President-elect Joe Biden has elected Rohit Chopra as director of the Consumer Financial Protection Bureau, calling on a progressive ally of Senator Elizabeth Warren to lead the agency whose creation she defended. The choice comes as the Democrats seek ways to provide student loan relief to millions of Americans as part of a COVID-19 aid package.
Chopra, now a commissioner at the Federal Trade Commission, helped start the consumer agency after the 2008-2009 financial crisis and served as its deputy director, raising the alarm over skyrocketing student loan debt. Chopra was previously the Deputy Director of the CFPB, where he led the student loan agency efforts. He also served as a special adviser to the United States Department of Education.
In these roles, Chopra led efforts to drive competition in the student loan finance market, develop new tools for students, and secure hundreds of millions of dollars in repayments for borrowers who have been the victims of illegal behavior by loan managers, collection agencies, and college chains with profit motive. .
Biden announced the move Monday, along with his intention to nominate Gary Gensler, a 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 up surveillance of the complex financial transactions that sparked the Great Recession.
Biden’s choice of an expert experienced as a strong market regulator during the financial crisis to lead the SEC hints at a goal of turning the Wall Street watchdog agency into an activist role after a deregulatory spell during the Trump administration.
Consumer advocates praised Gensler and Chopra’s selections.
Gary Gensler “was unafraid to include Wall Street as chairman of the US Commodity Futures Trading Commission and will return the SEC to an agency that both protects small investors from risky practices and protects the financial system from dangerous actors,” said Ed Mierzwinski . senior director for federal consumer programs at consumer advocacy group US PIRG, said in a statement.
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 tenure.
Gensler was senior adviser to U.S. Senator Paul Sarbanes on the writing of the Sarbanes-Oxley Act and was Secretary of State to the Treasury for Domestic Finance from 1999 to 2001 and Assistant Secretary of the Treasury for Financial Markets from 1997 to 1999. For nearly 20 years with Wall Street superpower Goldman Sachs, Gensler surprised many by being a strict regulator of major banks as CFTC chairman.
Fluent in the relationship between political and economic policy, Gensler was the chief financial officer of Hillary Clinton’s presidential campaign against Donald Trump in 2016 and an economic adviser to Obama in his 2008 presidential bid.
Gensler was a leader and advisor to Biden’s transition team, responsible for the Federal Reserve, banking and securities regulation.
“Protecting untouched investors”
Jay Clayton, a former Wall Street attorney who led the SEC during the Trump administration, presided over deregulatory pressure to soften the rules for Wall Street and the financial markets, as Trump promised when he took office. Rules tightening the reins of banks and Wall Street in the wake of the financial crisis and the Great Recession under the Dodd-Frank Act have been throttled.
“Gensler will tip the SEC for not making it easy for companies to raise money and to protect simple investors,” said Erik Gordon, an assistant professor of business at the University of Michigan. “His history in the Obama administration leaves him few friends on the Republican side – and he probably doesn’t care.”
House Financial Services Committee senior Republican, Rep. Patrick McHenry of North Carolina said Gensler’s receptivity to new financial technologies and cryptocurrency is positive. But he added, “I fear the Democrats will want to steer the (SEC) away from bipartisan interfaces in an effort to achieve their most partisan goals.”
Ohio Senator Sherrod Brown, the senior Democrat of the Senate Banking Committee to chair, said Gensler’s reputation as a regulator “shows that he will hold bad actors accountable and put the interests of working families first.”
Brown said Chopra will return the CFPB to its central mission to protect consumers and also ensure that the agency takes a leading role in combating racial inequalities in our financial system.
The CFPB was created by order of Warren as an independent agency under Dodd-Frank law. The director was given ample leeway to act alone, without obtaining the consent of members of an agency board.
While enforcing consumer protection laws, the CFPB has also been empowered to investigate the practices of virtually every company that sells financial products and services: credit card companies, payday borrowers, mortgage lenders, debt collection agencies, for-profit colleges, auto loans, lenders. transfer agents.
Outspoken critic of Facebook
The CFPB became a keen target of conservative Republicans. Trump appointed then-White House budget director Mick Mulvaney as acting director of the CFPB when Cordray left in November 2017.
Mulvaney had been an outspoken critic of the consumer agency and made sweeping changes to it, for example by softening the regulations on payday loans and withdrawing the enforcement efforts. The agency has been headed by Trump-appointed Kathy Kraninger since December 2018.
As one of the two Democratic Commissioners of the five-member Federal Trade Commission, Chopra is an outspoken critic of corporate practices, notably technology giant Facebook. He has filed strong disagreements about it FTC promotions against the company for privacy issues and alleged anti-competitive behavior, saying they were not going far enough.
“Rohit Chopra has the ideal background to start at the CFPB,” Mike Litt, consumer program advocate at the US PIRG Education Fund, said in a statement. “In his government service, he has used all available policy tools to protect consumers from corporate criminals. We couldn’t be happier with his choice to restore the CFPB after three years of disastrous leadership.”