A packed regulatory agenda awaits Rohit Chopra — the Biden administration's choice to lead the Consumer Financial Protection Bureau — on everything from supervising fintech lenders to assessing mortgage servicers' pandemic response.
The only problem: It's still anyone's guess when he will get the job.
Chopra is still in a holding pattern eight months after being tapped by the White House to run the agency. Analysts attribute the delay primarily to
The White House likely has preferred to keep Chopra at the FTC while the commission addresses its own busy agenda.
“For Chopra, it's a game of musical chairs,” said Ed Mills, managing director and Washington policy analyst at Raymond James. “The Biden administration has prioritized antitrust action and the FTC over the consumer protections at the CFPB. If President Biden wants to pursue his regulatory agenda, there needs to be Senate confirmation.”
Biden’s nomination this week of Georgetown law professor Alvaro Bedoya to the FTC has led to speculation that Chopra will be confirmed in the next two months by a narrowly divided Senate, with Vice President Kamala Harris casting the deciding vote. Some believe Bedoya, who would take Chopra's FTC seat, could be confirmed at the same time Chopra is confirmed for the CFPB.
Because acting CFPB Director Dave Uejio has moved aggressively on so many Democratic-backed initiatives, the holdup in Chopra’s confirmation has not been seen as slowing down much of the bureau’s agenda.
“Behind the scenes, the day-to-day behavior of the CFPB is already where I would expect it to be under Chopra,” said Christopher Willis, a partner at Ballard Spahr and co-leader of the firm's consumer financial services group. “The agency is doing lots of new investigations, they’re doing examinations and there are already all kinds of policy initiatives that [Chopra] can lead the bureau into doing that are already in the hopper."
However, Uejio is likely leaving the biggest policy decisions for Chopra to resolve.
Some suggested the delay in the Senate confirmation process could hamper some of the CFPB's more complex priorities, like revisiting a rule to restrict payday lending. Rulemakings at the bureau tend to take awhile, and the CFPB by law must convene a small business review panel for any rule that affects small businesses.
"With the small-business requirement and the fact that you always want to have a rule effective before a potential change in administration, the window is closing," Mills said.
"What we saw in the Trump administration is that when the Senate stuck around, it was able to clear individuals through the nomination calendar," Mills added. "So it's still not imminent, but I could see a scenario where by the end of the year Chopra has been sworn in as director."
Once Chopra arrives at the CFPB, many expect he will announce a few large-scale initiatives including potentially reopening the small-dollar
“The CFPB is uniquely positioned to be the dominant regulator in the fintech space with their authority over nonbanks and service providers,” said Rachel Rodman, a partner and litigator at Cadwalader, Wickersham & Taft and a former senior counsel in the CFPB’s legal division. “The CFPB has the ability to do a larger participant rulemaking over installment lenders that would sweep in a lot of fintechs and completely set the playing field for this entire industry.”
Chopra will inherit an already-packed rulemaking agenda with a small-business data collection proposal released
The industry's pandemic response would also likely be high on Chopra's list of priorities.
Uejio has repeatedly warned mortgage servicers
“We're going to see just a flurry, a ton of foreclosures this fall and going into next year and there's going to be a lot of mortgage servicing issues with that,” said Eric Johnson, a partner at Hudson Cook.
Chopra is expected to look closely at whether mortgage servicers followed the Coronavirus, Aid, Relief, and Economic Security Act. The CFPB has signaled that servicers must work with borrowers on loss mitigation and hew to the law in not reporting delinquencies to credit bureaus.
“The agency is going to take a very hard line on any foot fault [by servicers] moving people through foreclosure, but also how they are processing and dealing with the forbearances and how they're documenting that consumers haven't been paying,” said Rodman. “The bureau is going to come down really hard and I don’t think there's going to be a lot of regulatory sympathy for servicers.”
Observers also generally expect bigger civil penalties, larger redress for consumers and a shift away from former CFPB Director Kathy Kraninger’s priority of resolving violations through the nonpublic supervisory process rather than enforcement.
Chopra also will use one of the CFPB's most potent weapons — the Dodd-Frank Act’s federal prohibition on “unfair, deceptive or abusive acts or practices,” or UDAAP — to continue a crackdown on payday and auto title lenders, among others.
Lawyers have already seen a stark increase in the number of investigations and enforcement actions since Democrats regained control over the CFPB.
“Investigations have increased quite a bit since acting Director Uejio came on and it really runs the gamut where you can’t peg it to one product or one industry,” said Johnson.
Chopra will have a full plate to deal with judging by the violations the CFPB described in its
“The priorities that the acting director has set out in terms of addressing people who have experienced COVID hardship and access to equal services will remain top priorities under Chopra,” said Rachel Rodman, a partner and litigator at Cadwalader, Wickersham & Taft and a former senior counsel in the CFPB’s legal division.
Many are bracing for Chopra to announce a major action against a large bank or fintech firm that will set the tone for his enforcement agenda.
“The CFPB has so many things on its agenda that what makes a big splash is to go after a big entity and hold them accountable,” Johnson said. “You get a consent order out of them and then use that as a springboard to show off everybody else, all the other players in that space, here's a bad actor.”
