Chopra Vows To Revive Enforcement At CFPB

President Joe Biden’s CFPB nominee Rohit Chopra said the agency will have a much more aggressive enforcement unit in areas such as fair lending and mortgage servicing if he wins Senate confirmation to the post.

Chopra repeatedly told senators at a Tuesday confirmation hearing that consumer-centric enforcement will be a top priority, particularly when it comes to making sure that homeowners don’t get caught up in improper foreclosures.

“That’s what’s best for consumers, that’s what’s best for the honest market participants,” Chopra told the Senate Banking Committee.

If confirmed, Chopra would take over a Consumer Financial Protection Bureau that saw its enforcement division focus on smaller targets and recover less for consumers during the Trump administration.

The CFPB under Richard Cordray, an Obama appointee who led the agency from 2012 to 2017, returned more than than $12 billion to harmed consumers through enforcement actions. Under former Director Kathy Kraninger, a Trump appointee, the CFPB recovered around $1.5 billion in consumer redress over her approximately two years at the helm.

Chopra told senators that consumer redress would be a top priority for the CFPB’s enforcement division upon his confirmation.

“When victims of fraud or misconduct are not made whole, that doesn’t just hurt them, it hurts every other business that is trying to follow the law,” Chopra said.

Fair Lending Focus

Chopra also said fair lending enforcement would again be front and center at the CFPB after Trump’s two directors largely sidelined it. Former acting Director Mick Mulvaney removed the CFPB’s fair lending office from the bureau’s enforcement unit and placed it under the director’s office. Kraninger brought only one fair lending enforcement action.

The CFPB’s fair lending and equal opportunity office “is established by Congress and it should play a critical role in making sure the law is being followed,” Chopra told the committee.

Fair lending enforcement is likely to move to looking into potential discrimination from the algorithms that lenders use to make credit and even advertising decisions, he said.

The student loan market also is going to get a lot of attention, he added.

Chopra served as the CFPB’s student loan ombudsman under Cordray and later became a Democratic member of the Federal Trade Commission in April 2018.

Biden announced Chopra’s CFPB nomination alongside his choice to lead the Securities and Exchange Commission, Gary Gensler, in January ahead of his inauguration. The timing of the announcement indicated the growing importance of the CFPB under Biden, and its envisioned role combating the Covid-19 pandemic and boosting racial equity.

Gensler also appeared before the Senate Banking Committee Tuesday.

GOP Concerns

Sen. Pat Toomey (R-Pa.), the committee’s ranking member, pressed Chopra on some of his past comments about critics of the CFPB’s structure and independent funding.

Toomey asked Chopra whether he stood by 2016 comments that all lawmakers who supported making the CFPB a commission or putting it under Congressional appropriations were in the pockets of abusive consumer finance firms.

Chopra said he didn’t recall those specific comments, but he regretted them if he made them.

The nominee also committed to not bringing enforcement actions based on supervisory guidance.

Sen. Tim Scott (R-S.C.) raised concerns about a potential return of “regulation by enforcement” at the CFPB.

The term was coined during the Cordray era by Republicans who said the agency used enforcement actions against one or two companies to set the CFPB’s expectations for entire sectors, such as auto finance.

Chopra said he would bring more transparency to the enforcement process.