. The act of borrowing money, she learned, was growing increasingly risky and complex. As the consumer-credit industry grew, credit-card companies and mortgage lenders began to design their products to appear cheaper than they actually were. Unlike most things people buy, financial products became defined by their ever-lengthening terms and conditions: mandatory arbitration, reverse amortization, interest-rate calculations that can change at a whim, cross-default clauses and two-cycle billing, mysterious credit scores that emanate from Equifax and Experian as if from the temples of an obscurantist cult. “The real money was in the fine print,” Warren told me recently.

Warren, who is now a senator from Massachusetts and a Democratic candidate for president, spoke to me by phone as she was making her way to New Hampshire for a campaign swing. On the trail and off, Warren depicts the rise of the consumer financial industry as part of an elemental structural shift in American life. Wealthy people and big corporations were not just eating up a growing share of the pie; they had rigged the marketplace to help them do it. All that fine print didn’t just shift billions upon billions of dollars into the hands of lenders, Warren argued. It shifted power. Lenders could more safely harvest a few dollars in fees from the checking account of each customer, even when doing so broke the law, when mandatory arbitration clauses in the fine print prohibit customers from joining together in a class action to get their money back. Brokers could more easily push a family to a higher-cost mortgage, even when they qualified for a cheaper one, if the family believed they were getting the best possible deal. The increase in debt-financed consumption helped paper over the stagnating wages of the middle class and the growing gap between the rich and everyone else. But it was also driving an epidemic of social misery: bankruptcy and lost homes, anxiety and shame.

In her research, Warren found that people got in over their heads not because they were greedy or lacked self-discipline, but because they were being outmatched by a sophisticated and often predatory industry of lenders. Warren recalled being struck by “the number of people who said, in our interviews, ‘I never understood my payment would go up on that’ or ‘I didn’t understand I owed more on my house than I paid for it,’ ” she told me. “Even after they had seen a lawyer and declared bankruptcy, they still didn’t understand what had happened.” In a 2007 article titled “Unsafe at Any Rate,” Warren proposed the creation of a new regulatory agency to oversee consumer-credit products. When she lobbied lawmakers on Capitol Hill after the financial crisis, Warren would take them a selection of credit-card agreements. “I’d lay three of them down on the table, and I’d say, ‘Tell me which one is the cheapest credit card.’ ” None could.

Warren and other consumer advocates argued that payday lenders built their industry on a similar sleight of hand. They marketed themselves as lenders of last resort, offering emergency loans for a broken-down car or an unexpected medical bill. But according to Nick Bourke, a former financial-services consultant who now directs consumer-finance research at the Pew Charitable Trusts, what fed the industry’s growth were not emergency expenses but the increasingly unstable incomes of the working poor. As their hourly wages fluctuated at the whims of workplace-optimization software, payday-loan customers — typically white women earning around $30,000, according to Pew’s research — borrowed to pay their rent or electric bills. The average customer paid $55 in fees to borrow $375, due on their next payday. But most found that they couldn’t afford to repay the loan after two weeks. They took out another loan to cover the first, and usually another.

Consumer advocates called this cycle a “debt trap” and argued that payday lenders, much like credit-card companies, disguised the true costs of their products. Store clerks emphasized the small-seeming fees and pushed customers to roll their old loans into new ones, so that the fees snowballed, eventually exceeding the cost of the original loan. While most banks made money by finding customers who could repay their debts on time, payday lenders made money by finding customers who couldn’t. “If borrowers repaid loans in just two weeks and walked away as advertised, lenders would go out of business,” Bourke says.

Improbably, the payday-loan industry earned a fortune from the working poor. The short loan terms and frequent rollovers pumped out profits faster than conventional lending, requiring less capital and yielding bigger profits. Beginning in the 1990s, federal and state deregulation set off a payday-loan gold rush. In states like Utah, North Carolina and Missouri, the number of storefront lenders tripled or even quintupled practically overnight. Lenders clustered around big military bases throughout the South, where they could target service members, most of them young, low-paid and living the kind of peripatetic lives that made them ideal payday-loan customers. “Anybody with $50,000 can get into payday lending in some states,” one former payday-loan executive told me. “The model is designed to print money.”

Some of the largest payday lenders built national franchises and took their companies public during the frothy 2000s, fueling further expansion. Silicon Valley venture capitalists stepped in, building lead-generation databases and online platforms to compete against traditional storefront lenders. So did Wall Street. In recent years, leading private-equity firms, including Golden Gate Capital and the Fortress Investment Group, have acquired or bought stakes in almost two dozen short-term lenders. Payday lenders, which once operated on the fringes of the financial world, are now in unlikely alignment with the titans of high finance: Each has benefited enormously from Trump’s deregulatory policies, which Trump has cast as populist and his likely 2020 opponents have assailed as plutocratic.

“When you think about structures that perpetuate racial and economic inequality — this is it,” says Diane Standaert, the director of state policy at the Center for Responsible Lending, which advocates tighter regulation on lenders. “These are entities that suck up billions of dollars a year from people making $25,000 a year. And it’s going into the pockets of the wealthiest people in the world.”

Mick Mulvaney testifying on Capitol Hill in 2018.CreditMark Wilson/Getty Images

Mulvaney began his political career in the heart of payday-loan country, just as the industry’s headlong expansion began running into serious resistance. In South Carolina, short-term lending is not only a significant industry but also a political force. Payday lenders dole out more campaign money than traditional banks do, most of it to committees controlled by the Legislature’s powerful Republican leaders. The country’s biggest payday-loan chain, Advance America, is based in Spartanburg, where a local business school is named for a company founder, George Dean Johnson Jr., and the company’s chief spokesman, Jamie Fulmer, serves part time as a city councilman.

Mulvaney, who worked as a lawyer, restaurateur and real estate developer before entering politics, ran for a seat in the State House in 2006, when South Carolina had around a thousand payday lenders, one of the highest densities in the country. Two years later, Mulvaney won election to the State Senate, in a district that stretched along South Carolina’s border with North Carolina, which had outlawed payday lenders in 2001. Mulvaney, a junior lawmaker, received only a sprinkle of checks from the payday-loan industry during his time in the Legislature. But payday lenders did a brisk business in and around Mulvaney’s district, throwing up billboards along Interstate 77 and advertising in the Charlotte phone book to draw customers from across the border. For some constituents, particularly in rural areas of the district, payday lending served as a de facto line of credit. Emma Doyle, a close aide since Mulvaney’s time in Congress, told me that his views of the payday-loan industry were shaped, in part, by hearing from lower-income constituents who relied on payday lenders when they had nowhere else to go. “It was something he had worked on, something he had heard from a lot of people about,” Doyle told me. “Not everybody ends up in a debt trap. Not everyone ends up saying, ‘I wish I hadn’t taken this out’ or ‘I wish it hadn’t been available to me.’ ”

North Carolina’s expulsion of payday lenders was the first in a series of setbacks for the industry that unfolded through the decade. In 2005, federal officials began cracking down on “rent-a-bank” schemes, in which payday-loan companies formed partnerships with banks in states that had loose lending regulations to export high-interest loans to customers in states that banned them. A year later, with tens of thousands of American soldiers deploying to Iraq and Afghanistan, Congress passed the Military Lending Act, imposing a rate cap on payday loans and auto-title loans to service members. Over Mulvaney’s first two years in the Legislature, several other states passed new restrictions on lenders, and proposals to follow suit were among the most hotly debated legislation in the Capitol.

At first, payday-loan supporters successfully bottled up the bills in committee. But in 2008, as the subprime-mortgage implosion set off a global financial crisis, the politics of financial regulation abruptly shifted. Public anger against lenders spread around the country, and amid the wreckage of lost homes and destroyed savings, the wave engulfed payday lenders too. In the November elections, Democrats in Washington began drafting the Dodd-Frank reform act, adopting Warren’s idea for a new consumer financial regulator. Even in South Carolina, there were calls to ban payday lending altogether. “You had a lot of horror stories out there about people carrying multiple loans and taking out one loan to pay off another loan,” recalls Wes Hayes, a Republican who served with Mulvaney in the State Senate.

Hayes began working with Advance America and other lenders on a compromise that would limit South Carolinians to taking out one payday loan at a time. “We were trying to break the cycle,” he told me. For payday lenders, Hayes’s bill was also a kind of breakwater, intended to absorb the anger building against the industry in South Carolina and elsewhere. Advance America pushed lawmakers to support the compromise. Johnson, the company’s co-founder, personally lobbied the state’s governor at the time, Mark Sanford, according to a former Sanford aide. “It strengthened the consumer protections that were in our state, but also allowed consumers access to the credit they needed,” Fulmer says.

But not everyone was convinced. In the Senate, Mulvaney belonged to a small group of young conservatives who called themselves the William Wallace Caucus, after the Scottish freedom fighter portrayed in “Braveheart.” Like a growing number of conservatives around the country, they viewed the Republican Party of the Bush years as adrift from small-government principles. In the depths of the recession, Mulvaney sided with Sanford against their fellow Republicans when Sanford tried to reject federal stimulus money — funds that Mulvaney cast as an ominous expansion of big-government power. Hayes’s payday-loan bill came to the floor a few weeks later. Sanford, the aide told me, was skeptical that borrowers were being misled by payday lenders and made clear he would veto the bill. Republicans in the Legislature laid plans to override him. In May 2009, Hayes’s compromise passed overwhelmingly.

Only four members of the State Senate voted against the legislation. One of them was Mulvaney. A few months after the vote, he announced that he would run for Congress, joining the Tea Party wave that was building around the country.

A payday lender in Florence, South Carolina.CreditColby Katz for The New York Times

The C.F.P.B. that opened its doors in 2011 had been carefully constructed to survive the fight ahead. Warren and her colleagues wanted a bureau that could resist the political pressures that, in their view, had cowed and co-opted other financial regulators leading up to the crisis. The C.F.P.B. was funded directly by the Federal Reserve, insulating it from congressional appropriators. The sole political appointee was its director, who would serve a five-year term and could be fired only for wrongdoing. Facing stiff Republican congressional resistance to the prospect of Warren taking the job, Obama ultimately picked Richard Cordray, a cerebral former Ohio attorney general.

The new agency had the feel of a start-up. Cordray, a Democrat, made an effort to recruit broadly, bringing in financial-industry veterans and former prosecutors, but Warren’s creation inevitably attracted Warren acolytes and veterans of consumer-advocacy groups, many of whom landed in the enforcement division. As the human and financial costs of the subprime-mortgage crash mounted, the new bureau was inundated with whistle-blower tips and consumer complaints. Cordray and his leadership team initially planned to focus on the biggest consumer-finance players, like mortgage lenders and credit-card companies; payday lenders were a relatively small industry compared with Wall Street. But it was growing quickly: The crisis had been good for business, pulling more middle-class families into the payday-loan market. And unlike banks, payday lenders were unregulated by the federal government. “It was affecting a lot of people at the margins who could least afford to run into trouble,” Cordray told me recently.

In 2012, the C.F.P.B. began conducting supervisory exams of payday lenders, a process that required them to open up their offices and books, and sometimes yielded evidence of predatory lending for the bureau’s enforcement team to take up. A company called Ace Cash Express, investigators found, harassed overdue borrowers by using phony legal threats. The investigation yielded a potent illustration of the debt trap: Ace Cash’s training manual, which instructed employees to pressure borrowers into paying off overdue loans by taking out new ones, illustrated its customer-service doctrine with a graphic resembling a recycling symbol, with one “short-term” loan fueling the next in an endless loop of debt.

Other investigations underscored the contempt that some lenders had for their new regulator. When the bureau informed Cash America, a major firm based in Texas, that it planned to conduct an examination, employees there shredded internal records and deleted recordings of phone calls with customers. Managers at the firm instructed employees to mislead the bureau’s examiners about its sales practices and stripped its call center of posters exhorting the employees to collect on debts. (The bureau later found that Cash America had illegally overcharged hundreds of service members and their families and ordered the company to pay a $5 million fine.)

The exams also provided an insider’s view of the historically insular industry, data that in turn guided the bureau’s enforcement lawyers and regulation writers. A bureau study of 15 million loans found that customers who kept rolling their loans over — taking out 10 or more a year — were the cream of the payday-loan industry, generating three-quarters of all loan fees. Advance America and other lenders disputed these findings, arguing that the bureau had undercounted one-time borrowers. But Cordray and his team saw evidence of a major regulatory failure: State-level reform efforts had largely failed to rein in the industry’s most abusive features, like debt traps. And lenders were devising ever-more-sophisticated tools to evade state regulation altogether: Some incorporated on Indian reservations or in offshore financial havens, selling loans online and claiming to be immune from state laws entirely.

A faction in the bureau advocated a strategy of hyperaggressive enforcement lawsuits to bring the industry to heel. Instead, Cordray settled on a two-pronged strategy, according to current and former bureau employees. Enforcement lawyers would begin prosecuting the industry’s worst scofflaws, especially the growing online lenders. But at the same time, the bureau would develop a package of tough rules that would apply to everyone.

In 2015, the agency outlined its core proposal, one that would eliminate debt traps: an ability-to-repay rule. Under such a rule, payday lenders would have to check whether borrowers could afford to pay back a loan before making it in the first place — a short-term loan would have to actually be short-term, not just bait for a debt trap. The rule would have real teeth: If companies lent money to people who couldn’t afford to pay it back, they could face prosecution and sizable fines. “We wanted to prompt reform in the industry,” Cordray says. “If they couldn’t reform their products, some of them would get out of the industry altogether.”

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The backlash against the proposal was severe. Dennis Shaul, who leads the Community Financial Services Association of America, an industry trade group founded by Advance America and other payday lenders, told me that his group would have supported some limits on repeat borrowing. But the ability-to-repay rule, his members felt, was designed to shrink their industry. “We felt their solution was arbitrary,” Shaul says. The association worked with Jones Day, a powerhouse Washington law firm, to mount an all-fronts legal challenge. Advance America accused consumer-advocacy groups like the Center for Responsible Lending, whose alumni dotted the bureau and who had consulted closely with it on the proposed rules, of “infiltrating” the C.F.P.B. (The revolving door, of course, spun both ways: Shaul was recruited by the industry after working for Barney Frank, the Massachusetts Democrat who was an author of Dodd-Frank, and dozens of former bureau officials have gone on to work for the financial industry.) The industry mustered studies, including one by the bureau’s former assistant research director, finding that the bureau’s proposal would cut revenue so drastically as to put storefront companies out of business.

Not everyone in the industry agreed with this argument. The former payday-loan executive told me that most of his old industry would have survived under the ability-to-repay rule, but with a less lucrative business model. “You’d still make money,” the former executive says. “It would just be less money.” But payday lenders found a willing audience in Congress, where Republicans on the House Financial Services Committee — including Mulvaney, who joined the committee in 2013 — had worked aggressively to bring Washington’s new watchdog to heel. The committee was led by Jeb Hensarling, a Texas Republican who regarded the bureau as a constitutional abomination and Cordray as a “benevolent financial-product dictator,” as he put it in one hearing. Hensarling hammered Cordray with subpoenas and accused the bureau of mismanagement and waste. Mulvaney regarded Hensarling as a mentor and held similar views about the bureau’s structure and powers. “Some of us would like to get rid of it,” Mulvaney told a reporter in 2014. At oversight hearings, Mulvaney questioned Cordray relentlessly about the bureau’s budget and his payday-loan proposal, even introducing a bill that would allow states to opt out from the ability-to-repay rule for five years. Payday lenders, seeing Mulvaney as an ally, donated tens of thousands of dollars to his campaigns.

But as the 2016 election approached, aggressive enforcement by the C.F.P.B. and other federal regulators had cast a pall over the industry. Its money machine began to slow. That year alone, storefront-payday-loan fees plummeted by more than a quarter, according to an internal industry presentation that I obtained. The C.F.P.B. was “biased against our industry, our product and our customers,” Fulmer, the Advance America spokesman, told me. “We were in a very perilous position coming to the fall of 2016.”

In Florence, South Carolina.CreditColby Katz for The New York Times

Like almost every industry in America, payday lenders weren’t prepared for a Trump victory. But it quickly became clear that his election presented an opportunity. While Trump ran as a populist, promising to tear down a “rigged system” — language that echoed Warren’s own rhetoric — his anti-Wall Street rhetoric fused with a pro-Wall Street platform. Advance America and others from the industry flooded Trump’s inauguration committee with more than a million dollars in contributions.

Trump stocked his cabinet with billionaires and Wall Street veterans, including Gary Cohn, the former president of Goldman Sachs, who became his chief economic adviser. Trump, with Hensarling’s encouragement, tapped Mulvaney to run the Office of Management and Budget. The new administration immediately came under pressure to dismiss Cordray, who had almost 18 months left in his term as C.F.P.B. director. But Cohn and others in the White House were cautious, according to a person familiar with the discussions. The move would have plunged the administration into a risky legal battle against the bureau. They also believed — correctly, as it turned out — that Cordray would leave the bureau to run for governor of Ohio; a high-profile firing might actually help his campaign. Cohn persuaded Trump that the Cordray problem would soon take care of itself and began identifying candidates to replace him.

The list was short. To take over the agency immediately, without a time-consuming nomination fight, the White House needed someone who had already been confirmed by the Senate for another administration job. Trump settled on Mulvaney, asking him to continue as budget chief and also run the bureau until he could appoint a permanent successor there. Mulvaney, according to people close to him, did not campaign for the job but eagerly accepted it, drawn to the opportunity to remake the C.F.P.B. In November 2017, just weeks after finalizing the new ability-to-repay rule, Cordray announced his departure. Citing succession rules laid out in Dodd-Frank, Cordray tried to install a top aide, Leandra English, as the new acting director. The C.F.P.B.’s own general counsel sided with the White House, writing a memo backing Mulvaney’s appointment; English fought the appointment in court but ultimately quit. Mulvaney landed at the bureau just after Thanksgiving, bearing a bag full of doughnuts for his new colleagues.

Mulvaney had given some thought to taking control of a bureaucracy that didn’t necessarily want him there. He told reporters that he wanted his second agency to be more like his first, the Office of Management and Budget, where career employees are matched with appointees who serve at the president’s pleasure. “Maybe they didn’t think they needed to have any political people here because a lot of the people here were political anyway,” Mulvaney said. To become less political, Mulvaney decided, the bureau would first have to become more political. Each of the senior career officials in charge of the bureau’s divisions, who had the title of associate director, would get a Mulvaney-appointed twin, known as a policy associate director, or PAD. To lead the PADs, Mulvaney hired Brian Johnson, a senior Hensarling aide who had helped lead the inquisition of Cordray’s bureau. In his old job, Johnson helped draft a report — titled “Unsafe at Any Bureaucracy” — alleging that the bureau used shoddy statistics and legally questionable tactics to prosecute auto lenders accused of having racially discriminated against car buyers. In his new job, Johnson quoted Adam Smith and attacked what he called “paternalistic” policies. According to two former staff members, Johnson, citing an overlooked subsection of Dodd-Frank, soon revised a boilerplate description of the bureau’s mission that was appended to the bottom of news releases. It would henceforth include a reference to eliminating “unduly burdensome regulations.”

Emma Doyle, who went on to serve with Mulvaney at the bureau, told me that the PADs were intended to make life easier for career employees. “It’s helpful to be able to translate what the director’s vision is back down to staff and have the staff have an intermediary interceding on their behalf,” she said. But the appointments drew outrage inside and outside the C.F.P.B. Older agencies were accustomed to the ebb and flow of administrations, each with its own priorities. But many at the bureau believed in Warren’s idea of a regulator that permanently represented the interest of consumers — at least, as they defined it. Each side argued that the other wanted to politicize an otherwise pristine bureaucracy. “I originally designed the agency to be as nonpolitical as possible,” Warren told me. “When Mulvaney came in and brought in his own team of political hacks and put them in the agency, I was shocked.”

Mulvaney’s appointments were particularly alarming to the bureau’s supervision and enforcement staff, led by a former line attorney named Chris D’Angelo. When Mulvaney first arrived, D’Angelo urged his staff not to assume the worst, people who worked with him told me. But D’Angelo grew alarmed when Mulvaney named his PAD, a midlevel administration financial-services lawyer named Eric Blankenstein, who had little experience in consumer enforcement. D’Angelo took his case directly to Mulvaney. He argued that career enforcement officials at other financial regulatory agencies, like the Federal Deposit Insurance Corporation, reported directly to the appointed head of the agency, in order to create a clear line of accountability for enforcement decisions.

Mulvaney did not budge. (D’Angelo, who left the bureau in February, declined to comment.) After Blankenstein arrived, lawyers in the enforcement office were ordered to prepare summaries justifying every active enforcement matter — more than 100 open cases, most of them not yet public. Two days later, without warning, the bureau filed a one-sentence notice in federal court in Kansas announcing that it was withdrawing a high-profile lawsuit against a quartet of payday lenders, a case known as Golden Valley.

In Dillon, South Carolina.CreditColby Katz for The New York Times

The Golden Valley lawsuit was a product of Cordray’s enforcement strategy against scofflaw lenders. According to the bureau’s complaint, Golden Valley and three other lenders were technically owned by the Habematolel Pomo of Upper Lake, a California tribe, but were largely run out of a call center in Kansas. The lenders made payday loans over the internet, claiming that tribal ownership allowed the firm to ignore usury laws in states where its triple-digit interest rates were illegal. Using a legal theory the bureau had successfully employed in earlier cases — that trying to collect on illegal loans is itself a deceptive business practice under Dodd-Frank — the bureau filed suit against Golden Valley and the other lenders in the spring of 2017. The sudden withdrawal mystified and worried other lawyers in the division, who wondered what implications it held for their own cases.

As the grumbling spread throughout his division, Blankenstein convened a staff conference call. According to two people who were on the call, Blankenstein told them that in a previous meeting Mulvaney asked several questions about the Golden Valley case, including whether the defendants had fair notice that the bureau would view their conduct as illegal under Dodd-Frank. One person on the call later described this “fair notice” argument to me as one that could, in practice, justify throwing out many of the bureau’s other payday-loan cases, which advanced much the same theory as the Golden Valley lawsuit. But strikingly, according to the two people on the call, Blankenstein claimed that he himself didn’t know exactly why Mulvaney pulled the case.

Some career employees saw a kind of strategic ambiguity at work, designed to muddle decision-making and insulate Mulvaney as he neutered the agency’s enforcement work. The bureau’s enforcement lawyers typically spent months or years developing cases from the bureau’s complaint database or from information garnered from supervisory exams. In a memo to the staff, Mulvaney pledged to prioritize enforcement according to the volume of consumer complaints the bureau received, nearly a third of which related to debt collection and only 2 percent of which concerned payday lending. But bureau employees told me it was difficult to discern which particular cases and legal theories Mulvaney might allow to go forward, casting a chill over the work. Where Cordray had allowed lower-ranking enforcement lawyers to present cases to him directly, Mulvaney required lawyers to present their cases through Blankenstein, and bureau employees told me they had little sense of whether Blankenstein was arguing for them or against them when he took cases to Mulvaney. Craig Cowie, a former bureau enforcement lawyer who supervised several major payday-loan cases, including the one against Golden Valley, worked under Mulvaney for six months. “I never met him,” Cowie told me. “I was never even in the same room as him.” (Cowie declined to discuss any specific case, citing confidentiality rules.) “And I don’t recall him ever visiting enforcement,” he added.

By February, Mulvaney had spread a kind of bureaucratic fog across his new agency. He moved the Office of Fair Lending and Equal Opportunity from Blankenstein’s enforcement division to his own director’s office, frustrating coordination between the bureau’s experts on discriminatory lending and the lawyers who enforced the law. He took responsibility for coordinating the bureau’s oversight of the Military Lending Act away from the bureau’s service member affairs chief — a revered retired Army colonel — and gave it to a young aide with little experience. Cordray sometimes wouldn’t end a meeting until everyone in the room had weighed in on the matter at hand. Mulvaney, by contrast, began restricting more meetings to senior officials. The move was not atypical of federal agencies. But, employees told me, the effect was that information flowed up the chain of command and rarely back down. The practice also provided protection: Mulvaney’s team faced a torrent of leaks from within the bureau and intense scrutiny from without, as consumer groups demanded Mulvaney and Johnson’s calendars and email correspondence. One group, Allied Progress, filed more than 250 public-records requests during Mulvaney’s tenure.

If secrecy served to protect Mulvaney, it also made the C.F.P.B. even less efficient, worsening just the kind of management problems Mulvaney had, in theory, set out to combat. Junior staff members played endless games of telephone as they tried to suss out Mulvaney’s marching orders. “You had to have a meeting after the meeting so that people would know what was decided,” one former employee told me. (Mulvaney and Johnson ultimately compromised, allowing junior staff members to dial into more meetings.) Cordray had allowed enforcement lawyers to send out a civil investigative demand — a kind of noncriminal subpoena — with the approval of a midlevel supervisor. Bureau lawyers told me that the practice allowed them to make narrower, less burdensome requests of lenders, because they had to jump through fewer hoops to ask for more. But Mulvaney viewed the requests as an onerous demand of the lenders who received them — to be used only by bureau lawyers as a last resort. All civil demands had to go through Blankenstein. Over the coming months, the pace of investigations would slow drastically.

Mulvaney presented his decisions as part of an earnest effort to fulfill the bureau’s stated mission. He was not trying to undermine the bureau, he argued, but operate it within the plain black letter of Dodd-Frank. “I intend to execute the statutory mandate of the bureau to protect consumers,” he wrote to the staff in one memo. “But we will no longer go beyond that mandate.” To career employees, however, Mulvaney’s crusade against statutory deviation increasingly felt like an ideological publicity stunt, one that came at the expense of the agency’s ostensible mission. Mulvaney commenced a lengthy effort to change the bureau’s name, reasoning that Dodd-Frank had technically created something called the Bureau of Consumer Financial Protection, not the Consumer Financial Protection Bureau. “C.F.P.B. doesn’t exist,” he told bankers at a conference in April. “C.F.P.B. has never existed.” A new working group was convened to execute Mulvaney’s decision, while staff members were prodded to begin using the new name on internal documents. Mulvaney appeared not to consider the vast costs of rewritten paperwork and compliance procedures that a renaming might place on the banks and on other businesses the bureau regulates: $300 million, according to an internal agency analysis later obtained by The Hill. (The name change was abandoned in December.)

Nor was Mulvaney reluctant to ignore the statute when it suited him, former employees told me. In a memo that spring, he announced the creation of new bureau offices dedicated to “cost-benefit analysis” and “innovation.” Technically, neither office was prescribed by Dodd-Frank. Almost as an afterthought, Mulvaney effectively dissolved the student-loan ombudsman’s office — a position that was mandated by Dodd-Frank. A Mulvaney spokesman told reporters that the reorganization was a “very modest organizational chart change.” But on the same day, Mulvaney signaled that the bureau would scale back a long-awaited overhaul of student-lending rules. Last August, the ombudsman, a Cordray veteran named Seth Frotman, quit in protest, accusing Mulvaney of ignoring Dodd-Frank’s intent. “It felt like we were in some Ayn Rand debate club,” Frotman told me recently.

In Florence, South Carolina.CreditColby Katz for The New York Times

As Trump appointees elsewhere around the government were learning, it takes a bureaucracy to deconstruct one, and in all the speed and confusion, some of Mulvaney’s own priorities began to suffer. By the spring, months after he announced that the bureau would reconsider Cordray’s ability-to-repay rule, little apparent progress had been made. One problem, according to two former lawyers with the agency, was that Mulvaney and Johnson had more experience interrogating regulatory agencies than running them. Mulvaney had first asked the head of the research, markets and regulations division, a former financial-industry lawyer named David Silberman, if he could simply delay the new payday-loan rule. “They thought they could come in and snap their fingers,” a former lawyer there told me. But the law lays out a lengthy, nuanced procedure for writing or revising federal rules. In a joint memo with the legal division, according to a former staff member, Silberman’s team warned Mulvaney that he had little basis on which to delay Cordray’s rule and that he would most likely lose in court. Mulvaney had good reason to listen to them. As Trump officials at other agencies tried to roll back environmental and other regulations, they were losing in court at an embarrassingly high rate; in many cases, judges slapped down the administration for failing to follow proper rule-making procedures.

Next, a team in Silberman’s division was asked to devise arguments in favor of replacing the Cordray rule with a new rule, one that would challenge the underpinnings of Cordray’s regulation. The work was inherently awkward: There were no new studies or industry data that might provide a basis to replace the rule, meaning they would have to attack their own analysis of the payday-loan industry. Most of the original authors were recused from the work, leaving a bare-bones team of about a half-dozen people to finish the job. “You would be arguing against yourself,” a former employee in Silberman’s division told me. “You’d be saying, ‘Everything I argued last year, I’d have to say I was wrong about.’ ” By the spring, Silberman’s division had begun generating timelines and option memos for the bureau’s senior staff members, including proposals to get rid of the rule’s central feature, requiring payday lenders to make sure people can repay their loans.

Yet Mulvaney and his deputies provided little feedback or direction on the proposals, according to former Silberman staff members I spoke with. “It was radio silence from them on what direction they wanted to take,” the former staff member told me. The process stalled. Payday lenders, who had expected quick action from Mulvaney, began to panic. Cordray’s ability-to-repay rule would go into full effect in August 2019, in a little more than a year. Mulvaney’s team might come up with a new rule before August, but it might not, and in the meantime payday lenders would have no choice but to reconfigure their businesses — or shut them down — to prepare for the old one. Shaul, the leader of the Community Financial Services Association, told me that he had difficulty getting any sense of where the bureau was headed. “I was not able to get to see Mulvaney,” Shaul told me. “I was hoping we could convince Mulvaney to repeal that rule and craft a new rule.” What they needed was certainty, or at minimum some kind of delay. As months passed without any word, Shaul told me, his members were increasingly set on suing the agency.

What happened next underscores some of the absurdity and complexity of turning an agency inside out. In early April, Johnson granted Shaul an introductory meeting at the agency’s headquarters. At the last second, Shaul emailed to say he would be bringing Chris Vergonis, one of the association’s lawyers at Jones Day — and one of the people who would prepare any lawsuit against the agency. His presence was potentially dangerous for Mulvaney’s team; it could raise questions about whether the bureau was improperly coordinating with the industry. According to notes of the meeting, taken by a career bureau employee and obtained by the consumer group Public Citizen, Shaul told Johnson that the association had in fact been preparing to sue the C.F.P.B. to stop Cordray’s rule but now believed that it would be better to work with the bureau to write a new one. With the Cordray rule looming, Shaul stressed, they would need to move quickly.

A person familiar with the meeting, who asked for anonymity because of the legal sensitivities involved, told me that Shaul and Vergonis kept pushing for details of the new rule and at one point asked outright what reaction the bureau would have to a lawsuit. According to the staff notes, Johnson replied carefully, as a good lawyer would; it would be inappropriate for him to discuss either the rule or the lawsuit, he told them. Shaul gave me a similar account. “I found them so cautious as to preclude our having any real discussion,” he told me. “We came away from the meeting thinking that we were not going to get many answers.” Four days later, the Community Financial Services Association and another industry group filed suit against the bureau.

The C.F.P.B.’s response was atypical of a regulatory agency. In mid-May, the bureau’s lawyers called Vergonis with a proposal: They now wanted to in effect join forces with the industry, by asking a judge to stay both the compliance date of Cordray’s rule and the lawsuit. In a kind of regulatory jujitsu, the bureau would cite Mulvaney’s own decision to reconsider the Cordray rule as an excuse to stop the clock on the August 2019 implementation. There was just too much fog. “The bureau’s decision to initiate rule making to reconsider the payday rule creates inherent uncertainty,” the bureau lawyers and Vergonis’s team wrote in court papers filed later that month. “There is no way to know whether plaintiffs’ members will ultimately need to comply with the payday rule, a modified payday rule or no rule at all.”

The bureau still had not explained what kind of rule it planned to propose, much less implement, and in June, a Texas judge rejected the request for a stay of the compliance date. But that October, the C.F.P.B. announced that its new rule would indeed target the ability-to-repay requirement. Not long after, the judge agreed to grant the stay, in effect delaying the core of Cordray’s old rule. Inside the bureau, according to two former employees and an industry lawyer I spoke with, the regulation-writing team lurched into high gear, rushing to deliver what the bureau had promised. The industry had won what it needed most: time.

In Dillon, South CarolinaCreditColby Katz for The New York Times

Almost from the moment Mulvaney arrived at the C.F.P.B., rumors ricocheted around Washington that Trump was eyeing him as a future White House chief of staff. Mulvaney denied these rumors with the studied self-deprecation of a man whose star was on the rise. But by the time the White House had settled on a nominee to succeed Mulvaney at the C.F.P.B. — Kathleen Kraninger, his deputy in the budget office — in June, Mulvaney was going into the bureau’s offices only twice a week. C.F.P.B. staff members were just as likely to catch a glimpse of him on television: Mulvaney’s dual agency hats made him an in-demand guest on cable shows, where he capably defended Trump against the day’s mini-scandal. The president reportedly enjoyed watching him butt heads with cable hosts, and despite a packed schedule, Mulvaney found time to polish his skills. In April, after a contentious morning Senate hearing where he made headlines sparring with Warren, he boarded an evening flight to Los Angeles. There, he spent most of two days in media training with Frank Luntz, the famed Republican messaging guru and a friend dating back to Mulvaney’s time in the South Carolina Legislature. (A spokesman for Mulvaney told me that Luntz donated his services.)

Mulvaney continued to give speeches at financial-industry conferences, issuing sweeping pronouncements of bureau policy and often taking aim at Warren, a favorite target of his boss. When Warren sent Mulvaney letters demanding information about his conversations with payday lenders or his decision to freeze the bureau’s data-collection efforts, a former employee told me, Mulvaney’s team would take special relish in devising confrontational replies. Mulvaney and his staff members, for their part, viewed their tussles with Warren as a way to deliver the senator an unpleasant taste of her own medicine — an object lesson in the unaccountable bureaucracy that she had birthed and that he was remaking according to a different vision. “The bureau is not going anywhere,” Mulvaney told a conference of mortgage bankers in October. “There is no appetite on Capitol Hill for getting rid of the bureau. We are here.”

But within the walls Warren had so carefully constructed, the bricks began to loosen. Over the last year, Mulvaney’s temporary hiring freeze has turned into an indefinite one, slowly shrinking the C.F.P.B.’s staff by attrition. Bureau news releases, once packed with colorful details about abusive lending practices, have been toned down to dry legalese. According to a report by Christopher Peterson, a senior fellow at the Consumer Federation of America, enforcement at the bureau appears to have dwindled radically. In 2018, the bureau announced just 11 lawsuits or settlements, less than a third of the number during Cordray’s last year. In the months since Mulvaney reorganized the Office of Fair Lending, the bureau has not brought a single case alleging illegal discrimination. While Mulvaney pledged data-driven enforcement, his bureau brought only one case against debt collectors, who account for more complaints to the C.F.P.B. than almost any other industry. Where Mulvaney or his successor have allowed cases to go forward, lenders have often settled with lowered fines or none at all. When the bureau settled a three-year prosecution of a group of payday lenders called NDG Enterprise — which found that the group had falsely threatened American customers with arrest and imprisonment if they failed to repay loans — NDG walked away without paying a cent.

After Trump announced in December that he was promoting Mulvaney to the top staff job in his administration, senior White House officials told reporters that he was the president’s “original Plan B.” As Trump’s acting White House chief of staff, Mulvaney sits — however temporarily — at Washington’s bureaucratic apex, with influence far beyond the C.F.P.B. In the months leading up to the announcement, Mulvaney sometimes brushed off questions about his ambitions by joking that he was busy enough running two agencies. Now, in a sense, he runs them all.

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