Gavel to Gavel: the CFPB is reborn from its ashes | Crowe and Dunlevy
The Consumer Financial Protection Bureau – established under the Dodd-Frank legislation of 2010 – has had a difficult existence during its short lifespan. When it was created, the CFPB was given broad powers and sharp swords to enforce them. The agency was just starting to get to grips with itself when the Trump administration installed more anti-regulatory leaders who critics say chose to accommodate the industry instead of protecting consumers. Now, under the Biden administration, the agency is likely to resurrect in an even more powerful form.
President Biden has vowed to take the CFPB back to its roots – protecting consumers – and tackling racial and economic inequalities through regulatory and enforcement action. Biden is committed to using the agency’s tools to provide access to affordable housing and assistance to disadvantaged small businesses owned primarily by people of color.
The COVID-19 pandemic has caused unprecedented financial hurdles for Americans, amplifying racial and economic inequalities. The early days of Biden’s presidency were spent bringing relief to consumers in the event of a pandemic, giving Americans the first look at a Biden-led CFPB. From a moratorium on foreclosure on federally guaranteed mortgages, forbearance periods for student loans and prevention for homeowners from exercising eviction rights, we can see that the CFPB of Biden will likely prioritize consumer protection over industry concerns.
President Biden has appointed Rohit Chopra, currently Commissioner of the Federal Trade Commission, as director of the CFPB. Chopra is a founding member of CFPB and was the agency’s first student loan ombudsman. Known to be an aggressive enforcer, we can expect him to pursue tougher civil penalties across the board. He said he would prioritize servicing student loans, increase regulation of the payday lending industry, strengthen debt collection regulations and tackle violations of fair loan rights.
What does this mean for financial services institutions? Expect an agency not to be afraid to pick on the industry for violations and vigorously enforce regulations, which some say were ignored under the previous administration. The financial services industry needs to stay abreast of constantly evolving regulatory developments. The industry would be wise to ensure compliance with loan equity laws through a comprehensive internal review of fair loan policies and procedures. During the Biden administration, the powers of the CFPB will likely increase, plausibly ensuring even more regulation in an already highly regulated industry.
* This article first appeared in Log recording on May 26, 2021, and is reproduced with permission from the publisher.