Blog: CFPB Director Defends Novel Regulatory Tactics – The Wall Street Journal

The director of the U.S.’s consumer financial regulator is pledging to push ahead with regulatory actions targeting banks, credit-card companies and the student-loan industry, days after a group of Republican senators accused the Biden appointee of straying outside the bounds of the agency’s authority.

Rohit Chopra

said Wednesday that, among the items on its agenda, the Consumer Financial Protection Bureau would continue looking broadly at how the agency can tackle what it views as problematic fees banks and credit-card companies charge for overdraft transactions and late payments.

The CFPB’s actions on what Mr. Chopra has termed “junk fees” is one of several that has provoked the ire of conservative lawmakers, who in a letter on Monday said the agency was waging a “smear campaign.”

Speaking remotely at an event celebrating the nonprofit Public Citizen’s 50th anniversary, Mr. Chopra responded to the letter, saying he was optimistic the agency could find bipartisan support for its work on hot-button topics such as the regulation of big technology companies. “We’re going to keep doing our work, regardless of the false accusations that are made about our staff,” Mr. Chopra said.

Mr. Chopra has emerged as one of the Biden administration’s most outspoken officials on the topic of corporate accountability, expounding on issues such as how regulators should approach companies with repeat regulatory violations. On Wednesday, he said the agency had made progress since his Senate confirmation last year on regulatory matters related to mortgage lenders and credit reporting companies.

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The CFPB director has acknowledged taking an approach to the CFPB’s mandate that may set it apart from some of its regulatory counterparts. One of his strategies has been to deploy old or dormant provisions of long-existing laws and regulations in an effort to advance the agency’s policies.

“The regulators of the past really missed some of the major issues that [consumer lending] markets were facing because many of them were more concerned about ensuring that banks were profitable,” Mr. Chopra said. “I think our singular focus has made sure that that is changing fundamentally.”

In their letter, Republicans on the Senate Banking Committee, including its highest-ranking Republican member, Sen. Patrick Toomey of Pennsylvania, claimed that the CFPB has returned to its Obama-era roots as a “lawless and unaccountable agency.”

The CFPB earlier this year began publishing a chart listing banks with the highest revenue from overdraft fees. The move fell short of a formal use of the authority’s power to police unfair, deceptive or abusive practices, but it appeared to have an effect: Several large banks subsequently made changes to their fees, citing competitive pressures.

With regard to the charges, Mr. Chopra on Wednesday said his agency was looking at rules the CFPB inherited from the Federal Reserve Board, requiring fees to be reasonable and proportional. There was a difference, he said, between a flat fee used as a simple deterrent and those companies may be using as a core revenue driver.

Mr. Chopra also said he saw a difference between how regulators have historically approached financial institutions of different sizes. Regulators and law enforcement agencies have been quick to shut down smaller firms and criminally prosecute their executives, he said, while taking a more lenient approach with larger players.

The CFPB’s goal is to ensure that a financial penalty by regulators isn’t just the cost of doing business for large institutions, he added. He said his agency was looking at a wide set of solutions to the problem of repeat offenders, including whether it has the authority to seek limitations on future business practices. The Justice Department also has said it would look into how it resolves criminal violations by companies with multiple and similar offenses.

“It’s going to take a while to really change the dynamic there. But our staff is considering a host of new provisions to pursue in court, or in settlement, that moves away from this reliance on just a civil penalty,” Mr. Chopra said.

Write to Dylan Tokar at

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