As reported, President-elect Joe Biden nominated Rohit Chopra, a commissioner at the Federal Trade Commission (FTC), to lead the Consumer Financial Protection Bureau (CFPB), replacing Kathy Kraninger as director (who remains in her post in a term that technically runs through 2023, but is likely to be replaced by Biden).
Just what the incoming leadership might do remains to be seen, but as noted in this space previously, Chopra has, in his soon-to-be past role as a commissioner with the FTC, has been known as an aggressive enforcer.
The CFPB, of course, has been tasked with enforcing financial regulations and protecting consumers (settlements in 2019 came in at $777 million).
And, per Politico, Chopra is a “strong consumer advocate aligned with Sen. Elizabeth Warren (Democrat of Massachusetts).” Warren helped create the agency itself as part of the Dodd-Frank legislation of 2010, with an official debut the following year.
We’re likely to move past the existential debates that marked the CFPB during the years of the Trump administration. And though Chopra must be confirmed by a Senate where the Democrat party has a slim margin of control, there is at least some roadmap spelled out.
Earlier this month, the CFPB’s Taskforce on Federal Consumer Financial Law released a report with a number of recommendations.
Among those recommendations (which number about 100 and are meant for the CFPB itself, Congress and state and federal regulators): authorizing the CFPB to issue licenses to non-depository institutions that provide lending, money transmission and payments services; expanding access to the payment system to include unbanked and underbanked consumers; and working “with other agencies to create a unified regulatory regime for new and innovative technologies providing services similar to banks.”
Politico also notes that the agency, under Chopra’s stewardship, is likely to have an initial focus on fair lending laws.
At a high level, reported Politico, “Chopra can move quickly to restore the Office of Fair Lending, sidelined by former Acting Director Mick Mulvaney in 2017, to its original position, allowing fair lending staff to draw on both supervision and enforcement tools to combat discrimination.”
Looking At Payday Lenders
Chopra would also likely devote efforts to uncovering (and pursuing) abusive practices by payday lenders.
It remains to be seen what would happen to rules that, earlier in the Trump administration, would have required verification of borrowers’ income and ability to repay debt — specifically, payday loans. That rule was scrapped last year, and it is likely that underwriting provisions will be revisited in the new administration.
As for the payday loans themselves, PYMNTS research has found that six in 10 Americans are living paycheck to paycheck, and about 24 percent don’t make enough to cover even those basic expenses. Separately, in 2018, well before the pandemic, PYMNTS’ Financial Invisibles report found that 12 percent of sampled consumers used payday loans and did not have credit cards.
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