Rohit Chopra is cracking down on big banks and big tech – and business groups say he’s out of control

By Eleanor Laise

Consumer advocates love the head of the Consumer Financial Protection Bureau and business groups are fighting him. As a result, he is on MarketWatch’s 50 list of the most influential people in the markets.

In March, Rohit Chopra was invited to give a virtual speech at the University of Pennsylvania, an Ivy League school known for producing finance-minded graduates who fill Wall Street’s corporate rosters. A graduate of Penn’s Wharton School, Chopra himself had been a member of this club. But he quickly established that he was no longer necessarily a friend, hatching a plan to rein in Wall Street and corporate rule breakers.

“My classmates, students and other alumni are now financiers, convicted felons and everything in between,” Chopra said in his soft tone, adding that when he was at Penn he “viewed financial regulators as ignorant and even a little corrupt”.

It wasn’t just chatter. Chopra had recently taken the reins of the Consumer Financial Protection Bureau, the federal regulatory agency responsible for overseeing consumer financial products, and he used his virtual visit to his alma mater to declare that a new sheriff was in town. He said regulators had “lost their credibility when it comes to arresting repeat offenders”, before ticking off a list of potential remedies that prompted Wall Street legal teams to start scribbling notes. Repeat corporate offenders, he added, could be held more accountable if regulators force them to divest certain product lines, revoke government-granted privileges such as access to federal deposit insurance, or personally penalized executives with financial penalties and even lifelong professional bans.

Seven months later, it’s clear that the ambitious Chopra, 40, is now leading an agency built to be powerful that has reached a new level of influence, say fans and critics of the new director. Born out of the financial crisis, the CFPB was launched in 2011 to enforce financial consumer laws and ensure fairness and transparency in financial products. The agency is designed to be nimble and independent, with a single director rather than a review board, and funding from the Federal Reserve instead of congressional appropriations. This structure has faced multiple legal challenges from industry groups and is under threat again, with a Federal Court of Appeal ruling in October that found the CFPB’s funding mechanism violates the Constitution’s separation of powers. .

In addition to warning repeat lawbreakers, Chopra — a former federal trade commissioner and CFPB student loans ombudsman — has found new muscle for the agency to flex. Chopra’s CFPB has stepped up its enforcement action, shutting down small lender LendUp Loans’ lending operations last year for alleged repeated regulatory violations, and in October suing an event recording company. for using an “online trickery” to sign up consumers for a subscription. discount club. This spring, the CFPB said it would use its “dormant” authority to review non-bank fintech companies, a fast-growing segment battling for a share of consumers’ wallets. The move adds to Chopra’s broader review of Apple (AAPL), Alphabet Google (GOOGL) (GOOGL) and other tech giants’ businesses in financial services, where he shared about his concerns about Big Tech’s payment products and consumer data collection.

Chopra has already reshaped the behavior of financial behemoths, observers say, such as when a wave of the nation’s biggest banks cut overdraft fees earlier this year following the director’s criticism of what he calls ” junk fees,” and when major credit reporting agencies changed their treatment of medical debt after the CFBP brought to light inaccuracies in credit reports. That influence stems in part from Chopra’s desire to sue major market players and hold executives personally accountable, consumer advocates say.

Chopra’s moves and future plans land him on MarketWatch’s 50 list of most influential people in the markets. Indeed, his actions reverberate far beyond the CFPB. Along with the office of branch manager comes a seat on the board of directors of the Federal Deposit Insurance Corp., where Chopra immediately made waves by lobbying, with the support of other board members, for a review of bank merger policy. Then-FDIC Chairman Jelena McWilliams objected to the document, saying in a Wall Street Journal op-ed that she was willing to work with the board on a version that “would better reflect the historical approach to the agency,” but that the trustees instead attempted “a hostile takeover of the FDIC’s internal processes, personnel, and board agenda.” McWilliams resigned following the spat and the Chopra-backed bank merger policy review moved forward.

Chopra is trying to calm perceptions of the power of her agency, which has long been a political lightning rod. “We do our best to be humble about the impact we’re having,” he told MarketWatch. At CFPB, he said, “we try not to say how things are going to be totally transformative.”

Tell that to the biggest business groups in the country. Chopra’s influence makes them bristle, consumer advocates say. The U.S. Chamber of Commerce this summer launched an ad campaign personally targeting Chopra, saying he “has an inflated and distorted view of his role and power and is pursuing his own ideological agenda at the expense of American consumers.”

Chopra “changes policy by executive order” rather than traditional rulemaking that requires public notices and comment periods, said Bill Hulse, vice president of the U.S. Chamber of Commerce’s Center for Competitiveness. of Capital Markets, to MarketWatch, pointing to the agency’s recent review manual update. which allowed him to research potential discrimination across the full range of consumer financial services. The Chamber, along with several other business and banking groups, sued the CFPB in late September, alleging the change exceeded the agency’s legal authority. The CFPB did not respond to the legal complaint.

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Shaped by the financial crisis

As an undergraduate at Harvard University 20 years ago, Chopra made no secret of his lofty ambitions. “I want to be the guy who stands up for the little guy,” the New Jersey native told the Harvard Crimson during his successful 2002 campaign for student body president. He called peers he deemed incompetent, saying during a debate that members of student government “often spend more time attending attendance than discussing issues that people care about,” according to the Crimson.

Like the CFPB itself, Chopra was shaped by the financial crisis, which unfolded while he was earning his MBA from Wharton and working for the consulting firm McKinsey. He’s always believed that “banking is part of the American dream in some way,” he told MarketWatch. “It’s like your way of climbing the economic ladder. But the fact that there was such systemic abuse in the banking industry to the point that it blew up the economy – and then they got a bailout? I think that really had an effect on me, he says. It also became clear to him “that the regulators were also compromised and they had all their priorities out of whack,” he said. It was a major moment in how I thought my career would progress.”

Chopra came to the CFPB in 2010, before it was officially launched, and began specializing in student debt, which was “the Wild West of financial regulation,” Mike Pierce, one of Chopra’s first recruits to the CFPB and now Executive Director of the Center for Student Borrower Protection. As the agency’s first student loans ombudsman, Chopra began issuing annual reports detailing issues borrowers were having with lenders and servicers, often documenting parallels between those issues and the mortgage servicing issues that contributed to the financial crisis. And in a 2012 speech, he pointed to the fact that outstanding student debt had crossed the $1 trillion mark, warning that excessive student debt could slow the recovery of the housing market.

“That’s when people in Washington started taking student debt seriously,” Pierce said. Chopra’s agenda-setting work during this time, he said, helped shape monumental changes in the student loan market over the next decade — including the announcement of the Biden administration this summer on canceling student debt.

‘Call a cat a cat’

For consumer advocates, Chopra’s turn at the helm of the CFPB is a throwback to the agency’s early years of effective consumer protection — albeit on steroids. Under its first director, Richard Cordray, the CFPB has struck major deals with market-leading companies, such as its 2014 order that Bank of America reimburse nearly $730 million to customers in connection with its marketing allegedly misleading complementary products for credit cards. After Cordray’s departure in late 2017, however, the agency faced criticism from consumer rights advocates, lawmakers and researchers who said its Trump-era actions — including the cancellation of payday loan regulation and the weakening of its enforcement office – benefiting the industry at the expense of consumer protection.

By the time Chopra returned to lead the CFPB last fall, he had had years to consider how to effectively wield the agency’s considerable authority — and in a rare point of agreement, the groups industry and consumer advocates say it uses every tool available. . Chopra “is fully aware of his authority and has really pushed it to the limit,” said Hulse of the United States House. Or as Ed Mierzwinski, senior director of the federal consumer program at the US Public Interest Research Group, puts it, “he amped the agency up to 11.”

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