Biden CFPB candidate Rohit Chopra brings ‘substantial’ regulatory expertise
Rohit Chopra, President Joe Biden’s candidate for head of the Consumer Financial Protection Bureau, is likely to return the agency to its original incarnation, proactively removing bad actors and imposing heavy fines on violators, say regulatory experts. Chopra’s confirmation hearing on Tuesday will be the first of Biden’s regulators to face the Senate Banking Committee.
Chopra’s history with CFPB dates back to the creation of the agency following the financial crisis of 2008. He was one of the first architects of its implementation and was first its liaison officer intern for student loans, then as deputy director of the CFPB. Chief Executive Officer, former Ohio Attorney General Richard Cordray. Since 2018, Chopra has served as a Commissioner of the Federal Trade Commission, a position for which he was unanimously approved by the Senate.
Consumer advocates say this established record of bipartisan support should help facilitate a smooth Senate confirmation process. Rachel Weintraub, legislative director and general counsel for the Consumer Federation of America, said she expected Chopra to face questions during his confirmation hearing on where he would reverse course and how he would change the agency guidance to re-establish it as a robust regulator.
“Rohit will be asked about his priorities and how he will bring the agency back to its mission of making the financial market fairer for consumers,” she said.
The flip side is getting restitution for consumers who have been exploited by bad actors – another aspect where observers say Chopra is likely to reorient CFPB priorities. “The CFPB [should] return to its critical role as a law enforcement agency. Under the last administration, the number of cases, consumer restitution and settlement amounts were lower, ”Weintraub said.
Former CFPB interim director Mick Mulvaney made no secret of his desire to dismantle the agency, calling it a “sick and sad joke” and setting a budget of $ 0.
Aaron Klein, a senior economic studies researcher at the Brookings Institution, accused former President Donald Trump of weakening the agency by handing over the reins to his then chief of staff Mick Mulvaney after sacking Cordray, a change that precipitated a legal battle and was ultimately upheld by the Supreme Court.
“Unfortunately, things that should be bipartisan, like protecting consumers from scams, have become politicized. The CFPB was highly politicized under Trump, ”Klein said.
Mulvaney has made no secret of his desire to dismantle the CFPB, calling it a “sick and sad joke” at the time of its creation while serving as Congressman for South Carolina. As interim head of the Bureau, he submitted a budget request of $ 0, even going so far as to briefly change the name of the organization to “Bureau of Consumer Financial Protection”. (The switch was flipped by the full-time manager, which he later installed.)
During the Trump era, surveillance and law enforcement declined. “Consumer protection measures, enforcement and general financial market supervision were arguably poor,” said Christine Hines, legislative director of the National Association of Consumer Advocates. “The Bureau has become more sympathetic to regulated entities at the expense of consumers,” she said – a position observers predict will be the first thing to do.
“They’ll probably first look at the reorganization that Mr. Mulvaney put in place, and probably either amend or reverse it completely,” said Joseph Lynyak III, partner at the Dorsey & Whitney law firm and expert on reform of regulations. “There’s a whole host of things they’ll likely look at, from the debt collection rule to payday loans,” he said.
“The big picture is about focusing on and prioritizing consumer protection,” said Linda Jun, senior policy adviser with the United States Financial Reform Group. “There will be a return to loan equity as a priority in the office,” she predicted.
Jun added that as the first person of color appointed to head the agency, Chopra will likely focus in particular on the financial impact of Covid-19 on minority communities in the context of mortgages, student loans. and predatory lending practices, in particular. as practiced by the new generation of high-tech nonbank financial sector actors.
Chopra is also tasked with overseeing how lenders who handle a myriad of products, from mortgages to credit cards to student loans, deal with the end of the forbearance programs implemented in the first few months of the year. pandemic. “As the Covid measures diminish and the long periods of loan forgiveness end, there are going to be a lot of challenges related to consumers,” Klein said.
More generally, observers expect Chopra to address racial disparities in access to credit and capital that have contributed to financial inequity in communities of color. “They will likely review and revise the discriminatory lending practices protocol,” Lynyak said.
“The big issues are those that are not widely seen by the public, like… the approval and pricing of fintech credit and its relationship to fair lending,” said Joseph Mason, professor of finance at Louisiana State University. “These issues are very technical but crucially affect the availability of credit and, therefore, economic growth,” he said.
Financial industry regulatory experts say Chopra has the experience and skills to tackle these complex issues.
“The CFPB was designed to be the cop who watches the financial system for consumer abuse. If confirmed, Chopra will take aggressive action, ”Klein said. “It is so important to have substantive experts in charge of financial regulators.”