The Senate confirmed Rohit Chopra as director of the Consumer Financial Protection Bureau on Thursday, putting in place a seasoned regulator and Wall Street critic to police lending.
Senators approved Chopra in a 50-48 vote. No Republican supported his nomination, reflecting long-running antagonism from the right over the very existence of the consumer bureau, which Democrats set up a decade ago to crack down on predatory lending.
Chopra, who for the last three years served at the Federal Trade Commission, is expected to revive a more aggressive posture toward the finance industry after Democrats blasted the Trump administration for weakening consumer safeguards. The agency is the brainchild of Sen. Elizabeth Warren (D-Mass.), and Chopra helped her set up the bureau after its enactment in the 2010 Dodd-Frank law.
Credit reporting companies, small-dollar lenders, debt collectors and financial technology startups are among the players expected to face scrutiny from Chopra’s CFPB, as well as the student loan industry and mortgage servicers. The agency under interim leadership for the last eight months has already taken some initial steps to address lenders’ pandemic-era treatment of consumers and to advance the Biden administration’s racial justice priorities.
“It’s already on the track, but Chopra’s going to be driving the train faster,” said Allyson Baker, a former CFPB enforcement attorney and the chair of the law firm Venable’s financial services practice.
Chopra’s confirmation is the latest victory for progressives who have so far succeeded in putting their stamp on the Biden administration’s recruitment of top financial regulators. President Joe Biden has scattered allies of Warren and other liberal lawmakers throughout agencies tasked with overseeing the finance industry, including Securities and Exchange Commission Chair Gary Gensler.
“Rohit is a terrific champion for consumers,” Warren said in a statement. “I look forward to his leadership at the bureau as he works to return it to its core mission of protecting consumers from discrimination and predatory institutions.”
With Democrats in control of Congress and the White House, Chopra will likely be able to operate, at least initially, with fewer existential threats from Republicans and industry groups that fought to gut the agency early in its existence when it was run by former director Richard Cordray.
“Chopra isn’t going to have to deal with a lot of the issues that Cordray had to deal with,” Baker said. “He’s just going to be able to implement an agenda that’s progressive in an administration that has a lot of the Warren camp in it.”
Who is Rohit Chopra?
A Wharton-trained MBA, Chopra worked for management consultancy McKinsey & Co. before entering government. After the CFPB launched in 2011, he served as the agency’s assistant director and as student loan ombudsperson.
In 2018, he became a commissioner at the FTC, where he pushed for more aggressive enforcement and greater liability for bad actors, including corporate executives. He also called for more oversight of private equity-backed company takeovers.
“If there are unlawful, egregious practices, it is important for enforcement to make sure that they stop — that’s what’s best for consumers, that’s what’s best for the honest market participants and that’s the role Congress has asked the CFPB to play,” Chopra said at his March confirmation hearing for the consumer bureau post.
Biden has nominated privacy advocate Alvaro Bedoya to replace Chopra at the FTC.
Industry braces for emboldened CFPB
A range of financial firms that fall under the CFPB’s purview are expecting to be hit with new rules and tougher enforcement of existing regulations. Chopra will likely face pressure from influential progressive Democrats to take a hard line.
Finance industry lobbyists are already pushing back.
“Consumers are best served when regulators put politics aside and draft regulations with input from all stakeholders, leading to the implementation of well-founded rules which are debated, examined and their impact carefully considered before being enacted,” said Consumer Bankers Association President and CEO Richard Hunt, who has long called for the agency’s sole-director structure to be replaced with a bipartisan commission. “Now more than ever, banks need — and consumers deserve — a reliable rulemaking process as the economy climbs out of the effects from the coronavirus pandemic.”
Republican lawmakers are also gearing up to fight the CFPB under Chopra.
“I have grave concerns that Commissioner Chopra would return the CFPB to the lawless, overreaching, highly politicized agency it was during the Obama administration,” said Sen. Pat Toomey of Pennsylvania, the top Republican on the Senate Banking Committee.
Payday lending in the crosshairs
Among the targets is the payday lending industry. Consumer advocates want the agency to revisit a rule cracking down on the lenders after it was weakened under the Trump administration. At issue is the extent to which the lenders can offer high-interest loans to customers who may not be able to repay.
Ed D’Alessio, who represents the industry as executive director of the trade group INFiN, said he hoped Chopra’s business background would influence the agency’s work on the issue.
“It’s critically important for the bureau to reexamine the marketplace before moving forward with any new rulemaking,” he said. “We would hope and urge that the bureau would take some time to thoughtfully examine the market, as it has evolved over time since the original rule.”
Credit reporting problems a Biden priority
Another top target will probably be the consumer credit reporting industry, which is dominated by Equifax, Experian and TransUnion. Democrats in recent years have been ramping up calls for an industry overhaul to address concerns that the companies help disseminate erroneous and damaging financial information on millions of Americans who may lose out on mortgages and car loans. A massive 2017 data breach at Equifax only fueled calls for new safeguards.
Biden’s campaign platform included a proposal to create a government-run credit reporting agency at the CFPB to compete with the private firms and combat racial disparities in credit scores.
Credit and consumer reporting complaints accounted for more than 58 percent of the record 542,300 complaints the bureau received last year, according to the agency’s most recent annual report.
Chopra is a student lending watchdog
As the top student loan official at the CFPB during the Obama administration, Chopra aggressively pursued for-profit colleges, private student lenders and the loan servicing companies hired by the Education Department. He also went after how financial institutions market and sell debit cards and other products on campuses. It’s widely expected that Chopra will continue to scrutinize those industries as the bureau’s director.
The Obama-era CFPB often had a contentious relationship with the Education Department as bureau officials like Chopra criticized the loan servicers hired by the department to collect federal student loans. Chopra eventually was brought into the Education Department as a senior adviser to work on student loan and consumer protection issues.
This time around, Chopra’s CFPB is likely to play a far more collaborative role with the Biden Education Department, whose student loan unit is run by Cordray, Chopra’s former boss at the CFPB. Cordray has already taken steps to boost collaboration between the department and the CFPB when it comes to overseeing student loan servicing companies.
Internal battles
One of the first big challenges Chopra will face is addressing CFPB employee complaints of workplace racism that date back to the Obama administration.
The National Treasury Employees Union, which represents the bureau’s workers, is urging Chopra to fix salary disparities it has identified among Black, Hispanic and Native American employees.
During his vetting to lead the CFPB, Chopra pledged to be transparent about workplace salaries and benefits and to work with staff on the agency’s diversity, equity and inclusion strategic plan.
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