U.S. consumer watchdog lays out ambitious agenda to monitor big tech and loan competition
WASHINGTON, Oct.27 (Reuters) – Rohit Chopra, the chief consumer finance watchdog, told U.S. lawmakers on Wednesday that his agency wanted to minimize foreclosures on distressed U.S. homeowners and return consumer loans more competitive.
The Consumer Financial Protection Bureau (CFPB) will also examine the efforts of tech giants to better control the flow of money in the economy; these “big tech” companies often offer real-time consumer payment systems and therefore monitor huge amounts of consumer data.
And, it will increase its enforcement on companies that repeatedly break consumer credit laws.
Chopra, a longtime consumer advocate asked by Democratic President Joe Biden to help address lending inequalities, laid out an ambitious agenda amid the continuing economic fallout from the coronavirus during his first hearing as CFPB director before members of the House of Representatives Financial Services Committee.
“In many parts of the country and in many neighborhoods, conditions remain fragile,” Chopra told the panel. “Many families continue to struggle to pay their mortgages and rent. Many small businesses face serious challenges making ends meet.
Chopra’s appearance is likely to reinvigorate CFPB’s status as a political lightning rod. Republicans have sought to handcuff the agency since its inception, calling it overkill and irresponsible.
“You inherited an agency that has been undermined by the Trump administration, which has actively worked to reduce consumer protection and allow predatory behavior against the most vulnerable,” said U.S. Representative Maxine Waters, who chairs the House panel.
“Fortunately, their efforts to eliminate the CFPB were unsuccessful.”
Sworn in as a full-time director of the CFPB earlier this month, Chopra has made a name for himself as a strong consumer advocate at the Federal Trade Commission, and previously helped Senator Elizabeth Warren set up the CFPB after its creation in 2010.
Chopra’s track record as a business critic and his experience at the agency will likely make him a powerful executive, analysts say.
“This hearing should serve as a reminder both of the broad authority of the office and of Director Chopra’s ability to effectively use the office toolbox,” said Isaac Boltansky, director of policy research for financial firm BTIG.
Just weeks after taking office, Chopra made his mark when the CFPB ordered Amazon.com Inc, Apple Inc and Facebook Inc to pass on information on how they collect and use consumer payment data.
He told lawmakers the agency would keep a close eye on practices that could hamper competition by taking note of the “hurdles that small local financial institutions face when seeking to challenge dominant incumbents, including in Big Tech “.
This drive for clarity is part of a growing interest among regulators and lawmakers in the rapid adoption of technology in a variety of financial products, ranging from cryptocurrency to new ‘buy now, pay later’ loan products.
The Democrats’ top policy priorities are to boost competition in the consumer credit industry by requiring financial companies to give consumers more control over their financial data – a concept known as “open banking.”
Chopra says he is studying open banking regulations in other countries, particularly the UK, and is eager to consider the agency’s comments. Analysts said they expected the CFPB to move forward with an open banking rule first proposed by the agency under the former Trump administration in the coming months.
“I think (open banking regulation) really promises to ensure a more competitive environment, that consumers have more choice and that there aren’t just a handful of incumbents who control everything,” said Chopra.
“At the same time, we will need to make sure that we protect privacy, security and other essentials.”
Chopra’s broad agenda at CFPB will also include the review of several major rule relaxations ushered in under Republican leadership, particularly with regard to debt collection and payday loans.
Advocates are eager to see Chopra erase pro-industry changes introduced under Republican leadership and impose tough new rules on the market.
“We hope he explains how he plans to boost CFPB’s efforts to protect consumers from credit report errors, forced arbitrage, overdraft fees and predatory lending,” said Michael Litt, director of US PIRG, a Washington-based consumer advocacy group.
Reporting by Katanga Johnson and Pete Schroeder in Washington; Editing by Megan Davies, Chris Reese, Jonathan Oatis and Aurora Ellis
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