U.S. consumer watchdog lays out ambitious agenda to eye Big Tech, lending competition
(C) Reuters. FILE PHOTO: The seal of the Consumer Financial Protection Bureau (CFPB) is seen at their headquarters in Washington, U.S., May 14, 2021. REUTERS/Andrew Kelly/File Photo
By Katanga Johnson and Pete Schroeder
WASHINGTON (Reuters) -Chief consumer finance watchdog Rohit Chopra told U.S. lawmakers on Wednesday his agency wants to minimize foreclosures on struggling American homeowners and make consumer lending more competitive.
The Consumer Financial Protection Bureau (CFPB) will also scrutinize the efforts of technology giants to gain greater control over the flow of money in the economy; these “Big Tech” companies often offer real-time consumer payments systems and consequently control huge amounts of consumer data.
And, it will sharpen its enforcement focus on companies that repeatedly violate consumer finance laws.
Chopra, a longtime consumer advocate tapped by Democratic President Joe Biden to help address inequities in lending, outlined an ambitious agenda amid the continuing economic fallout from the coronavirus in his first hearing as CFPB director before members of the House of Representatives Financial Services Committee.
“In many parts of the country and in many individual neighborhoods, conditions remain fragile,” Chopra told the panel. “Many families continue to struggle to afford their mortgage and rent payments. Many small businesses are facing severe challenges to make ends meet.”
Chopra’s appearance will likely reinvigorate the CFPB’s status as a political lightning rod. Republicans have sought to handcuff the agency since its creation, calling it overpowerful and unaccountable.
“You have inherited an agency that was undermined by the Trump administration, which actively worked to reduce consumer protection and enable predatory behavior against the most vulnerable,” said U.S. Representative Maxine Waters (NYSE:WAT), who chairs the House panel.
“Thankfully, their efforts to eliminate the CFPB were not successful.”
Sworn in as the CFPB’s full-time director earlier this month, Chopra built his name as a fierce consumer advocate at the Federal Trade Commission, and previously helped Senator Elizabeth Warren set up the CFPB after it was created in 2010.
Chopra’s record as a corporate critic and experience at the agency will likely make him a potent director, say analysts.
“This hearing should serve as a reminder of both the bureau’s broad authority and Director Chopra’s capacity to effectively use the bureau’s toolbox,” said Isaac Boltansky, director of policy research for financial firm BTIG.
Just a few weeks into the job, Chopra made his mark when the CFPB ordered https://www.reuters.com/technology/us-consumer-watchdog-orders-tech-giants-turn-over-information-payment-systems-2021-10-21 Amazon.com Inc (NASDAQ:AMZN), Apple Inc (NASDAQ:AAPL) and Facebook Inc (NASDAQ:FB) to hand over information about how they gather and use consumer payment data.
He told lawmakers the agency will keep a close eye on practices that might impede competition by taking note of “the obstacles small local financial institutions face when seeking to challenge dominant incumbents, including in Big Tech.”
That push for clarity is part of a growing interest among regulators and lawmakers about the rapid adoption of technology in various financial products, ranging from cryptocurrency to new “buy now, pay later” lending products.
Democrats’ top policy priorities include boosting competition in the consumer finance sector by requiring financial companies to give consumers more control over their financial data — a concept known as “open banking https://www.reuters.com/business/exclusive-white-house-target-bank-mergers-financial-data-with-competition-order-2021-07-09.”
Chopra says he is studying open banking regulations in other countries, particularly the U.K., and is eager to review the agency’s comments. Analysts said they expected the CFPB to move ahead with an open-banking rule first proposed by the agency under the former Trump administration in coming months.
“I think (the open banking rulemaking) holds promise to really make sure there’s a more competitive environment; that consumers have more choices; and that there’s not just a handful of incumbents who control everything,” Chopra said.
“At the same time, we’re going to need to make sure we’re protecting privacy, security and other things that are critical.”
Chopra’s expansive agenda at the CFPB will also include revisiting https://www.reuters.com/business/sustainable-business/how-bidens-agencies-are-picking-apart-trumps-wall-street-friendly-measures-2021-04-12 several major rule easings ushered through under Republican leadership, particularly around debt collection and payday lending.
Advocates are eager to see Chopra erase industry-friendly changes ushered in under Republican leadership and impose tough new rules on the marketplace.
“We hope he will explain how he plans to supercharge the CFPB’s efforts to protect consumers from credit reporting mistakes, forced arbitration, overdraft fees and predatory loans,” said Michael Litt, a director at Washington-based U.S. PIRG, a consumer advocacy group.