Financial information

Senate confirms Biden’s consumer watchdog, sparking industry crackdown

Credit reporting firms, low dollar lenders, debt collectors and fintech startups are among the players that should be the subject of close scrutiny from Chopra’s CFPB, as well as the student loans and mortgage services sector. The agency under interim management over the past eight months has already taken some initial steps to address lenders’ treatment of consumers in the pandemic era and to advance the Biden administration’s racial justice priorities. .

“It’s already on track, but Chopra is going to be driving the train faster,” said Allyson Baker, former CFPB lawyer and chair of the financial services practice at law firm Venable.

Chopra’s confirmation is the latest victory for progressives who have so far managed to put their stamp on the Biden administration’s hiring of top financial regulators. President Joe Biden has dispersed allies of Warren and other liberal lawmakers to agencies overseeing the financial sector, including Securities and Exchange Commission Chairman Gary Gensler.

“Rohit is a tremendous champion for consumers,” Warren said in a statement. “I look forward to his leadership in the office as he strives to bring him back to his 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 who have fought to gut the agency in the past. early in its existence when it was headed by former manager Richard. Cordray.

“Chopra won’t have to deal with a lot of the issues Cordray had to face,” Baker said. “He’s just going to be able to implement a progressive agenda in an administration that has a lot of Camp Warren.”

Who is Rohit Chopra?

With an MBA trained in Wharton, Chopra worked for management consulting firm McKinsey & Co. before joining government. After the launch of the CFPB in 2011, he was deputy director of the agency and mediator for student loans.

In 2018, he became commissioner at the FTC, where he advocated for more aggressive enforcement and greater accountability for bad actors, including corporate executives. He also called for more monitoring of takeovers of privately funded companies.

“If there are any illegal and egregious practices, it is important that law enforcement make sure they stop – this is what is best for consumers, this is what is. best for honest market players and that is the role Congress has asked CFPB to play, ”said Chopra. during his March confirmation hearing for the Office of Consumer Affairs position.

Biden has appointed privacy advocate Alvaro Bedoya to replace Chopra at the FTC.

Industry accolades for emboldened CFPB

A range of financial companies that fall under the jurisdiction of the CFPB expect to be hit by new rules and stricter enforcement of existing regulations. Chopra will likely come under pressure from influential Progressive Democrats to take a hard line.

Financial industry lobbyists are already backing down.

“Consumers are best served when regulators put politics aside and develop regulations with input from all stakeholders, leading to the implementation of well-founded rules that are debated, scrutinized and their impact carefully considered before. to be enacted, ”said the President and CEO of the Consumer Bankers Association. Richard Hunt, who has long called for the agency’s single-director structure to be replaced by a bipartisan commission. “Now more than ever, banks need – and consumers deserve it – a reliable rule-making process as the economy emerges from the effects of the coronavirus pandemic. “

Republican lawmakers are also preparing to fight the CFPB under Chopra.

“I am seriously concerned that Commissioner Chopra is referring the CFPB to the lawless, overbreadth and highly politicized agency that it was under the Obama administration,” said Sen. Pat Toomey of Pennsylvania, the most senior republican of the Senate Banking Committee.

Payday loans in the crosshairs

One of the targets is the payday loan industry. Consumer advocates want the agency to reconsider a rule cracking down on lenders after it was weakened under the Trump administration. The problem is to what extent lenders can offer high interest rate loans to customers who may not be able to repay.

Ed D’Alessio, who represents the industry as executive director of the INFiN business group, said he hopes Chopra’s business background will influence the agency’s work on the issue.

“It is extremely important for the office to re-examine the market before going ahead with any new regulations,” he said. “We hope and urge the office to take some time to carefully examine the market, as it has evolved over time from the rule of origin.”

Credit Report Problems a Biden Priority

Another priority target will likely be the consumer credit reporting industry, which is dominated by Equifax, Experian and TransUnion. In recent years, Democrats have stepped up calls for an industry overhaul to address concerns that companies are helping spread false and damaging financial information about millions of Americans who could lose mortgages and auto loans. A massive data breach in 2017 at Equifax only fueled calls for new guarantees.

Biden’s campaign platform included a proposal to create a government-run credit bureau at CFPB to compete with private companies and tackle racial disparities in credit scores.

Complaints about credit and consumer reports made up more than 58% of the 542,300 complaints recorded by the bureau last year, according to the agency’s most recent annual report.

Chopra is a student loan watchdog

As the primary student loan officer at CFPB during the Obama administration, Chopra actively pursued for-profit colleges, private student lenders, and loan service companies hired by the Department of Education. He also looked at how financial institutions market and sell debit cards and other products on campus. It is generally expected that Chopra will continue to oversee these industries as the office manager.

The Obama-era CFPB often had contentious relationships with the Department of Education, as office officials like Chopra criticized loan officers the department hired to collect federal student loans. Chopra was eventually brought into the education department as a senior advisor to work on student loan and consumer protection issues.

This time around, Chopra’s CFPB is expected to play a much more collaborative role with Biden’s Education Department, whose student loan unit is headed by Cordray, Chopra’s former boss at CFPB. Cordray has already taken steps to strengthen collaboration between the department and the CFPB in overseeing student loan management companies.

Internal battles

One of the first big challenges Chopra will face is dealing with complaints from CFPB employees about racism in the workplace that date back to the Obama administration.

The National Union of Treasury Employees, which represents office workers, is urging Chopra to correct the wage disparities he has identified among black, Hispanic and Native American employees.

During her selection as head of CFPB, Chopra made a commitment to be transparent about wages and benefits in the workplace and to work with staff on the agency’s diversity strategic plan, equity and inclusion.

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