President-elect Joe Biden has chosen Rohit Chopra to be the director of the Office of Consumer Financial Protection, and has taken advantage of a progressive ally of Senator Elizabeth Warren to lead the agency whose creation he advocated. The decision comes as Democrats consider ways to provide student loan relief to millions of Americans as part of a COVID-19 relief package.
Chopra, now commissioner of the Federal Trade Commission, helped launch the consumer agency after the 2008-09 financial crisis and served as deputy director, where he sounded the alarm about rising debt levels. student loans. Chopra previously served as deputy director of the CFPB, where he led the agency’s student loan efforts. He also served as a special adviser to the U.S. Department of Education.
In these roles, Chopra led efforts to foster competition in the student loan financing market, develop new tools for students, and secure repayments of hundreds of millions of dollars for borrowers who are victims of illegal conduct by school administrators. loans, debt collectors and for-profit university chains. .
Biden announced the move Monday, along with his intention to appoint 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, tightened supervision of the complex financial transactions that helped spark the Great Recession.
Biden’s choice of an expert with experience as a strong market regulator during the financial crisis to lead the SEC points to the goal of turning the Wall Street surveillance agency into an activist role after a deregulatory stretch during the Trump administration.
Consumer advocates praised the selections of Gensler and Chopra.
Gary Gensler “was not afraid to take Wall Street as chairman of the U.S. Commodity Futures Trading Commission and will return the SEC to an agency that protects small investors from risky practices and protects the financial system from dangerous actors.” said Ed Mierzwinski, said in a statement the senior director of federal consumer programs of the US consumer advocacy group PIRG.
Gensler, now a professor of economics and management at MIT’s Sloan School of Management, was deputy secretary of the Treasury in the Clinton administration and later headed the CFTC during Barack Obama’s tenure.
Gensler was a senior adviser to U.S. Senator Paul Sarbanes on the drafting of the Sarbanes-Oxley Act and was undersecretary of the National Treasury from 1999 to 2001 and deputy secretary of the Treasury of the financial markets from 1997 to 1999. Having worked for nearly 20 years at Wall Street Central, Goldman Sachs, Gensler surprised many by being a tough regulator of big banks as president of the CFTC.
Fluent in the nexus between politics and economic policy, Gensler was chief financial officer of Hillary Clinton’s 2016 presidential campaign against Donald Trump and Obama’s economic adviser on his 2008 presidential candidacy.
Gensler has been the leader and advisor to the Biden transition team responsible for the Federal Reserve, banking issues and securities regulation.
“Protecting unsophisticated investors”
Jay Clayton, a former Wall Street lawyer who led the SEC during the Trump administration, presided over a deregulatory push to soften rules affecting Wall Street and financial markets, as Trump promised when he took office. . The rules that, under the Dodd-Frank Act, tightened the reins of banks and Wall Street in the wake of the financial crisis and the Great Recession were intercepted.
“Gensler will leave the SEC far from making it easier for companies to raise money and protect unsophisticated investors,” said Erik Gordon, an assistant professor of business at the University of Michigan. “His history in the Obama administration leaves him with few friends on the Republican side, and he probably doesn’t care.”
The Republican House Financial Services Committee spokesman Patrick McHenry of North Carolina said Gensler’s reception of new financial technologies and cryptocurrency is positive. But he added: “I fear Democrats will want to pull the (SEC) away from the common ground of the bipartisan in an attempt to achieve its more partisan goals.”
Senator Sherrod Brown of Ohio, a senior Democrat on the Senate Banking Committee, who will become its chairman, said Gensler’s record as a regulator “shows that it will hold bad actors accountable and put the interests of families at ease.” workers in the first place “.
Brown said Chopra will return the CFPB to its core mission of protecting consumers and also “ensure that the agency plays a leading role in fighting 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 was given ample latitude to act alone, without having reached the agreement of the members of an agency board.
While enforcing consumer protection laws, the CFPB also gained powers to examine the practices of virtually any company that sells financial products and services: credit card companies, payroll providers, mortgage administrators, debt collectors. debts, for-profit schools, car lenders, transfer agents.
Frank critic of Facebook
The CFPB became a major target of conservative Republicans. Trump appointed then-White House budget director Mick Mulvaney as the CFPB’s acting director when Cordray left in November 2017.
Mulvaney had been a vocal critic of the consumer agency and had made profound changes to it, softening regulations on payday loans, for example, and withdrawing compliance efforts. The agency has been run by Trump-appointed Kathy Kraninger since December 2018.
As one of two Democratic commissioners for the five-member Federal Trade Commission, Chopra has been a outspoken critic of the practices of big business, especially tech giant Facebook. He has filed strong dissents about FTC shares against the company for privacy violations and alleged anti-competitive conduct, saying they didn’t go far enough.
“Rohit Chopra has the ideal background to start working at the CFPB,” Mike Litt, an advocate for the U.S. PIRG Education Fund’s consumer program advocate, said in a statement. “In his government service, he has used all available policy levers to protect consumers from corporate criminals. We could not be happier with his selection to restore the CFPB after three years of disastrous leadership.”