GOP slams top consumer watchdog at hearing, alleging overreach

Senate Republicans ripped the Biden administration’s top financial watchdog Tuesday as the agency takes aggressive steps to expand its oversight and regulation. 

Republican members of the Senate Banking Committee and Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra dueled during a Tuesday oversight hearing after months of growing tensions between GOP lawmakers and the progressive firebrand. 

“None of what you do over there makes sense,” Sen. John Kennedy (R-La.) said during the hearing.

Chopra, a staunch critic of the financial services industry, has launched a series of rulemaking efforts, investigations and new approaches to policing consumer abuse lauded by Democrats and fiercely criticized by Republicans.  

Under Chopra, the bureau has pressured banks over fees charged to consumers; broadened what it considers to be racially discriminatory practices; proposed new data collection standards and homed in on medical and student debt servicing.  

The CFPB announced Monday it would begin regular inspections of nonbank financial firms, such as popular financial technology and short-term credit companies, even without reason to believe they harmed consumers. 

The moves, Chopra said, are meant to focus the CFPB on the firms with the greatest potential to hurt Americans — whether because of their size, market power or repeated violations of consumer protection laws.  

“Currently, the United States is working toward a market structure where finance and commerce commingle, fueled by uncontrolled flows of consumer data,” Chopra said, raising the dominance of major tech companies in China’s financial sector as a warning. 

“Over the last several years, Chinese tech and finance giants have developed so-called social score that goes beyond credit performance and relies on analyzing user habits unrelated to credit and banking,” Chopra said. 

“These developments raised a host of questions about privacy, fraud, discrimination, and much more.” 

But he’s also drawn fierce backlash from Republicans, who opposed the agency’s creation. The GOP has pushed to limit the director’s sole authority over rulemaking and enforcement and pledged to reign it in should they recapture the House and Senate in the upcoming midterm elections. 

“The CFPB is more out of control than ever before. It’s once again pursuing a subversive far-left agenda by abusing — and exceeding — its authorities,” said Sen. Pat Toomey (Pa.), the top Republican on the Senate Banking Committee. 

“It is past time for Congress to bring accountability to the CFPB by making it subject to the appropriations process and enacting other needed reforms. The current Congress won’t do that. The next one should,” Toomey continued. 

Chopra helped stand up the CFPB with its architect, Sen. Elizabeth Warren (D-Mass.), after it was created through the 2010 Dodd-Frank Wall Street reform law and said Tuesday he has pushed the agency to “live up” to its founding purpose.  

While Republicans have long attempted to put the CFPB under control of Congress through appropriations, President Biden is almost certain to block legislation to weaken the agency’s independence even if passed by a GOP-controlled Congress next year. 

The CFPB is funded through the Federal Reserve System, not the congressional funding cycle, giving the agency independence from lawmakers. The director also wields unilateral control over the agency’s broad regulatory and enforcement powers, though the president can appoint and fire the CFPB director at will and the director must be confirmed by the Senate. 

Chopra and Democrats say the CFPB has simply returned to its founding purpose under Biden’s leadership after years of what they argued was lax oversight under Trump administration officials. 

“American workers need a strong Consumer Financial Protection Bureau on their side. With you at the helm, they finally have one again,” said Senate Banking Committee Chairman Sherrod Brown (D-Ohio). 

Republicans have also blasted Chopra for his role in pushing former Federal Deposit Insurance Corp. Chairman Jelena McWilliams, a Trump appointee, to retire last year after a power struggle over a review of bank merger standards. 

While McWilliams ostensibly controlled the FDIC board, she was the sole Republican countering three Democratic directors: current acting Chairman Martin Gruenberg, Chopra and acting Comptroller of the Currency Michael Hsu. Chopra and Hsu are both members of the board through their leadership of other regulators. 

Chopra, Gruenberg and Hsu voted in December to approve a request for public feedback on how the FDIC analyzes bank mergers. The FDIC said at the time the vote was not a valid agency action, leading to an unprecedented split between the chair of the FDIC and the board. 

McWilliams resigned on Dec. 31 over what she and fellow Republicans denounced as a “hostile takeover” of the FDIC. 

“You’re a smart man. There’s no doubt about that. Yet, I feel like you’ve chosen to poison the well in an effort as a congressionally confirmed head of a federal financial regulator,” said Sen. Thom Tillis (R-N.C.).

Democrats counter it was McWilliams who broke from the rule of law and sought to stifle an overwhelming majority of the board she chaired. 

“It was all very sad, but it was all pretty simple. Never before has a chair or a board member at the FDIC purported to be able to nullify a super majority of the board of directors without any legal justification other than because ‘I say so,’” Chopra said.