CFPB pick’s earlier statements form the basis for a hearing to confirm the review
Rohit Chopra, President Biden’s candidate for Head of the Consumer Financial Protection Bureau, doesn’t crush words about corporate misconduct.
As a Democratic member of the Federal Trade Commission appointed to the Trump administration, he accused Amazon of “cheating on its workers” for tipping drivers and saying the wireless data plans offered by AT&T had ” Victimized millions of Americans “trace of nearly 120 public statements.
Such comments could influence Republican lawmakers how to vote on their nomination and create a heated mood Confirmation Negotiation Tuesday when the Senate Banking Committee questioned him and the administration’s candidate to head the Securities and Exchange Commission, Gary Gensler.
“His opinion as the FTC commissioner is pretty illuminating,” said Alan Kaplinsky, senior counsel at Ballard Spahr, of Chopra.
Unlike former CFPB director Kathy Kraninger, a Trump official who had no experience in consumer finance, Chopra’s background in consumer protection includes not only his time at the FTC, but also previous work at the CFPB as a student loan ombudsman of the office.
In contrast to Kraninger’s more medium-sized approach, which is seen as more environmentally friendly for the industry, Chopra’s writings show that he is not afraid to publicly report bad behavior.
“If he thinks something is wrong and the executives have acted outrageously, he will go after them,” said Kaplinsky. “He’s not going to suffer kind fools.”
As a Democrat, Chopra has served the FTC under a legal construct that requires a minority of those appointed to regulators and commissions to come from a party other than the president. It was nominated in 2018 by then-President Donald Trump and went through Senate confirmation, which was unanimously voted for.
But his aggressive statements in the past, coupled with the power and high profile that comes with the CFPB job, could lead to some targeted questions from GOP lawmakers at his hearing and potential opposition from some Senate members. Democrats have a wafer-thin majority, and Vice President Kamala Harris has a groundbreaking vote.
Some critics may bristle Chopra’s use of more inflammatory language about business grievances than the tone set by Kraninger.
To some observers, Chopra recalls former CFPB director Richard Cordray, who issued press releases that pose a headline risk for large publicly traded companies. Jen Howard, Chopra’s chief of staff at the FTC, was the CFPB’s assistant director of communications under Cordray. If Chopra is confirmed, she is expected to become the CFPB’s chief of staff, sources said.
“He will be at least as aggressive as former director Cordray, if not more aggressive,” said Lucy Morris, a partner at Hudson Cook and former CFPB deputy enforcement director who worked with Chopra in the CFPB’s early years. “His statements are very powerful and the language is quite charged.”
His public comments and tweets provide a roadmap for how he would rule as the best cop in the country for enforcing consumer finance laws.
“He has a long history of consumer protection,” said Linda Jun, senior policy counsel with the Americans for Financial Reform Education Fund. “He believes in meaningful accountability. When people are injured and companies break the law, there must be consequences. “
The 38-year-old Chopra has been particularly aggressive about enforcing the FTC among large technology companies.
Earlier this month, when the FTC asked Amazon to pay $ 62 million to pay the fees it withheld from delivery drivers, Chopra issued a statement saying, “Amazon has nearly a third of the driver tips stolen to improve his own bottom line. “
When AT&T Mobility agreed to pay $ 60 million in 2019 to resolve FTC allegations that consumers were misled about their wireless data plans, Chopra wrote that the operator ” Subscribers got caught in “a bait-and-switch scam”.
“AT&T attracted subscribers with the promise of unlimited data, locked them in multi-year contracts with punishable termination fees, and then cheated on them by stifling their access unless they chose a more expensive plan,” he wrote.
In 2019, Chopra challenged the FTC’s $ 5 billion deal with Facebook over allegations that the company misled users about their ability to control the security of their personal information.
Chopra said he believes Facebook is likely to be more widely known that the FTC’s offer of immunity to Facebook’s officers and directors is “a giveaway”.
“Because behavioral advertising enables advertisers to use mass surveillance as a means to their unknown and potentially nefarious ends, Facebook users are exposed to propaganda, manipulation, discrimination and other harms,” he wrote.
At the same time, Chopra has taken positions that support the free markets, which reflects the interest in finding common ground with his critics.
“The government has long sought to create laws and regulations to structure and facilitate well-functioning marketplaces,” he said in a 2018 speech. “Are laws that protect an individual’s ability to contract and own property essential for functioning markets. “
Those who have worked with him say his aggressive approach is policy-driven and not personal.
“He’s very thoughtful, he thinks systematically about things, and he really thinks deeply about how to use the authority of the office,” said Morris.
At the FTC, he has criticized the agency for not using all of the tools in its arsenal to enforce the law.
“Breaking the law must be riskier than obeying it,” he wrote in a dissent.
In another he said: “I remain concerned that the FTC is not using its authority to the fullest extent to combat market abuse. This is another missed opportunity for the Commission. “
Chopra was the CFPB’s first student loan ombudsman for five years and testified often on Capitol Hill. Before joining CFPB, he was an associate at McKinsey & Co. for two years. A graduate of Harvard University, he received a master’s degree in business administration from the Wharton School of the University of Pennsylvania.
Two issues that banks, lenders, industry groups and Republicans surely weigh are his positions on fair lending violations and enforcement of the federal prohibition on “unfair, misleading or abusive acts or practices.” Chopra would likely revive the CFPB’s use of “disparate impact,” a legal standard used to punish lenders who inadvertently discriminate against minorities. In the meantime, many expect him to apply the UDAAP ban more broadly than Kraninger.
“I think we will see a reversal of former Director Kraninger’s policy regarding abusive acts and practices very quickly,” said Robert Goldenberg, attorney at Reed Smith. “There will be a more aggressive approach and scrutiny under the new administration, and I think that approach will often be in line with the government’s focus on addressing systemic racism issues.”
Last year Kraninger new guidelines issued Define what constitutes an “abusive” act.
“I am sure we will see a reversal of this [abusive standard] quick, ”said Goldenberg.
Discrimination and racial justice issues are another area where the CFPB, in accordance with the Biden government, plans to crack down on financial corporations. Chopra has written extensively on how agencies should deal with unintentional discrimination. He’s also likely to be skeptical about lenders using artificial intelligence and alternative credit data to draw borrowers.
In a case last year where the FTC accused a Honda car dealer in the Bronx, New York, of illegally discriminating against black and Hispanic families by charging them higher interest rates than white customers, Chopra wrote, “The Different impact analysis is an important tool to uncover these hidden forms of discrimination. “
“As machine learning and predictive analytics become more prevalent, the FTC should use its injustice agency to combat discriminatory algorithms and practices in business,” he wrote.
Acting CFPB director Dave Uejio already has one aggressive agenda. According to Chopra’s FTC comments, auto lenders are likely to be targeted by the CFPB as well as lenders, mortgage service providers, and collection agencies. The agency is also likely to take a tougher stance on lenders, including banks, who defraud immigrants, the elderly, and members of the military.
Large banks and financial firms involved in wrongdoing should also be on the alert, lawyers said.
High profile corporations “will get a lot more exposure and publicity than a nighttime scam firm Kraninger was looking for,” Kaplinsky said.
“We’re going to see a lot more focus on the bigger institutions and the bigger banks, like Cordray did when he went to every major bank for credit card add-on products,” he said. “I expect [Chopra] will be looking for something big to send everyone a message that the Kraninger era is over. “