July 24, 2021

Biden to pick FTC’s Chopra to steer CFPB

WILMINGTON, Del. — President-elect Joe Biden will nominate Federal Trade Commission member Rohit Chopra to head the Consumer Financial Protection Bureau.

Chopra, whose consumer advocacy views align with Democratic Senator Elizabeth Warren, had been considered a top candidate for the job running the agency created after the 2008-09 financial crisis.

Separately, former Commodity Futures Trading Commission Chairman Gary Gensler will be nominated to lead the Securities and Exchange Commission.

Both appointments could be bad news for the banking industry and other lenders, as well as dealers, which braced for the prospect of stiffer rules since Biden was elected in November.

As an FTC commissioner, Chopra has been an outspoken critic of some dealership business practices, notably with regards to discrimination.

“Our administration will hit the ground running to deliver immediate, urgent relief to Americans; confront the overlapping crises of COVID-19, the historic economic downturn, systemic racism and inequality, and the climate crisis; and get this government working for the people it serves,” Biden said in a statement to Bloomberg News. “These tireless public servants will be a key part of our agenda to build back better — and I am confident they will help make meaningful change and move our country forward.”

Chopra is expected to review payday lending and debt-collection rules, which influential consumer groups say won’t protect Americans. They also hope he will stamp out exorbitant lending rates and abusive debt-collection practices, address the student debt burden and gaps in minorities’ access to credit.

“The CFPB has an incredibly important job to do, including stopping financial rip-offs,” said Lisa Donner, executive director at Americans for Financial Reform, a think tank. “It also has an urgent role to play in helping families survive and recover from the pandemic-induced economic crisis.”

The CFPB, championed by Warren, has been beloved by Democrats as a watchdog to help level the financial playing field for middle-class Americans but reviled by Republicans as too powerful and unaccountable. Millions of Americans who lost jobs and income due to the coronavirus pandemic are turning to help from the financial institutions the CFPB seeks to regulate.

The outgoing Trump administration weakened the agency’s enforcement powers and won a Supreme Court ruling that allows the president discretionary authority to fire its director.

That could backfire now. Chopra’s expected nomination suggests that Biden intends to fire current CFPB director Kathy Kraninger, a Trump appointee whose term officially ends in 2023.

But Richard Hunt, chief executive of the Consumer Bankers Association, rejected the idea that Biden should automatically use the power authorized by the nation’s top court.

“CBA does not believe it is in the best interest of consumers to have a new Director with each change in Administration. This whip-saw effect will stifle innovation and prevent consistent regulations,” Hunt said in an usually forceful statement.

Immediate change

One reason Chopra, 38, was picked, supporters say, is that he could start overturning some of Trump’s policies on Day One, ensuring that the CFPB returns to its focus on helping consumers deal with the complexities of the financial system.

Because he is already a Senate-confirmed official, Chopra could immediately become acting CFPB chief under a federal law for filling temporary vacancies. He would be able to stay at the FTC while keeping the CFPB post for about 300 days.

Chopra helped Warren set up the CFPB and served as the agency’s first student loan ombudsman. Progressives have sought to return it to a tougher stance, reversing Trump’s rules on payday lending and debt collection agencies as well as scrapping proposals that could prevent low-income Americans from getting mortgages.

Other liberal priorities include stamping out exorbitant lending rates, addressing the student debt burden and gaps in minorities’ access to credit as well as overhauling the credit reporting system. As a presidential candidate, Biden proposed letting the CFPB offer its own credit ratings for consumers.

“Rohit has a proven record of challenging corporate abuse on behalf of everyday families who don’t want to be cheated,” said the Progressive Change Campaign Committee, a liberal advocacy group that had promoted Chopra, on Twitter.

Chopra’s appointment would take a key advocate for strong regulation of big technology companies off of the FTC.

Chopra backed a lawsuit last month by that agency that accused Facebook Inc. of using a “buy or bury” strategy with competitors that may force the company to sell off WhatsApp and Instagram.

In 2019, he voted against a $5 billion fine against Facebook for privacy failures, saying that while it “sounds like a lot,” the settlement did not go far enough to prevent repeated abuses. He has also pressed social media companies for more information on how they use personal data and warned lawmakers that consumer data posed a threat to competition.

Bloomberg contributed to this report.