President Biden’s pick to lead the Consumer Financial Protection Bureau (CFPB) is expected to embolden the powerful agency with a more aggressive approach to how banks, lenders and debt collectors treat their customers.
The shift comes after progressives and Wall Street critics raged for years as Trump-appointed CFPB leaders weakened regulations, upended the agency’s structure and took a less combative approach to oversight and enforcement.
The ideological pendulum is now set to swing sharply to the left if Biden’s top choice, Rohit Chopra, takes over the agency.
Chopra, a member of the Federal Trade Commission (FTC) since 2018, was among the CFPB’s first senior officials and has pushed the envelope on how far the government should go to punish consumer abuse.
As the CFPB’s first student loan ombudsman, Chopra was a fierce critic of how servicers handled struggling borrowers. He later made headlines at the FTC for his condemnation of Facebook.
Progressives have hailed Chopra’s nomination and expect him to restore the bureau to the vision laid out by Sen. Elizabeth Warren (D-Mass.), who designed the agency as a special adviser to former President Obama.
“Throughout his career, Rohit has fought on behalf of American consumers, and I think he’s done so in a manner that is both forceful and deliberate,” said former CFPB student loan ombudsman Seth Frotman, who served with Chopra at the bureau.
“Rohit is the exact person for this moment in time to refocus the bureau on its core mission, which is to stand up for consumers,” he continued.
Republicans and industry advocates are bracing for Chopra’s more combative approach and the reversal of their work to rein in the agency during the Trump era, when it was most recently led by former Director Kathy Kraninger.
“One of Director Kraninger’s main priorities was trying to lower the political tension that the agency has always attracted,” said Brian Johnson, a partner at law firm Alston and Bird who served as her deputy CFPB director.
“I think the CFPB will remain a highly divisive and political agency. I hope that it doesn’t,” he added.
The CFPB has been a political flashpoint since its creation through the Dodd-Frank financial reform law signed by Obama in 2010. The agency was designed to regulate consumer financial products, oversee the companies that offer them and punish those that use unfair, abusive or deceptive practices.
Since the CFPB’s structure gives its director unilateral power over nearly everything it does, the agency is largely defined by the priorities of its leader.
Richard Cordray, the first CFPB director, used his perch to write strict rules, file well-publicized lawsuits against banks and lenders and issue frequent warning shots to the financial sector. His Trump-appointed successor, Mick Mulvaney, reversed some of that regulatory work, eased the CFPB’s supervision and installed political advisers to oversee operations that were previously led by career staffers.
And Kraninger, a Trump nominee, sought to split the difference with a low-key approach meant to reduce regulatory burdens without antagonizing her critics.
Both Chopra’s supporters and critics expect him to govern in the Cordray mold, unapologetically holding banks and lenders to strict standards while bringing back the CFPB’s crusading mentality.
“Biden’s decision to nominate Rohit Chopra will make Elizabeth Warren very happy,” said Rep. Patrick McHenry (N.C.), the top Republican on the House Financial Services Committee, in a statement last week.
“This is proof that the Biden team is pandering to members of the far-left who want to weaponize the CFPB to go after financial services companies they simply don’t like.”
Sen. Sherrod Brown (D-Ohio), the incoming chairman of the Senate Banking Committee who will preside over Chopra’s confirmation hearing, called him a “bold and experienced choice” that will “return the CFPB to its central mission.”
The committee has yet to schedule Chopra’s confirmation hearing.
Advocates for stronger financial rules have high hopes for Chopra.
Linda Jun, senior policy counsel at Americans For Financial Reform, said she hopes Chopra takes quick action to protect struggling Americans from any coronavirus-related financial woes, particularly those related to mortgage forbearance and credit reporting, but also unwind structural changes imposed by Republican leaders.
“His work at the FTC as well as the bureau has really shown that he is dedicated to the cause and has a lot of expertise to offer as far as protecting vulnerable consumers and making sure that his regulatory agency returns to its roots in a good way,” Jun said.
With their critics ascendant, the financial industry and their D.C. advocates are treading carefully and hope that the CFPB’s past is not prologue.
“The CFPB … should be an independent agency, free of presidential politics and an advocate for consumers, which requires a consistent, sustainable set of rules,” said Richard Hunt, president and CEO of the Consumer Bankers Association, in a statement.
“This whipsaw effect will stifle innovation and prevent consistent regulations.”