Chopra's Expansive Vision for CFPB Authority is Facing Industry Pushback

Source: American Banker

A dizzying number of policy changes and enforcement actions by the Consumer Financial Protection Bureau in recent weeks has prompted aggressive pushback from banks and industry executives.

Efforts by CFPB Director Rohit Chopra to extract hefty fines and settlements from repeat corporate offenders and to hold individual executives personally liable for wrongdoing has sent ripples through the financial services industry. More companies are disputing the CFPB’s allegations, refusing to pay large fines or admit wrongdoing, and vowing to vigorously defend themselves in court. 

Chopra also has made several policy changes outside the normal notice-and-comment process that are renewing concerns about regulatory risks and big compliance costs ahead, especially for large firms.

“We have a new leadership that is intent on expanding their reach and the likely effects of that are going to be broader investigations involving a greater number of entities,” said Bryan Schneider, a partner at the law firm Manatt, Phelps & Phillips and a former CFPB associate director of supervision, enforcement and fair lending.

The bureau recently expanded its supervisory authority over nonbanks, including fintechs that it deems risky. While that move was welcomed by bankers, the bureau's crackdown on discrimination in all financial products — from payments to checking accounts to prepaid cards — could have wider-ranging impacts in the financial industry.

“The number of things coming out of the agency for which there could be challenges with respect to its authority is growing,” said Eamonn Moran, of counsel at Morgan Lewis.

Though Chopra has been on the job just seven months, bankers already are pushing back hard against what they see as incendiary and, in some cases, derogatory language aimed at specific companies and industries. A crackdown on so-called junk fees has many policy experts concerned that Chopra is stoking an adversarial relationship with bankers.