A political ally of Sen. Elizabeth Warren who worked with Warren to create the Consumer Financial Protection Bureau (CFPB) has been named by President-elect Joe Biden to head up the bureau.
Politico has more on the appointment and what it means for the direction of the Bureau:
Chopra, a Wharton-trained MBA, worked as a consultant at McKinsey before joining government. Over the course of his term at the FTC, he has pushed the agency to be more skeptical of private equity buyers and more aggressive in using its rulemaking powers to rein in businesses.
Thanks to a Supreme Court ruling last year, Biden can fire current CFPB Director Kathy Kraninger on Day One. But erasing President Donald Trump’s industry-friendly imprint on the bureau, which has pulled back on enforcement and watered down Obama-era rules, may take years.
Kraninger has come under fire from consumer advocates as someone who has been friendly to payday lenders. Under her leadership, the bureau adopted a very weak version of a rule designed to rein-in payday predators. This came after five years of work by advocates to convince the bureau to adopt a rule that would provide relief to consumers who fall prey to debt trap lenders.
Chopra seems poised to shift the bureau back in the direction of actually regulating industries and protecting consumers, rather than providing political cover for the unscrupulous lenders and other big business entities who donated heavily to outgoing President Donald Trump.
Here’s how Politico explains the payday lending rule under the Trump Administration:
The new rule released in July rescinded a key requirement of the agency’s controversial earlier regulation cracking down on the industry, which offers small emergency loans to customers at sky-high interest rates, frequently trapping low-income borrowers in costly debt cycles.
The Center for Responsible Lending weighed-in with a comment from director of federal advocacy Ashley Harrington:
Commissioner Chopra has long fought for financial markets that are fair for consumers, including student loan borrowers. We are encouraged that the CFPB will now return to its mission of protecting people’s finances, which has heightened significance in this economic downturn, and which includes a strong fair lending program.
Chopra is the latest in a series of impressive federal agency and department nominees, which includes former Federal Reserve Chair Yellen, Congresswoman Fudge, and Connecticut Education Commissioner Cardona. We look forward to working with them all.
Lisa Donner of Americans for Financial Reform also had positive remarks about Chopra and the future direction of the CFPB.
We applaud the nomination of Rohit Chopra to lead the CFPB. His commitment to consumer protection, his effectiveness at using the tools of government to serve the public interest, and his willingness to challenge powerful corporate interests when necessary are exactly what the Bureau needs to fulfill its crucial consumer protection mission.
The CFPB has an incredibly important job to do, including stopping financial rip-offs, fighting discrimination, ending predatory lending, halting debt collection abuses, insisting on corporate accountability and much more. Right now, it also has an urgent role to play in helping families survive and recover from the pandemic-induced economic crisis, especially in Black and Latinx where people have been hardest hit, in concert with the incoming Administration’s broad rebuilding agenda.
A CFPB recommitted to its mission can make a huge difference in the lives of families across the country. We look forward to collaborating with Mr. Chopra and the CFPB staff to focus on the essential work of ending practices that trap people in debt, amplify racial inequality, and exploit people’s financial vulnerability.
Payday lenders are currently allowed to charge ridiculously high interest rates — north of 400% in some states — that trap borrowers in a cycle of long-term debt. The rule consumer advocates wanted would have provided a longer time to repay loans and required stricter underwriting, preventing those in the most difficult situations from being trapped in unaffordable loans.
In addition to the Consumer Bureau regulations, it is possible that the Senate will take up legislation previously passed in the House that would create a federal interest rate cap on payday loans.
For more on consumer protection issues, follow Andy Spears