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Biden’s transition team declined to comment.
The confirmation process will likely be difficult, with Democrats only tightly controlling the Senate. The CFPB, Warren’s brainchild, has long been a favorite target of GOP lawmakers, who have criticized the agency’s strict regulations as an executive exaggeration. They also objected to the way it was set up, with a one-director system that gave the leader a lot of power and funding from the Federal Reserve, meaning the agency isn’t under pressure from the Congressional appropriation process. .
Chopra, a Wharton-trained MBA, worked as a consultant at McKinsey before joining government. During his tenure at the FTC, he pushed the agency to be more skeptical of private equity buyers and more aggressive in using its regulatory powers to subdue companies.
He was previously Deputy Director of the CFPB and Student Loans Mediator after the agency opened in 2011. He has been a Federal Trade Commissioner since 2018.
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 pro-industry footprint from the desk, which has reduced law enforcement and watered down Obama-era rules, can take years.
One of Chopra’s likely first priorities, restoring the agency’s focus on enforcing fair loan laws, will be relatively easy to achieve. The other two important items former public servants expect to be on the new director’s agenda – cracking down on payday lenders and building strong case law on what constitutes an “abusive act or practice” under of the Dodd-Frank Act – could not be accomplished until the end of Biden’s term as president.
Chopra can act quickly to restore the Office of Fair Lending, sidelined by former interim director Mick Mulvaney in 2017, to its original position, allowing Fair Lending staff to rely on both on monitoring and enforcement tools to fight discrimination.
Rolling back the revised Trump administration salary rule would take longer. The new rule released in July overturned a key requirement in the agency’s controversial earlier regulation that cracked down on the industry, which offers small emergency loans to clients at extremely high interest rates, frequently trapping borrowers at low income in expensive debt cycles.
The previous rule, published in October 2017 just before then-director Richard Cordray resigned, would have required lenders to check borrowers’ income and debts to assess whether they could afford the loans. The CFPB overturned that requirement with the new rule this year, sparking an outcry among Congressional Democrats, who demanded an investigation by the Inspector General into allegations of improper political influence over the rule-drafting process.
Consumer groups have taken legal action to overturn the new rule – alleging that the agency violated the Administrative Procedure Act and Dodd-Frank – so there is a possibility that the courts will overturn it.
Without court intervention, revising and relaxing the rule would mean going back to square one – building on previous research, explaining in a proposal why the latest version of the rule reinstates various provisions, allowing for long notice – and – comment period and set an implementation date that gives the industry enough time to comply This means payday lenders might not face further consequences for nearly a decade after the bureau launched its efforts to crack down on the industry under Cordray.
Chopra will also be likely to develop a more aggressive application of the “abusive” standard under Dodd-Frank, a pivot away from the more relaxed guidelines the agency released this year.
“Unfair or deceptive acts or practices” have long been prohibited under federal law, but Dodd-Frank in 2010 added “abusive” to the ban, known as UDAAP, and conferred on CFPB the power of regulation and enforcement.
Business groups have for years demanded clarification on what is considered abusive, and the agency said earlier this year it would take a restrained approach to accusing companies of abusive violations, in part on the fact that companies were acting in good faith. Consumer groups immediately denounced the open exemption in “good faith”.
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