Consumer Financial Protection Bureau Director Rohit Chopra has some thoughts to share. The leader of the financial sector’s most feared agency talked to us about the year ahead for the CFPB.
Our conversation covered the agency’s bruising run of court battles, Chopra’s thoughts about a new financial product that lawmakers have been toying with and how he’s actively working with Congress to overhaul privacy law.
Litigation nation: Advocates for the largest banks and the business community have dragged the CFPB into court more than once under the Biden administration. The latest is a challenge to the agency’s credit card late fee reforms.
But that legal effort has gotten bumpy fast. A federal district judge chastised the industry’s initial approach and even suggested they may be judge shopping by bringing their case to Fort Worth, Texas.
Regulators aren’t exactly famous for talking about active litigation. But Chopra didn’t shy away from the topic, telling us it wasn’t just the CFPB in the legal limelight these days. “You’re seeing it across the board across all agencies,” Chopra said.
Chopra also said his agency continues to be responsive to how a conservative-dominated Supreme Court is changing the legal landscape. “We have focused quite a bit on textualist looks at our laws,” the director said.
Unfinished business: Chopra uses the law itself as another point of defense for the CFPB — specifically, bits of statute that have never been implemented by regulators. Some of those gaps are glaring, like long-delayed reforms in executive compensation regulation.
The CFPB takes a lot of hits from Republicans for being “aggressive” and even power-hungry. But for Chopra, these kinds of regulatory delays are the problem — not acting on the law as written.
“When [rules and regulation] take forever because of litigation — sometimes frivolous, maybe sometimes not — in many ways, that can be an abrogation of Congress’ prerogatives to fulfill what it wants to see done,” Chopra said.
That’s a key part of the pitch we’ve heard from the CFPB on its late fee crackdown. Regulators wanted to reopen part of the Federal Reserve’s implementation of the 2009 CARD Act that allowed for some fees to remain pegged to inflation.
“We have identified a very clear prohibition in credit card law that bans unreasonable fees. And we found that the credit card industry was exploiting a loophole for years to get an extra $10 billion out of it,” Chopra said.
“It’s irresponsible for us to not look at that because a credit card is the most common lending product in America,” he added.
Earned wage access: Congress has taken an interest in earned wage access, a financial product where workers can access some portion of an upcoming paycheck early. Chopra, too, has an interest here.
The CFPB announced back in January that it would be updating its guidance around EWAs — first published under the Trump administration. The big question for the product’s advocates is to what extent traditional consumer protection standards might apply.
This is an area where Chopra is keeping his cards a little closer to the chest. But when we asked for a preview of his thinking, he said the CFPB would be focused on distinguishing how EWAs are marketed versus how they may operate in practice.
Chopra also mentioned — somewhat ominously — that it was “clear” that “a number of players have been misinterpreting the guidance that was issued on this a few years ago.“
Privacy overhaul: Chopra has a lot of thoughts about the future of data privacy, and he told us that there’s a big role for lawmakers to play here. This is an area where he’s even gotten some policy love from House Financial Services Committee Chair Patrick McHenry (R-N.C.).
“Gramm-Leach-Bliley [Act] privacy provisions are so outdated for the world we live in,” Chopra said, referring to a landmark 1999 law that, among other things, established some of the country’s first federal privacy standards for banks.
The director said he’s fielded a lot of lawmakers’ meetings about reining in the abuses of data brokers and privacy reforms writ large.
“I’ve really gotten some very good counsel on ways to push things forward that maybe aren’t so flashy, but that are going to make a big difference for people over the long run,” Chopra said.
— Brendan Pedersen
