CFPB changes expected as Biden administrator settles in


As reported, President-elect Joe Biden has appointed Rohit Chopra, Commissioner at the Federal Trade Commission (FTC), head of the Consumer Financial Protection Bureau (CFPB), replacing Kathy Kraninger as director (who remains in her post for a term that technically extends until 2023 , but is likely to be replaced by Biden).

It remains to be seen what the incoming leadership might do, but as previously reported in this space, Chopra, in his future role as FTC commissioner, has been known as an aggressive executor.

The CFPB, of course, was tasked with enforcing financial regulations and protecting consumers (settlements in 2019 amounted to $ 777 million).

And, by policy, Chopra is a “strong consumer advocate aligned with Senator Elizabeth Warren (Democrat of Massachusetts)”. Warren helped set up the agency itself under the Dodd-Frank legislation of 2010, with an official debut the following year.

We will probably exceed the existential debates that marked the CFPB during the years of the Trump administration. And while Chopra needs to be confirmed by a Senate where the Democratic Party has little leeway, there is at least a stated roadmap.

Earlier this month, the CFPB task force on federal consumer finance law released a report with a number of recommendations.

Among these recommendations (numbering about 100 and intended for the CFPB itself, Congress, and state and federal regulators): authorize the CFPB to license non-depository institutions that provide lending, money transmission and payment ; expand access to the payment system to include unbanked and underbanked consumers; and work “with other agencies to create a unified regulatory regime for new and innovative technologies providing similar services to banks”.

Politico also notes that the agency, under Chopra’s leadership, should initially focus on fair lending laws.

At a high level, Politico reported, “Chopra can move quickly to restore the Office of Fair Lending, sidelined by former interim director Mick Mulvaney in 2017, to its original position, allowing staff fair loans to rely on both supervisory and enforcement tools to combat discrimination. “

A look at payday lenders

Chopra would also likely devote efforts to uncovering (and prosecuting) the abusive practices of payday lenders.

It remains to be seen what happens to rules that earlier in the Trump administration would have required verification of borrowers’ income and ability to repay debt. more specifically, payday loans. This rule was scrapped last year, and it is likely that the underwriting arrangements will be reviewed in the new administration.

As for the payday loans themselves, PYMNTS search found that six in ten Americans live paycheck to paycheck, and about 24% don’t earn enough to cover even these basic expenses. Moreover, in 2018, well before the pandemic, PYMNTS ‘Financial Invisibles report found that 12% of sampled consumers were using payday loans and did not have a credit card.

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