The Biden transition team declined to comment.
The confirmation process is likely to be difficult, with Democrats narrowly controlling the Senate. The CFPB, Warren’s idea, has long been a favorite target of Republican lawmakers, who have criticized the agency’s strict regulations as an exaggeration by executives. They also opposed the way it was created, with a single director system that gave the leader a great deal of power and resources from the Federal Reserve, which means that the agency is not subject to the pressures of the Congressional appropriation process.
Chopra, an MBA from Wharton, worked as a consultant at McKinsey before joining the government. Throughout his tenure at the FTC, he pushed the agency to be more skeptical of private equity buyers and more aggressive in using its regulatory powers to control business.
Previously, he served as assistant director of the CFPB and as an ombudsperson for student loans after the agency opened its doors in 2011. He has been Federal Trade Commissioner since 2018.
Thanks to a Supreme Court decision last year, Biden can fire the current CFPB director, Kathy Kraninger, on the first day. But erasing President Donald Trump’s industry-friendly brand in the bureau, which lifted scrutiny and weakened Obama-era rules, could take years.
One of Chopra’s first likely priorities, restoring the agency’s focus on enforcing fair credit laws, will be relatively easy to achieve. The other two important items that former employees hope to see on the new director’s agenda – cracking down on payday creditors and building solid case law on what counts as an “abusive act or practice” under Dodd-Frank law – could not be fulfilled until mid-term of Biden as president.
Chopra can act quickly to restore the Office of Fair Lending, sidelined by former acting director Mick Mulvaney in 2017, to its original position, allowing the fair lending team to use oversight and enforcement tools to combat discrimination.
Reversing the revised Trump administration payday rule would take longer. The new rule launched in July rescinded a fundamental requirement of the agency’s controversial previous regulation that repressed the sector, which offers small emergency loans to clients with very high interest rates, often arresting low-income borrowers in costly debt cycles.
The previous rule, launched in October 2017 just before then-director Richard Cordray stepped down, would have required creditors to check borrowers’ income and debts to assess whether they could repay the loans. The CFPB overturned that requirement with the new rule this year, sparking protests among Congressional Democrats, who called for an investigation by the inspector general over allegations of undue political influence in the process of drafting the rule.
Consumer groups have filed a lawsuit to overturn the new rule – claiming that the agency violated the Administrative Procedure and Dodd-Frank Act – so it is possible that the courts will overturn it.
Without court intervention, reviewing and relaunching the rule would mean returning to square one – based on previous research, explaining in a proposal why the latest version of the rule restores several provisions, allowing for a lengthy notice period of comment and definition of a implementation date that gives the industry enough time to comply. This means that payday creditors may not face any new consequences until almost a decade after the bureau began efforts to crack down on the sector under Cordray.
Chopra is also likely to move to build a more aggressive application of the “abusive” standard under Dodd-Frank, a pivot away from the more relaxed orientation the agency issued this year.
“Unfair or deceptive acts or practices” were banned a long time ago by federal law, but Dodd-Frank in 2010 added “abusive” to the ban, known as UDAAP, and gave the CFPB regulatory and enforcement authority.
Business groups have been lobbying for years for clarification on what is considered abusive, and the agency said earlier this year that it would take a contained approach to accusing companies of abuse violations, based in part on the fact that companies are acting good faith. Consumer groups immediately criticized the unlimited “good faith” exemption.