Greater competition, stopping repeat offenders, ‘relationship banking’ make up triad of goals for new bureau director

Stimulating greater competition in consumer financial markets, sharpening focus on repeat offenders, and restoring “relationship banking” are the “path forward” for the federal consumer financial protection agency, its director told a House committee Wednesday.

Appearing before the House Financial Services Committee, Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra outlined the focus for the agency during his term. He was sworn in Oct. 12 for a five-year term (after Senate confirmation Sept. 30), subject to the will of the president.

“The CFPB intends to faithfully and fairly administer the consumer financial laws entrusted to the agency by Congress,” Chopra said. “We must use our tools to promote an equitable and inclusive recovery,” he added, referring to the economic condition of the country.

In stimulating “greater competitive intensity,” Chopra asserted that there are many places where greater competition would benefit households and businesses. “For example, I am concerned that there is a dearth of competition in the mortgage refinance market for families with lower balance mortgages,” Chopra said. “The lack of refinancing may disproportionately affect communities of color and others that are historically disadvantaged.”

Regarding credit card and savings interest rates, the CFPB director hinted the bureau would be looking at those areas. “There is also evidence to suggest that many Americans could be paying lower interest rates on their credit cards or earning higher interest rates on their savings,” he said.

He also said the agency would keep “a close eye on practices that might impede competition.” Chopra said the bureau would listen to local financial institutions and “nascent competitors” on the obstacles they face when challenging more dominant players, “including in big tech.”

In sharpening focus on repeat offenders – especially those that violate agency or federal court orders – Chopra said those who violate orders and cause “ongoing harm to families and low-abiding businesses” must be stopped. He said his agency intended to work closely with state regulators and other federal banking agencies (specifically mentioning the Office of the Comptroller of the Currency, or OCC) to “fashion appropriate remedies for repeat offenders.”

In restoring relationship banking, Chopra indicated that automation and algorithms more and more define the consumer financial services market. He charged that results in less transparency into how credit decisions are made. In some cases, he added, those “big data” practices “can unwittingly reinforce biases and discrimination, undermining racial equity.”

He also tied credit reporting, and other industries, to his call for restoring relationship banking, charging that consumers are often not the customer and lack leverage to get problems fixed. “The inability to cut through red tape and get help in one’s financial life can be a major obstacle when seeking a job or when applying for credit,” he said. “Preserving relationship banking is critical to our nation’s resilience and recovery, particularly in these times of stress.”

Written Testimony of Rohit Chopra Director, Consumer Financial Protection Bureau Before the House Committee on Financial Services October 27, 2021