WASHINGTON (AP) – President-elect Joe Biden chose Rohit Chopra to be the director of the Consumer Financial Protection Bureau, counting on a progressive ally of Senator Elizabeth Warren to head the agency whose creation she defended.
Chopra, now commissioner of the Federal Trade Commission, helped launch the agency to the consumer after the 2008-09 financial crisis and served as deputy director, where the alarm was raised about skyrocketing student loan debt levels. The choice came at a time when Democrats are looking for ways to provide relief to millions of Americans on student loans as part of a COVID-19 relief package.
Biden announced the move on Monday, along with his intention to nominate Gary Gensler, former chairman of the Commodity Futures Trading Commission, as the next chairman of the Securities and Exchange Commission. Gensler, a former Goldman Sachs banker, stepped up oversight of the complex financial transactions that helped cause the Great Recession.
The choice of Biden by an expert with experience as a strong market regulator during the financial crisis to lead the SEC signals a goal of turning the Wall Street watchdog into an activist role after a period of deregulation during the Trump administration.
Consumer and investor groups praised the selections of Gensler and Chopra.
Gensler, now a professor of economics and management at MIT’s Sloan School of Management, was assistant secretary of the Treasury in the Clinton administration and later headed the CFTC during Barack Obama’s term. With a history of having worked for almost 20 years on the powerful Goldman Sachs on Wall Street, Gensler surprised many by being a strict regulator of large banks as president of the CFTC.
Fluent in the nexus between politics and economic policy, Gensler was chief financial officer of the 2016 Clinton presidential campaign against Donald Trump and Obama’s economic adviser in his 2008 presidential candidacy.
Gensler was a leader and consultant on the Biden transition team responsible for the Federal Reserve, banking issues and securities regulation.
Jay Clayton, a former Wall Street lawyer who headed the SEC during the Trump administration, presided over a deregulation action to soften the rules that affected Wall Street and the financial markets, as Trump promised when he took office. The rules under the Dodd-Frank law that tightened the reins of banks and Wall Street in the wake of the financial crisis and the Great Recession have been broken.
“Gensler will make the SEC avoid making it easier for companies to raise money and protect unsophisticated investors,” said Erik Gordon, assistant professor of business at the University of Michigan. “His history in the Obama administration leaves few friends on the Republican side – and he probably doesn’t care.”
The senior Republican on the House’s Financial Services Committee, Deputy Patrick McHenry of North Carolina, said Gensler’s responsiveness to new financial technologies and cryptocurrencies is positive. But he added: “I fear that Democrats want to move the (SEC) away from bipartisan common ground in an attempt to achieve its most partisan goals.”
Senator Sherrod Brown of Ohio, the senior Democrat on the Senate Banking Committee who is expected to become its president, said Gensler’s track record as a regulator “demonstrates that he will hold criminals accountable and put the interests of working families first.”
Brown said that Chopra will return the Consumer Financial Protection Bureau to its central mission to protect consumers and also “ensure that the agency plays a leading role in combating racial inequalities in our financial system”.
The CFPB was created at Warren’s request as an independent agency under the Dodd-Frank Act. Its director had ample freedom to act alone, without obtaining the agreement of the agency’s board members.
While enforcing consumer protection laws, the CFPB has also been empowered to review the practices of virtually any company that sells financial products and services: credit card companies, payment lenders, mortgage agents, debt collectors, colleges profitable, car lenders, money transfer agents. Chopra was deputy to its first director, Richard Cordray, while the agency took coercive action against a number of companies large and small and returned tens of billions of dollars to consumers harmed by illegal practices.
The CFPB has become a keen target for conservative Republicans. Trump appointed then White House budget director Mick Mulvaney as interim director of the CFPB when Cordray left in November 2017.
Mulvaney was a vocal critic of the consumer protection agency and made profound changes to it, easing regulations on payday loans, for example, and withdrawing enforcement efforts. The agency has been led by Kathy Kraninger, appointed by Trump, since December 2018.
As one of two Democratic commissioners on the five-member Federal Trade Commission, Chopra has openly criticized the practices of large companies, especially the tech giant Facebook. He expressed strong disagreements over the FTC’s actions against the company for breaches of privacy and alleged anti-competitive conduct, saying they did not go far enough.