Senate upholds Biden’s consumer watchdog, sparking industry crackdown – POLITICO

Credit reporting companies, small lenders, debt collectors, and fintech startups are among the players who should come under scrutiny from Chopra’s CFPB, as well as the banking industry. student loans and mortgage services. The agency under interim management over the past eight months has already taken some initial steps to address lenders’ treatment of consumers in the age of the pandemic and to advance the Biden administration’s justice priorities. racial.

“It’s already on the right track, but Chopra is going to drive the train faster,” said Allyson Baker, a former CFPB attorney 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 key financial regulators. President Joe Biden has dispersed Warren allies and other liberal lawmakers to agencies tasked with overseeing the financial industry, 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 office as he strives to bring it back 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 who have fought to gut the agency in the first place. beginning of its existence when it was run by former manager Richard. Cordray.

“Chopra won’t 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 a progressive agenda in an administration that has a lot of the Warren camp.”

Who is Rohit Chopra?

A Wharton-educated MBA graduate, Chopra worked for management consultancy McKinsey & Co. before entering government. After the launch of the CFPB in 2011, he served as the agency’s deputy director and student loans ombudsman.

In 2018, he became a commissioner at the FTC, where he pushed for more aggressive enforcement and greater accountability for bad actors, including corporate executives. He also called for greater oversight of private equity-backed corporate takeovers.

“If there are egregious illegal practices, it’s important that law enforcement makes sure they stop – that’s what’s best for consumers, that’s what’s best for honest market players and that’s the role that Congress has asked the CFPB to play,” Chopra said. during his confirmation hearing in March for the office of consumer affairs.

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

Industry braces for an emboldened CFPB

A range of financial firms that fall under the CFPB’s jurisdiction expect to be hit by new rules and tougher enforcement of existing regulations. Chopra will likely face pressure from influential progressive Democrats to take a hard line.

Financial industry lobbyists are already backtracking.

“Consumers are best served when regulators put politics aside and write regulations with input from all stakeholders, leading to the implementation of well-founded rules that are debated, scrutinized and whose impact is carefully considered. before being enacted,” said the president and CEO of the Consumer Bankers Association. Richard Hunt, who has long called for the agency’s one-manager structure to be replaced by a bipartisan commission. “Now more than ever, banks need – and consumers deserve – 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 fear Commissioner Chopra will return the CFPB to the lawless, oversized, highly politicized agency it was under the Obama administration,” said Sen. Pat Toomey of Pennsylvania, the top Republican on the Senate committee. banks.

The payday loan in the crosshairs

Among the targets is the payday loan industry. Consumer advocates want the agency to review a rule cracking down on lenders after it was weakened under the Trump administration. The issue is the extent to which 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 INFiN business group, said he hopes Chopra’s business background will influence the agency’s work on the issue.

“It is extremely important that the bureau re-examine the market before moving forward with any new regulations,” he said. “We hope and urge that the office take some time to carefully review the market as it has evolved over time since the original rule.”

Credit report issues are a priority for Biden

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

Biden’s campaign platform included a proposal to create a government-run credit reporting agency at the CFPB to compete with private businesses and address racial disparities in credit scores.

Credit and consumer reporting complaints accounted for more than 58% of the record 542,300 complaints the bureau received last year, according to the the latest annual report of the agency.

Chopra is a student loan watchdog

As the top student loans official at the CFPB during the Obama administration, Chopra aggressively sued for-profit colleges, private student lenders, and loan service companies hired by the Department of Education. He has also been interested in how financial institutions market and sell debit cards and other products on campuses. Chopra is expected to continue overseeing these industries as office manager.

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

This time around, Chopra’s CFPB will likely 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 service companies.

Internal battles

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

The National Union of Treasury Employees, which represents office workers, is urging Chopra to address the pay disparities it has identified between black, Hispanic and Native American employees.

During his selection to lead the CFPB, Chopra pledged to be transparent about workplace pay and benefits and to work with staff on the agency’s strategic plan for diversity, equity and inclusion.