June 25, 2022

Volume XII, Number 176

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CFPB Director Testifies Before Congress

This week, CFPB Director, Rohit Chopra, appeared before the U.S. Senate Committee on Banking, Housing, and Urban Affairs and the U.S. House Committee on Financial Services in conjunction with the CFPB’s submission of its Semiannual Report to Congress.  In his prepared testimony before both committee, the Director highlighted some of the CFPB’s work over the past six months, which includes:

  • Focusing enforcement on repeat offenders and other major market actors: The CFPB is shifting enforcement resources away from investigating small firms and instead focusing on repeat offenders and large players engaged in large-scale harm (we previously discussed this new enforcement priority in a blog post here).

  • Enhancing transparency through guidance: A renewed focus on creating guidance, such as advisory opinions, compliance bulletins, policy statements, and other publications, that are easy to follow, enforce, and understand.

  • Rethinking approach to regulations: Emphasis on carrying out the laws and directions of Congress and the President, including Section 1033 of the Consumer Financial Protection Act (CFPA), “a provision that could increase competition and choice in consumer financial markets,” and Section 1071 of the CFPA, regarding the collection of small business data (we previously discussed the proposed rule under Section 1071 in a blog post here).

  • Listening and learning from the business community: Director Chopra reiterated the importance of engaging with local financial institutions and the broader business community.

  • Promoting competition: Recognizing that “competition leads to innovation, attractive rates, quality service, and benefits that may be difficult to quantify.” The CFPB intends to launch initiatives to identify “ways to lower barriers to entry and increase the pool of firms competing for customers based on quality, price, and service.”

  • Preparing for the era of Big Tech and Big Data in banking: The Director warns of a consolidated market structure among Big Tech and Big Data giants that “comes with risks and raises a host of questions about privacy, fraud, discrimination, and more.”  The CFPB is currently studying these issues as part of its inquiry into Big Tech  and plans to issue research reports to contribute to consumer finance policy (we previously discussed this inquiry in a blog post here).

Putting It Into Practice:  Six months into his leadership, Director Chopra has moved quickly in several areas including a request for information on “junk fees” and changes to UDAAP examination procedures to target non-credit discrimination.  While CFPB has been met with significant criticism from lawmakers and industry, financial companies should take stock of the regulator’s recent moves and ensure that their activities align with the CFPB expectations.

Copyright © 2022, Sheppard Mullin Richter & Hampton LLP.National Law Review, Volume XII, Number 118
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About this Author

Moorari Shah Bankruptcy Lawyer Sheppard Mullin Law Firm
Partner

Moorari Shah is a partner in the Finance and Bankruptcy Practice Group in the firm's Los Angeles and San Francisco offices. 

Areas of Practice

Moorari combines deep in-house and law firm experience to deliver practical, business-minded legal advice. He represents banks, fintechs, mortgage companies, auto lenders, and other nonbank institutions in transactional, licensing, regulatory compliance, and government enforcement matters covering mergers and acquisitions, consumer and commercial lending, equipment finance and leasing, and supervisory examinations,...

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A.J. S. Dhaliwal Bankruptcy Attorney Sheppard Mullin Washington DC
Associate

A.J. is an associate in the Finance and Bankruptcy Practice Group in the firm's Washington, D.C. office. 

A.J. has over a decade of experience helping banks, non-bank financial institutions, and other companies providing financial products and services in a wide range of matters including government enforcement actions, civil litigation, regulatory examinations, and internal investigations.

With a diversified regulatory, compliance, and enforcement background, A.J. counsels financial institutions in matters involving...

202-747-2323
Associate

Gabriel is an Associate on the Telecom team and the Co-Lead Associate on the Blockchain and Digital Assets team in the firm’s Washington, D.C. office. He is a Blockchain Law Professional as Certified by the Blockchain Council.

At Sheppard Mullin, Gabriel assists the Telecom team in all aspects of communications law and regulation including, satellites, spectrum, 5G implementation, media companies, and new technologies. He assists the Blockchain and Digital Assets team in legal issues relating to the use of blockchain technology, social media, internet, video games, online gambling,...

202-747-2194
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