President Biden's nomination of Rohit Chopra to lead the CFPB is up for consideration by the full Senate. On March 11, 2021, the Senate Committee on Banking, Housing, and Urban Affairs, in a tied vote (12-12), advanced the nomination of Rohit Chopra to the position of CFPB Director, to the Senate floor. The committee vote was held after a March 2 hearing to consider the nomination, featuring a wide range of topics, largely broken down into key issue areas: disclosures and materiality; market structure; military family and consumer finance protections; housing; student loans; and CFPB authorities.
The committee, chaired by Sen. Sherrod Brown (D-OH), posed questions that led to discussions on a wide range of topics. Broken down into key issue areas, they include: disclosures and materiality; market structure; military family and consumer finance protections; housing; student loans; and CFPB authorities. Mr. Chopra, in his opening statement, discussed the mortgage markets and using the CFPB's authority to ensure that Americans can remain in their homes. In response to questions from the Committee, Mr. Chopra made it clear that as director, he would immediately focus on student lending as well as protecting veterans, enforcing the fair lending laws, and ensuring the equal treatment of small business owners.
Mr. Chopra also highlighted the particular role of innovation. He stressed that the Bureau should take a "hard look" at the nature of innovation in financial services and how data is used. Here, he focused on how emerging technologies might change the nature of credit reporting agencies and payment systems.
Traditional Areas of CFPB Regulatory Activity: The Mortgage Markets, Student Loans, and Military Lending
Mortgage Markets: Sens. Sherrod Brown, Elizabeth Warren, and Jon Tester asked questions relating to the mortgage industry and how Mr. Chopra, as director, would work to prevent foreclosures. To this end, as director, he committed to working with other federal and state regulators. Additionally, Mr. Chopra stated that the Bureau will enforce homeowner protections and monitor the markets for unlawful foreclosures.
Student Loans & Financial Products Targeted Toward Students: Sens. Jack Reed, Tina Smith, Raphael Warnock, and Robert Menendez asked questions about student loan lending, servicing, and collections. Mr. Chopra, who previously served as the Bureau's first Student Loan Ombudsman, committed the Bureau, under his direction, to working with the Department of Education and with state attorneys general to address what he described as student loan servicing inconsistencies.
Military Lending: Mr. Chopra stated that he would work with the Department of Justice, state attorneys general, and the Department of Defense on VA loan issues, as well as actively enforce the Servicemembers Civil Relief Act. In particular, he addressed questions about the treatment of service members in the credit reporting, servicing, and mortgage arenas.
The Future: A "Hard Look" at Innovation
Mr. Chopra addressed questions about the role of mobile applications, alternative credit data, and AI algorithmic tools concerning access and innovation.
He indicated that he would draw on his experience at the FTC and focused his response on how technology products can impact privacy, fair competition, and even compliance with money- laundering laws.
Mr. Chopra stated his belief that the entrance of large technology platforms to the financial services sector will be disruptive and will fundamentally change the market. He noted that the CFPB should balance competition and innovation. He explained that, in his view, a financial system should allow new entrants to enter and compete, and that dominant players in either technology or banking should not be able to block competition. Additionally, Mr. Chopra emphasized the need to understand how mass behavioral data collection impacts privacy and security. He cited the FTC settlement with Facebook to show how large technology companies' reliance on algorithms can result in discriminatory behavior toward consumers.
Some senators asked Mr. Chopra about his opinion on the potential for a multimember commission instead of a single director for the CFPB following Seila Law; others probed about committing the CFPB to rulemaking directives instead of enforcement actions to prevent a chilling effect on the market. Mr. Chopra assured these senators that he would follow the law and not expand CFPB's authority into areas that were guaranteed explicit carve-outs under Dodd-Frank. Mr. Chopra also stated that he would not revisit the invalidated indirect auto-lending guidance that Congress repealed under the Congressional Review Act.
He also reiterated that as director, he will insist that the Bureau seek more settlements with higher restitution numbers and not agree to no-fault settlement agreements.
It has been reported that consideration of Mr. Chopra's nomination may be delayed until the new Administration fills the FTC vacancy created by the resignation of former Chairman Joseph Simons, since if Mr. Chopra is confirmed by the Senate, he would need to resign from the FTC before he could be sworn in as CFPB director.