A dense regulatory agenda awaits on Rohit Chopra – the Biden government's decision to head the Consumer Financial Protection Bureau – from overseeing fintech lenders to assessing pandemic response from mortgage service providers.
The only problem: it is still unclear when he will get the job.
Chopra is still on hold eight months after she was hired by the White House to run the agency. Analysts attribute the delay primarily to the tussle with the Federal Trade Commission he currently sits on and timing with the Senate in negotiating infrastructure and reconciliation laws.
The White House likely preferred to keep Chopra with the FTC while the commission addresses its own busy agendas.
"It's a game of musical chairs for Chopra," said Ed Mills, managing director and Washington policy analyst at Raymond James. “The Biden government has given antitrust measures and the FTC priority over consumer protection at the CFPB. If President Biden wants to pursue his regulatory agenda, the Senate must give confirmation. "
Once Rohit Chopra arrives at the CFPB, many expect him to announce some large-scale initiatives, including the potential reopening of the small dollar payday loan rule, the proposal of changes to the collection rule due to go into effect Nov. 30, and the initiation of one larger affiliate rule for fintech installment lenders.
Biden's nomination of Georgetown law professor Alvaro Bedoya for the FTC this week has sparked speculation that Chopra will be ratified by a narrowly divided Senate over the next two months, with Vice President Kamala Harris giving the casting vote. Some believe that Bedoya, who would take Chopra's FTC seat, could be validated concurrently with Chopra's certification for the CFPB.
With incumbent CFPB director Dave Uejio aggressively pushing so many Democrat-backed initiatives, the delay in confirming Chopra has not been seen as slowing down the bureau's agenda.
"Behind the scenes, CFPB's day-to-day behavior is already what I would expect under Chopra," said Christopher Willis, partner at Ballard Spahr and co-head of the company's Consumer Financial Services Group. "The agency is doing a lot of new research, they are doing research, and there are already all sorts of policy initiatives in place that [Chopra] can get the office to do this that are already in the funnel."
Uejio, however, likely leaves the biggest political decisions to Chopra.
Some suggested that the Senate's delay in the verification process could hamper some of the CFPB's more complex priorities, such as revising a rule to limit payday loans. It usually takes a while to develop regulations in the office, and the CFPB is required by law to set up a Small Business Review Board for every rule that affects small businesses.
"With the requirement for small businesses and the fact that they always want a rule that is in place before a possible change in administration, the window is closing," said Mills.
"What we saw in the Trump administration is that when the Senate stayed close, they could clear individuals through the nomination calendar," Mills added. "So it's not imminent, but I could imagine a scenario where Chopra was sworn in as a director at the end of the year."
Once Chopra arrives at the CFPB, many expect he will announce some large-scale initiatives, including the potential reopening of the small dollar payday loan rule, the proposal of changes to the collection rule due to go into effect November 30, and the initiation of a larger affiliate rule for fintech installment lenders.
"The CFPB is uniquely positioned to be the dominant fintech regulator with its authority over non-banks and service providers," said Rachel Rodman, partner and litigator at Cadwalader, Wickersham & Taft and former senior counsel in the CFPB's legal department. "The CFPB has the option of exempting a larger number of participants via installment lenders, which would sweep many fintechs away and completely create the framework for this entire industry."
Chopra will adopt a pre-packaged rulemaking agenda with a data collection proposal for small businesses released this month and a final rule expected by year-end on standards for fintechs access to consumer bank account information.
The industry's pandemic response would likely also be high on Chopra's priority list.
Uejio has repeatedly warned mortgage servicers to prepare for a high volume of borrowers who will leave their forbearance plans from September through the end of the year. He even coined a catchy phrase – "being unprepared is unacceptable" – when the office let a moratorium on foreclosures expire in June.
"This fall and next year there will be only a spate of foreclosures and there will be many problems with the mortgage service," said Eric Johnson, partner at Hudson Cook.
Chopra is expected to look carefully to see if mortgage administrators have been following the Coronavirus, Aid, Relief and Economic Security Act. The CFPB has signaled that service providers must work with borrowers to limit losses and comply with the law to avoid reporting defaults to credit bureaus.
"The agency will be very tough on every foot error [by service providers] that leads people through foreclosure, but also on how they process and handle the forbearance and how they document that consumers have not paid," said Rodmann. "The office is going to come down really hard and I don't think there will be much sympathy for the service staff."
Observers also generally expect higher civil penalties, greater consumer redress, and a move away from former CFPB director Kathy Kraninger's priority of solving violations through private oversight rather than enforcement.
Chopra will also use one of the CFPB's most powerful weapons – the federal Dodd-Frank Act Ban on "Unfair, Fraudulent, or Abusive Acts or Practices", or UDAAP – to crack down on payday and auto title distributors, among others.
Lawyers have already seen a sharp increase in the number of investigations and enforcement actions since the Democrats regained control of the CFPB.
"The investigation has grown significantly since Assistant Director Uejio took office, and it really gets so far that it cannot be tied to any product or industry," said Johnson.
Chopra will have a full plate to judge by the violations the CFPB described in their latest report on Oversight Highlights.
"The priorities set by the acting director in terms of addressing people who have experienced COVID hardship and access to equal services will remain top priorities under Chopra," said Rachel Rodman, partner and litigator at Cadwalader , Wickersham & Taft and former Senior Counsel in the Legal Department of CFPB.
Many are preparing for Chopra to announce major action against a large bank or fintech company that will set the tone for its enforcement agenda.
"The CFPB has so many things on its agenda that there is a lot of buzz following a big company and holding it accountable," said Johnson. "They get a consent form from them and then use that as a stepping stone to show everyone else, all the other players in this area, this is a bad actor."