Nani Coloretti
Nani Coloretti didn’t come to Washington expecting to set up a new agency from scratch. But the Deputy Assistant Secretary, Management and Budget at the Department of Treasury was swept up in the aftermath of the Dodd-Frank Wall Street and Reform and Consumer Protection Act. Signed into law in July 2010, it called for creation of a new agency, known as the Bureau of Consumer Financial Protection (CFPB). Coloretti served on the team that designed the bureau, and found and recruited the people to staff it.
I first met Coloretti at a reception before an Association of Government Accountants event. Engaging with a ready smile, she strikes you as the kind of political appointee a career person might actually want to work for, or with. She’s no newcomer to federal service. Coloretti spent three years at the Clinton Office of Management and Budget as a program examiner. Before returning to Washington at the start of the Obama administration, she held a series of jobs in the San Francisco municipal government, culminating as the Budget Director for Mayor Gavin Newsom (now California’s lieutenant governor). At Treasury, she reports to Dan Tangherlini, a former D.C. official who is now Assistant Treasury Secretary and the Chief Financial Officer.
Coloretti said that while the legislation was being written and debated, Treasury officials didn’t know whether the CFPB would end up within Treasury or as an independent agency, like the Securities and Exchange Commission. It ended up being a creature of the Federal Reserve.
Meanwhile, “We’d been working with OMB and Treasury staff to run scenarios of the agency from a budget and human resources perspective,” she said. “My staff did that modeling.” That staff subsequently carried out the stand-up. Treasury chose Booz Allen Hamilton as a management consultant for the process.
“Booz Allen prepared a paper on what not to do,” Coloretti said. “Some [reorganized] agencies had merely changed a logo, but no one physically moved, there were no new business processes. There’s a cultural problem. If there’s nothing new for people to go to, they do what they did before.”
The result: “We had to do the fundamentals of good management ⎯ have a clear mission and goals, and not just change titles on the building. We didn’t want to spend time on what doesn’t matter, like logos, cards and stationery.”
As it turned out, the legislation required not moving anyone for two years to new duty stations. But, Coloretti said, that didn’t prevent making things new by changing around supervisors and reports.
Treasury Secretary Tim Geithner told the team he wanted the plan for the Bureau completed within a year of passage of Dodd-Frank.
“The question was, what would success look like in a year? And how would we communicate that to the stakeholders,” Coloretti said. That process was aided by an early selection of Elizabeth Warren to be commissioner. (Warren is now a Senate candidate in Massachusetts.) Although that turned out to be a dead-end nomination in the Senate, the President made Warren a special assistant so she could be the de facto head of the Bureau and provide direction.
“Elizabeth brought deep engagement in managing the direction of the new agency and moving out work forward,” Coloretti said. “Yet she didn’t micromanage.”
Functionally, the Bureau entailed transferring the consumer protection laws and associated employees from the Office of the Comptroller of the Currency (OCC), the Office of Thrift Supervision (OTS), and five other agencies into the Bureau, with six of the seven transferring people. In some ways, the roughly 500-person bureau was like Homeland Security, only in miniature. (A separate section of the Dodd-Frank legislation merged the OCC and the OTS.)
Final decisions on who would move were relatively straightforward, Coloretti said. The transferred people corresponded to the laws and authorities moving into the CFPB.
Not that the decisions always came easily, or that the sending agencies always went along.
For example, “In bank supervision, OCC and OTS examiners may be doing several things, and you can’t divide that person in half,” Coloretti said. “What people feared is that the agencies would send people they didn’t want anymore. We tried to create a pull factor, not a push factor. So we created position descriptions. Then the agencies worried we’d take the best people.”
Right now, the CFPB people work scattered throughout Washington, much like DHS people. Most occupy a leased building in the Farragut North area of D.C. OTS headquarters on Pennsylvania Avenue near the Eisenhower Executive Office Building will be the eventual headquarters of the Bureau.
As for the information technology the CFPB would need, “we worked with Treasury IT folks, and got some on loan for six months,” Coloretti said. Also called in was Eugene Huang, then of the Office of Science and Technology Policy. Fellow Californian and Health and Human Services’ Chief Technology Officer, Todd Park, also lent a hand to the Bureau’s IT efforts. David Forrest, a founder of the Motley Fool ⎯ an entirely web company ⎯ was brought in to consult.
“We even had a lot of conversations with Silicon Valley folks who told us to not just do the standard things,” Coloretti said. Ultimately, the CFBP chose not to build a data center, instead having its IT resources cloud-hosted.
Coloretti’s detail to the CFPB lasted from August 2010 to March of this year. “It’s funny to come from the oldest federal department [Treasury] and help set up the newest agency,” she said. She noted the rare opportunity to start something fresh.
Now Coloretti is dealing with Treasury’s own budget issues. Last week agencies submitted 2013 requests to OMB, even though a certain continuing resolution and the as-yet unknown outcomes of the Select Committee on Deficit Reduction make all federal fiscal matters hard to predict.
“You have to live with cognitive dissonance. We don’t know what 2012 or 2013 will be,” except for perhaps the top-line number. So Coloretti and her staff are running what-if scenarios to see what the effect of various congressional outcomes might be. But, she said, “it’s not just the numbers and doing cool things with them, but also what they mean. They’re connected to what’s happening.”
Coloretti added, “This is different from city government. Here we’re so high up. The numbers are so large. Sometimes it’s a big puzzle.”
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