Tanis Judique's friendship strengthens Babbitt's resolution. At the club and elsewhere, he continues to be critical of many generally accepted beliefs. Some of his friends consider him a crank, but a few, like Vergil Gunch, seem seriously concerned about Babbitt's radicalism.
Babbitt soon begins to spend all his free time with Tanis and thinks of her constantly when they are apart. Furthermore, whenever he compares the chic Tanis with the dumpy Myra, his wife comes out second best. At times, Myra's comments or behavior make him feel guilty, and he often resolves to spend more time with her, but his longing for Tanis usually triumphs, and he hastens to join his lover.
Tanis is one of a group of bohemians who call themselves "The Bunch." This group has frequent late parties, where the members spend their time dancing wildly and drinking heavily. Babbitt learns to be one of them and adopts many of their habits, although his morning hangovers and fatigue serve as unheeded warnings that he is too old for this sort of lifestyle.
Myra leaves to take care of a sick relative in another town, and Babbitt takes advantage of her absence to become even more involved in his new social life. After a while, he becomes less discreet about his relationship with Tanis and her friends. Once, while they are drunk, they encounter Professor Pumphrey, and another time Babbitt and Tanis are seen together in a downtown restaurant by Vergil Gunch. Babbitt soon becomes the subject of whispered gossip and public scandal. This troubles him, as does his realization that he is growing unhappy with the conventions and demands of the Bunch.
One day, Gunch comes to Babbitt's office to advise him about the formation of a local chapter of the Good Citizens' League. This is an organization dedicated to fighting socialism and liberalism, although it maintains a camouflage over its activities by professing an interest in such civic matters as park and city planning. Naturally, all of the respectable members of the community are joining, and Gunch invites Babbitt.
Babbitt feels that he must assert his independence; he refuses to commit himself. Gunch becomes indignant and warns Babbitt that in the struggle between decency and Americanism on the one hand and red tyranny on the other, everyone must take sides. The League, he says, considers anyone who does not join to be an enemy. That night, Babbitt worries fearfully about the consequences of his behavior.
There are two schools of thought about the newly emerging George F. Babbitt. To his fellow club members, Babbitt has, inexplicably, become a "crank," while Babbitt thinks of himself as possibly a highly original man: successful, conservative, yet touched with wisdom. He sees himself as a courageous pioneer — one who crosses social strata in the name of decency. And in addition to Babbitt's new belief in humanity, he has a beautiful and usually discreet ladylove. With Myra gone, Babbitt realizes that he will be free to spend more time with Tanis, but, ironically, the sense of adventure and daring that once surrounded his affair with Tanis Judique soon dissolves.
Babbitt's illusions about Tanis begin to crumble when Tanis' crowd of friends increasingly invades their idyllic love life. Babbitt feels like an alien. The men in Tanis' Bunch are not successful, and the women are not lovely like Tanis. As an alien, Babbitt looks at the scene from a distance and sees the crowd trying too hard to have fun — drinking too much, gossiping too loudly, and dancing too wildly — and he sees himself trying too hard to follow their steps.
Despite this insight, however, Babbitt buys a yellow tie — not to boost his spirits, but to look younger — in order to look more like one of the Bunch. He has begun to replace "old" things; he has a new playwife, a new group of friends, and now he has new, if often disturbing ideas that are eroding the old solid citizen mold.
Ultimately, though, Babbitt is unable to break completely with his solid citizen past and give himself completely to a new, if dubious, future with Tanis and her Bunch. Similarly, Babbitt is unable to endorse the Good Citizens' League. Not long ago, Babbitt would have been the biggest booster of the League — but at that time, he would have been endorsing the League simply because of its name: the Good Citizens' League. Now, Babbitt can discern that the League isn't concerned with "good citizens." Its aim is to enforce conformity. There is no room in the League for dissenting opinion. Babbitt realizes that the world is no longer divided into two groups — the good citizens and the bad citizens. Life is complex; it cannot be divided into two groups — the red-blooded all-American middle class versus the socialists.