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President-elect Joe Biden chose Rohit Chopra to be the director of the Consumer Financial Protection Bureau, bringing in a progressive ally of Senator Elizabeth Warren to lead the agency she championed for creation. The choice comes as Democrats search for ways to provide student loan relief to millions of Americans as part of a COVID-19 relief program.
Chopra, now a commissioner at the Federal Trade Commission, helped launch the consumer agency after the 2008-09 financial crisis and served as deputy director, where he sounded the alarm on skyrocketing levels of student debt. Chopra was previously Deputy Director of CFPB, where he led the agency’s efforts on student loans. He was also a special adviser to the US Department of Education.
In these roles, Chopra has led efforts to stimulate competition in the student loan financing market, develop new tools for students, and secure hundreds of millions of dollars in repayments for borrowers victims of illegal acts. loan officers, collection agents and for-profit university chains. .
Biden announced the move on Monday, as well as his intention to appoint Gary Gensler, former chairman of the Commodity Futures Trading Commission, as the next chairman of the Securities and Exchange Commission. Gensler, a former Goldman Sachs banker, has tightened oversight of the complex financial transactions that helped trigger the Great Recession.
Biden’s choice of an expert experienced as a powerful market regulator during the financial crisis to lead the SEC signals the goal of making the Wall Street watchdog in an activist role after deregulation under the Trump administration.
Consumer advocates have praised the selections of Gensler and Chopra.
Gary Gensler “was not afraid to take Wall Street as chairman of the US Commodity Futures Trading Commission and fire the SEC to an agency that both protects small investors from risky practices and protects the financial system from dangerous players.” Ed Mierzwinski, senior director of federal consumer programs for US consumer advocacy group PIRG, said in a statement.
Gensler, now a professor of economics and management at MIT’s Sloan School of Management, was Assistant Secretary of the Treasury in the Clinton administration and then headed the CFTC during Barack Obama’s tenure.
Gensler was senior advisor to U.S. Senator Paul Sarbanes on drafting the Sarbanes-Oxley Act and was Under Secretary of the Treasury for Home Finance from 1999 to 2001 and Under Secretary of the Treasury for Financial Markets from 1997 to 1999. After working for nearly 20 years at Goldman Sachs, the powerhouse on Wall Street, Gensler surprised many by being a tough regulator of big banks as chairman of the CFTC.
Well-versed in the connection between politics and economic policy, Gensler served as CFO of Hillary Clinton’s 2016 presidential campaign against Donald Trump and Obama’s economic adviser during his 2008 presidential bid.
Gensler was the leader and advisor to Biden’s transition team responsible for the Federal Reserve, banking matters and securities regulation.
“Protect uninformed investors”
Jay Clayton, a former Wall Street lawyer who ran the SEC under the Trump administration, presided over a deregulation aimed at relaxing rules affecting Wall Street and financial markets, as Trump promised when he took office . The rules that under the Dodd-Frank Act tightened the reins of banks and Wall Street in the aftermath of the financial crisis and the Great Recession have been stifled.
“Gensler will prevent the SEC from making fundraising easier for companies and protecting unsophisticated investors,” said Erik Gordon, assistant professor of commerce at the University of Michigan. “His history in the Obama administration leaves him few friends on the Republican side – and he probably doesn’t care.”
Senior Republican on the House Financial Services Committee, Rep. Patrick McHenry of North Carolina, said Gensler’s receptivity to new financial technologies and cryptocurrency was positive. But he added: “I’m afraid the Democrats will want to take the (SEC) away from bipartisan middle ground in an effort to achieve their most partisan goals.”
Sen. Sherrod Brown of Ohio, the top Democrat on the Senate Banking Committee who is about to become its chairman, said Gensler’s record as a regulator “shows that he will hold bad actors accountable and will do put the interests of working families first ”.
Mr Brown said Chopra would bring the CFPB back to its core mission of consumer protection and “will also ensure that the agency plays a leading role in addressing racial inequalities in our financial system.”
The CFPB was created at Warren’s request as an independent agency by the Dodd-Frank Act. Its director had great latitude to act alone, without obtaining the agreement of the members of the board of directors of an agency.
While enforcing consumer protection laws, the CFPB also gained the power to review the practices of virtually all businesses selling financial products and services: credit card companies, payday lenders, mortgage managers, debt collectors, for-profit colleges, auto lenders, money. transfer agents.
Open criticism of Facebook
The CFPB has become a prime target for conservative Republicans. Trump appointed Mick Mulvaney, then White House budget manager, acting director of the CFPB when Cordray left in November 2017.
Mulvaney had sharply criticized the consumer agency and made sweeping changes to it, loosening regulations on payday loans, for example, and withdrawing enforcement efforts. The agency has been headed by Trump-appointed Kathy Kraninger since December 2018.
As one of the two Democratic commissioners of the five-member Federal Trade Commission, Chopra has openly criticized the practices of large corporations, especially tech giant Facebook. He lodged strong dissensions on FTC actions against the company for breach of privacy and alleged anti-competitive behavior, claiming it does not go far enough.
“Rohit Chopra has the perfect training to hit the ground at CFPB,” said Mike Litt, consumer protection advocate with the US PIRG Education Fund, in a statement. “In his government service, he used all available policy levers to protect consumers from corporate wrongdoers. We couldn’t be happier with his selection to restore the CFPB after three years of disastrous leadership.
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