New leader cites triad of key goals for CFPB
(Oct. 29, 2021) Stimulating greater competition in consumer financial markets, sharpening focus on repeat offenders, and restoring “relationship banking” make up the “path forward” for CFPB, its director told a House committee this week.
Appearing before the House Financial Services Committee, Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra outlined the focus for the agency during his term. He was sworn in Oct. 12 for a five-year term (after Senate confirmation Sept. 30), subject to the will of the president. (Chopra appeared before the Senate Banking Committee this week also, repeating the goals he outlined before the House panel.)
“The CFPB intends to faithfully and fairly administer the consumer financial laws entrusted to the agency by Congress,” Chopra said. “We must use our tools to promote an equitable and inclusive recovery,” he added, referring to the economic condition of the country.
In stimulating “greater competitive intensity,” Chopra asserted that there are many places where greater competition would benefit households and businesses. “For example, I am concerned that there is a dearth of competition in the mortgage refinance market for families with lower balance mortgages,” Chopra said. “The lack of refinancing may disproportionately affect communities of color and others that are historically disadvantaged.”
Regarding credit card and savings interest rates, the CFPB director hinted the bureau would be looking at those areas. “There is also evidence to suggest that many Americans could be paying lower interest rates on their credit cards or earning higher interest rates on their savings,” he said.
He also said the agency would keep “a close eye on practices that might impede competition.” Chopra said the bureau would listen to local financial institutions and “nascent competitors” on the obstacles they face when challenging more dominant players, “including in big tech.”
In sharpening focus on repeat offenders – especially those that violate agency for federal court orders – Chopra said those who violate orders and cause “ongoing harm to families and low-abiding businesses” must be stopped. He said his agency intended to work closely with state regulators and other federal banking agencies (such as the OCC) to “fashion appropriate remedies for repeat offenders.”
In restoring relationship banking, Chopra indicated that automation and algorithms more and more define the consumer financial services market. He charged that results in less transparency into how credit decisions are made. In some cases, he added, those “big data” practices “can unwittingly reinforce biases and discrimination, undermining racial equity.”
He also tied credit reporting, and other industries, to his call for restoring relationship banking, charging that consumers are often not the customer and lack leverage to get problems fixed. “The inability to cut through red tape and get help in one’s financial life can be a major obstacle when seeking a job or when applying for credit,” he said. “Preserving relationship banking is critical to our nation’s resilience and recovery, particularly in these times of stress.”
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