President-elect Joe Biden has elected Rohit Chopra as director of the Office of Consumer Financial Protection, reaching out to a progressive ally of Senator Elizabeth Warren to lead the agency he founded. The election comes as Democrats find ways to provide student loan aid to millions of Americans as part of a COVID-19 aid package.
Chopra, now commissioner at the Federal Trade Commission, helped launch the consumer agency after the 2008-09 financial crisis and served as deputy director, sounding the alarm over rising levels of student loan debt. Chopra was previously deputy director of the CFPB, where he led the agency’s student loan efforts. He was also a special adviser to the US Department of Education.
In these roles, Chopra has led efforts to stimulate competition in the student loan financing market, to develop new tools for students and to provide hundreds of millions of dollars in repayments for borrowers who are victims of illegal lending services, of debt collectors and for-profit university chains. .
Biden announced the move on Monday, along with his intention to appoint Gary Gensler, former chairman of the future Commodity Trading Commission, as the next chairman of the Securities and Exchange Commission. Gensler, a former Goldman Sachs banker, has stepped up oversight of complex financial transactions that have contributed to the Great Recession.
Biden’s choice of an expert with experience as a strong market regulator during the financial crisis to lead the SEC indicates a goal to turn the Wall Street watchdog into an activist role after a spate of deregulation during the Trump administration .
Consumer advocates praised the Gensler and Chopra selections.
Gary Gensler “was not afraid to take over Wall Street as chairman of the U.S. Commodity Trading Commission and will return the SEC to an agency that protects both small investors from risky practices and the financial system from dangerous actors,” Ed Mierzwinski said. stated in a statement the director general of federal consumer programs within the US PIRG consumer support group.
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 led the CFTC during Barack Obama’s tenure.
Gensler was a senior adviser to U.S. Senator Paul Sarbanes in drafting the Sarbanes-Oxley Act and was undersecretary of the Treasury for Internal Finance from 1999 to 2001 and deputy secretary of the Treasury for financial markets from 1997 to 1999. For nearly 20 years, at Wallman’s Goldman Sachs headquarters, Gensler has surprised many by being a tough regulator of big banks as president of the CFTC.
Fluent in politics and economic policy, Gensler was chief financial officer for Hillary Clinton’s 2016 presidential campaign against Donald Trump and Obama’s economic adviser in his 2008 presidential candidacy.
Gensler was the leader and advisor to Biden’s 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 deregulatory pressure to ease rules affecting Wall Street and financial markets, as promised by Trump when he took office. The rules that, according to the Dodd-Frank law, tightened the reins of banks and Wall Street following the financial crisis and the Great Recession were hardened.
“Gensler will remove the SEC to facilitate fundraising for companies 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 Republican friends – and he probably doesn’t care.”
The senior representative of the Financial Services Committee of the Chamber, Rep. Patrick McHenry of North Carolina said Gensler’s responsiveness to new financial and cryptocurrency technologies is positive. But he added: “I’m afraid Democrats want to move away (SEC) from bipartisan common ground in an attempt to achieve their most partisan goals.”
Senator Sherrod Brown of Ohio, the senior Democrat on the Senate Banking Committee to become its chairman, said Gensler’s record as a regulator “demonstrates that he will hold bad actors accountable and put his interests first.” working families ”.
Brown said Chopra will bring CFPB back to its core consumer protection mission and will also “ensure that the agency plays a leading role in combating racial inequities in our financial system.”
The CFPB was created at Warren’s request as an independent agency under the Dodd-Frank Act. Its director has been given a wide freedom to act alone, without gaining the consent of the members of the board of directors.
While implementing consumer protection laws, the CFPB has also gained the power to examine the practices of virtually any business that sells financial products and services: credit card companies, creditors, mortgage brokers, debt collectors. , for-profit colleagues, car creditors, money-transfer agents.
Critical review on Facebook
The CFPB has become a strong target of conservative Republicans. Trump appointed then-White House budget director Mick Mulvaney as CFPB’s interim director when Cordray left in November 2017.
Mulvaney had been a critical critic of the consumer agency and had made profound changes to it, easing regulations on payday loans, for example, and withdrawing enforcement efforts. The agency is headed by Kathy Kraninger, appointed by Trump in December 2018.
As one of the two Democratic commissioners of the five-member Federal Trade Commission, Chopra has been an open critic of the practices of large companies, especially technology giant Facebook. He strongly disagreed FTC shares against the company for breaches of privacy and alleged anti-competitive conduct, saying they did not go far enough.
“Rohit Chopra has the ideal background to hit the ground running at the CFPB,” said Mike Litt, a consumer advocate for the US PIRG Education Fund’s consumer program, in a statement. “In his government service, he has used all available policy levers to protect consumers from those who make mistakes. We could not be happier with his selection to restore the CFPB after three years of disastrous rule.”