Rohit Chopra confirmed as CFPB director; more dominoes to follow?

Following a familiar pattern, the vote for Chopra was 50-48, with all Democrats voting in favor and 48 Republicans voting no. Two Republican senators, Rand Paul of Kentucky and John Cornyn of Texas, did not cast a vote. In order to bring a vote to the floor, Vice President Kamala Harris had to cast the tiebreaking vote in a procedural motion.

Chopra’s nomination had stalled since his Senate confirmation hearing in March because, as a current member of the Federal Trade Commission (FTC), his presence preserved a 3-2 Democratic majority at the agency. With Chopra set to transition to the CFPB, attention shifts to the confirmation status of President Joe Biden’s nominee to replace him: Alvaro Bedoya, founding director of the Center on Privacy & Technology at Georgetown Law.

Once Chopra takes the reins at the CFPB from Acting Director Dave Uejio, the agency is likely to return to its roots as a pugnacious defender of consumers through the pursuit of enforcement actions and large fines against companies it deems to have abused them. Chopra is a protégé of Sen. Elizabeth Warren (D-Mass.), who helped found the CFPB. He worked at the agency as assistant director and student loan ombudsman from 2010-15.

In an email to CFPB staff, Uejio said he expects Chopra to take over as director late next week.

“This is a moment that we have been anticipating and preparing for,” Uejio said in the email, which was provided to Compliance Week by the CFPB public affairs office. “The next step is for President Biden to sign [Chopra’s] commission and for him to formally leave his role as a Commissioner of the Federal Trade Commission. Until these steps are completed, which we anticipate will occur by late next week, I will remain in my role to ensure a smooth transition.”

Chopra joined the FTC as a commissioner in 2018.

BIG: We just confirmed Rohit Chopra as Director of the @CFPB

Under Obama, he worked at CFPB protecting students from unscrupulous practices of student loan providers

With his confirmation, CFPB will return to fighting for people—not big financial institutions like under Trump

— Chuck Schumer (@SenSchumer) September 30, 2021

Warren welcomed the news of Chopra’s confirmation, tweeting, “He is a terrific champion for consumers & will be a fearless leader of the Bureau. Let’s get to work!”

Senate President Chuck Schumer (D-N.Y.) tweeted, “With his confirmation, CFPB will return to fighting for people—not big financial institutions like under [President] Trump.”

Republicans were equally forceful in their opposition.

“I have grave concerns that Commissioner Chopra would return the CFPB to the lawless, overreaching, highly politicized agency it was during the Obama administration,” said Sen. Pat Toomey (R-Pa.) in a statement issued Thursday. “The CFPB was created by Democrats through the Dodd-Frank Act as arguably the most unaccountable agency in the history of the federal government.”

The CFPB director oversees a $600 million budget and a 1,600-member workforce, according to the agency’s website.

Tony Alexis, partner at Goodwin who once served as the CFPB’s assistant director and head of enforcement, said Chopra’s appointment “ushers in an era that is likely to be more in line with the reasons the CFPB was created in Dodd-Frank.”

“I would expect a focus on collaborating with other federal and state agencies that can address multiple issues during a single investigation and finding remedies that would make adversely impacted consumers whole for the specific alleged harms settled in CFPB enforcement actions,” he said. “Having worked with Rohit at the CFPB, I expect he will be thorough, energetic, and will work with all sides to find solutions to matters before the CFPB.”

Bryan Schneider, partner at Manatt, Phelps & Phillips and former associate director of the CFPB’s Supervision, Enforcement and Fair Lending division, said the agency under Chopra “will likely use their enforcement tool as option No. 1, as opposed to other tools at their disposal.”

Schneider said he expects Chopra to focus the Bureau’s attention on how the COVID-19 pandemic continues to negatively affect consumers, particularly as it relates to supervision of firms that service home mortgages, now that the federal foreclosure moratorium was lifted July 31.

“This is a critical transition period back to normal, and I think anyone servicing mortgages can expect a lot more scrutiny,” he said.

Other industries and areas of focus for a Chopra-led CFPB could include whether a firm’s lending practices and advertising are excluding certain populations because of race or income levels and whether student loan servicing companies are adequately discharging all their obligations, he said.

During his tenure at the FTC, Chopra has spent significant time examining the abuses of Big Tech, and that will likely translate to an increased scrutiny of some of the artificial intelligence and machine learning tools some firms use to determine eligibility to credit, Schneider added.

“I think given his previous attention to this issue, the Bureau will be suspicious of that technology,” he said.

Under the CFPB’s first director, Richard Cordray, huge fines against some of the largest financial institutions in the country were the norm. In 2014, the agency extracted more than $4 billion in penalties in 23 enforcement cases. Under two directors during Trump’s term, Mick Mulvaney and Kathy Kraninger, the agency never topped $1 billion in fines in any given year.

Cordray told Compliance Week last year the CFPB under Trump had been reduced to a shell of its former self.

“I think they need to ramp up enforcement. It’s dropped dramatically,” he said.