One can see why the Chamber is nervous. In the nine months since the Senate approved the nomination of Chopra, a protege of Sen. Elizabeth Warren (D-Mass.) who previously served on the Federal Trade Commission, he has initiated a wide-ranging investigation into “junk fees,” the money banks and credit card companies charge consumers for everything from late payments on credit cards to checking account overdrafts. The CFPB has also put financial companies on notice that it will not allow AI-based credit decisions to replicate preexisting racial inequities. It’s looking into the burgeoning “buy now, pay later” apps, and how the tech giants are collecting and using information on consumer-payment behavior. Chopra has also made it clear that the days of slap-on-the-wrist fines are over, and that repeat offenders will face serious financial consequences.
But radical? Please. The only “radical” action Chopra has taken is using existing federal law to start to restore the balance of power between American consumers and the banks, credit card companies and financial technology companies that are supposed to be serving them, and doing so in a way that shows he means business.
I sat down with him via Zoom last week, before the Chamber went public with its campaign, but after many complaints from the financial services sector that he was an out-of-control Washington “bureaucrat” (as the Wall Street Journal recently called him) steamrolling over Beltway mores in service to his anti-industry vendetta.
“I think the largest firms are much more accustomed to having a relationship with their regulators that is more akin to friendship than to a traditional relationship between a regulator and a regulated entity,” Chopra told me.
Chopra is already getting results — even before the CFPB takes regulatory action. After a CFPB report revealed that banks earned $15 billion annually when customers overdrew their accounts, a number of banks, including Capital One, Citibank, JPMorgan Chase and Bank of America quickly moved to either eliminate or reduce their overdraft fees.
Similarly, in March, the CFPB announced it would review how the credit reporting industry handles the $88 billion in medical debt listed on the credit reports of individual Americans, including how and when errors are addressed, so that people do not feel pressured to pay money they might not even owe. In response, Equifax, Experian and TransUnion, the three largest credit bureaus, quickly announced they would remove medical debt from individual reports as soon as it is paid off, and no longer list amounts in arrears under $500.
These sorts of moves leave opponents scrambling, lashing out like cartoon villains. Sen. Patrick J. Toomey (R-Pa.), who claimed the CFPB “bullied lenders and credit rating agencies” when it came to the matter of medical debt, said it could “discourage” people from paying their doctor bills. As for the Chamber, it would like you to know that when Chopra bashes “junk fees,” he wants to “vilify legal products that have well-disclosed terms.”
But everyone knows many consumers skip the fine print. And disclosure is not always good enough. “In today’s economy, very large firms have an enormous power over each of us. And in many cases we don’t even have the ability to negotiate. We sign boilerplate language, we click yes on terms of service,” Chopra pointed out.
The Chamber is also alleging that a regulatory revision that the CFPB is undertaking to combat discrimination by financial firms is in violation of federal law. The agency counters that this — along with all the other parts of the Chamber attack — is balderdash. “Scare tactics,” a CFPB spokesperson said in an emailed statement Tuesday. “We remain focused on ensuring fair, transparent, and competitive markets for American consumers and honest businesses who play by the rules.” The CFPB did not respond to the personal attack on Chopra.
If Chopra’s adversaries have complained less in the past, it may be because they were benefiting from CFPB inaction. They had few if any negative words to say about President Donald Trump’s agency picks of Mick Mulvaney and his deputy, the thoroughly unqualified Kathy Kraninger. Mulvaney once described the CFPB as a “sad, sick” joke. Under Kraninger, corporate fines for malfeasance were a mere pittance compared to those issued during the Obama administration.
Chopra’s actions are not abuse. They are the absolute opposite: a plan of attack to even the scales in the increasingly unequal relationship between consumers and big business. No wonder the financial sector and its lobbyists are so enraged. But it’s a fight the rest of us should relish — and one that should make the Biden administration, which is less aggressive on so many other fronts, take note.