Rohit Chopra was officially confirmed as director of the Consumer Financial Protection Bureau, signaling a return to more aggressive oversight of financial services companies at the agency. The U.S. Senate voted Thursday 50-48 to approve Chopra’s nomination on party lines. As CFPB director, he’ll face intense pressure from progressive Democrats, who expect him to revive the agency they say was put to sleep during the Trump administration. If he succeeds in turning the agency around, life may get less pleasant for auto dealerships, banks, credit bureaus, credit-card companies and student and payday lenders.
“The industry didn’t have to dedicate any mindshare whatsoever to the CFPB’s activities for nearly four years,” said Isaac Boltansky, a policy analyst at Compass Point Research & Trading. “But with Chopra taking the chair, the bureau suddenly jumps up to the top of the worry list for most consumer finance companies.”
The agency was created as part of the 2010 Dodd-Frank Act to protect consumers from abuses that were common in the run-up to the 2008 financial crisis. It has since become one of the most politically-charged financial regulators in Washington as Republicans and Democrats continue to fight over whether it should even exist.
Chopra previously served as the bureau’s assistant director and was its first student loan ombudsman before he was nominated to serve on the Federal Trade Commission in 2018. He testified before the Senate Banking Committee earlier this year that he intends to focus on the economic impact of the pandemic that’s left millions of Americans in financial ruin, particularly in communities of color. To read more click here.
His top priorities may also include revitalizing the CFPB’s fair lending and equal opportunity office, which is responsible for policing discriminatory lending practices, according to Allyson Baker, a partner at Venable LLP. The division has became dormant in recent years, Baker said.
Republicans, who’ve opposed the CFPB from existence and have called for its powers to be drastically curtailed, cited Chopra’s record as a cause for severe concern. GOP senators also insisted that Chopra should be disqualified from leading the CFPB after refusing to respond to questions about the acting director’s dismissal of some bureau staff.
“It's clear to me that Commissioner Chopra would very likely return the CFPB to the rogue, unaccountable, anti-business agency it was during the Obama administration," said Sen. Pat Toomey (R-Pa.), the top Republican on the Senate Banking panel, in a speech before the vote.
Chopra joined the CFPB in 2012 as the agency’s first student loan ombudsman and regularly condemned student loan collection companies for misleading and bilking borrowers. The CFPB has since sued several student loan servicers, some of which later announced plans to transfer their portfolios to other loan collectors.
He subsequently joined the Education Department as a senior advisor in 2016 and then the Consumer Federation of America before former President Trump nominated him to the FTC in 2017. To read more click here.
Joseph Lynyak III, a partner at law firm Dorsey & Whitney summed up the situation when he said, "The questions on the minds of the consumer industry are simple: will the CFPB return to regulation by enforcement? Similarly, will it direct its litigation efforts at large banks and mortgage lenders, or will it focus on smaller non-bank and fringe participants such as payday lenders and debt collectors?"
