Unlike some Biden appointments (think Janet Yellen in the Treasury Department) that will be seen as compromises, Chopra’s appointment represents a full return to the combative CFPB under former manager Richard Cordray, experts say.
Chopra is a protégé of Senator Elizabeth Warren (D-Mass.), Who developed the CFPB and is a polarizing figure herself.
In one tweet monday, Warren had this to say about Chopra’s appointment: “He has been a fearless consumer champion at the FTC and will be a fearless champion at the head of the consumer agency.”
Scott Pearson, partner of Manatt, Phelps & Phillips, called Chopra a “very experienced and committed consumer advocate” who is “a bit caustic in his approach”.
“It’s very aggressive and very difficult for the industry to manage,” he said. Chopra, like Cordray, will measure the success of the CFPB by the amount of its fines and the extent of its enforcement action, Pearson said.
Benjamin Saul, partner at Bryan Cave Leighton Paisner, called Chopra “an incredibly aggressive consumer protection advocate.”
Rachel Rodman, partner at Cadwalader, Wickersham & Taft and CFPB regulator from 2011 to 2016, said CFPB under Chopra would revert to an aggressive enforcement position last seen under Cordray.
In general, this position will result in “more repression, more cases, higher fines and an agency that pushes the limits of its authority,” she said.
At the FTC, Chopra made it clear that he believes regulators should seek additional penalties for repeat offenders. A dissident declaration Chopra made the case in November of Zoom Video Communications, which was linked to security weaknesses in the popular video conferencing platform, offers a window into its thinking.
“In cases like this, investigations should seek to find out how customers have been attracted to any deception, how a business has profited from any misconduct and the motives for that behavior,” Chopra wrote. “This approach can help shape an effective remedy. While deciding to resolve an issue through regulation, regulators and authorities should seek to help victims, withdraw gains, and correct underlying business incentives. “
The appointment at the head of the CFPB represents a kind of homecoming for Chopra. He was deputy director of the CFPB under the Obama administration, leading the agency’s efforts on student loans, according to information released by Biden’s transition team. In 2011, Chopra was appointed CFPB’s Student Loans Ombudsman.
The post of director is vacant after Kathy Kraninger submitted his resignation in Biden on January 20. “I support the president’s constitutional prerogative to appoint senior officials in government who support the president’s political priorities, which ensures that our government responds to the will of the people expressed in the presidential elections,” she wrote.
Biden was reportedly entitled to replace Kraninger, appointed for a five-year term in December 2018, as CFPB director through a June 2020 decision in the Seila Law Case.
Priorities under Chopra
Biden has made scrutiny of fair lending practices a pillar of his campaign platform, and the CFPB is likely to make this issue a regulatory priority.
“The main focus of the agency will be social justice, which means that equitable loans will be the main issue,” Pearson said.
One of Chopra’s first actions will likely be to return the CFPB’s Fair Lending Office to a stand-alone unit, reversing move in 2018 by former CFPB director Mick Mulvaney to bring the office directly under his control.
The CFPB under Chopra “will hold financial institutions and non-bank financial institutions accountable for discriminatory lending processes,” Saul said, and could also examine how the algorithms used by these institutions may contain bias, unintentional or otherwise.
In addition, several CFPB initiatives from that time, suspended under the Trump administration, could be relaunched, Rodman said.
The CFPB could re-enact a new substantive rule on student loan servicing, which addresses how lenders perceive and process payments, particularly how they work well (or poorly) with overdue student borrowers. wrong to repay.
The CFPB under Chopra will likely monitor non-bank financial entities more closely, including expanding its supervisory authority to some larger players in the industry, such as companies offering unsecured personal loans, Rodman said.
Points to remember from a CFPB led by Chopra
For compliance departments within companies in these industries, it is imperative to have a robust compliance management system in place, Rodman said.
“They should tackle problems as they find them and not wait for a regulator to come and report them,” Rodman said.
Saul said compliance departments should ensure their businesses’ fair loan compliance programs are strong, do what they promise and can withstand increased regulatory scrutiny.
“As far as the job has to be done, now is the time to get it in shape,” Saul said. “It is very likely that control will fall to a much more empowered enforcement division.”
Editor’s Note: This story has been updated to reflect that of Kathy Kraninger resignation as director of the CFPB on January 20.