Chopra Testifies Before Congress

The CFPB delivered its Semi-Annual Report to Congress triggering Director Chopra’s appearance before key congressional committees. Yesterday, he went before the House Financial Services Committee and this morning before the Senate Banking Committee. During the hearings the Director outlined an ambitious agenda and answered legislators’ questions.

Director Chopra noted, “The CFPB will use its tools to promote an equitable and inclusive recovery, I hope to focus attention on ways to stimulate greater competitive intensity in consumer financial markets and sharpen my focus on repeat offenders, particularly those that violate agency or federal court orders.”

Chopra addressed key details of his agenda as legislators, both in person and virtually. Chopra was questioned for more than four hours yesterday and an additional three hours today by the Senate Banking and Housing Committee.

As you can see from the memos prepared by lawmakers, the Republicans and Democrats see the role of the CFPB differently:

• House Financial Services Committee Majority Staff Memo (Democrats)
• House Financial Services Committee Republican Staff Memo
• Senate Banking and Housing Committee Staff Memo

Little Mention of Debt Collection at HFSC Hearing

Despite the length of the hearing yesterday, there was only one legislator, Representative Rashida Talib (D-MI-13), who asked a debt collection related question. Primarily Rep. Talib focused on her proposal to eliminate medical debt from credit reports, request to add an electronic communication category to the CFPB complaint data base, and finally her concern that debt collectors deceive consumers to restart the tolling of the statue of limitations.

Director Chopra indicated that there were no plans to change the complaint data base but would explore both the database idea and look at the time-barred debt rule.

What Can We Expect from a Chopra CFPB?

HFSC Hearing Takeaways:

• In response to Rep. Talib questioning, Chopra responded that equitable post-pandemic economic recovery requires a very close look at debt collection and credit reporting.
• The larger the market participant, the larger the target. Chopra reflected on his tenure at the FTC and “ the bullying of small businesses” when large companies like Facebook were let off the hook. Chopra said, "that though the large players repeatedly break the law, it feels like nothing happens." Look for the CFPB to use resources on the largest firms that are allegedly engaged in “nationwide harm”.
• No support for government-run credit reporting agency. Though the Biden administration proposed the creation of a credit reporting agency to compete with the big three, Chopra testified that he doesn’t know how mechanically it would work and “would be an enormous undertaking”.
• “Abusive” practices to be defined through enforcement. When asked by minority leader, Representative Patrick McHenry (R-NC-10) if a policy statement defining “abusive acts and practices” would be forthcoming. Chopra indicated that he wants confusion to be clarified through case law. A combination of court statutory interpretation coupled with rules and guidance will result in “durable jurisprudence”.
• Safeguarding the nation’s payment system is critical to the economy. When asked by Representative Frank Lucas (R-OK-3) what was behind Chopra’s request last week of Apple, Facebook and other tech firms, to turn over information on consumer payment data, Chopra responded he is “very worried” about these tech giants taking control of the “global flow of payments”. He further stated, “safeguarding our nation’s payment system is so critical to our economy…small businesses…[and] our national security."

Senate Banking Hearing Takeaways:

• Contentious allegations that CFPB pushed out career employees based on political affiliation remains front and center for Republicans. Chopra advised he will cooperate with Inspector General, by being “transparent wherever [they] can" and by “observing customary protocols”.  
• Student loans have been at the forefront of many legislators’ questions. Transfer of accounts from one servicer to another and Public Services Loan Forgiveness Program challenges and failures remain a priority. Chopra, noted the CFPB’s “role in supervision” of student loan servicers’ transfer of accounts, and how a “resilient eco-system, is to prevent a cascade of wrong bills” being forwarded to consumers.
• Protection of Service Members and their families: Chopra testified a “refresh” of how the CFPB enforces the Service Member Civil Relief Act (SCRA) is required. Bad actors take advantage of active and even deployed service members results in poor credit reports and loss of security clearances.