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President-elect Joe Biden is set to nominate Rohit Chopra as the director of the Consumer Financial Protection Bureau, tapping a progressive ally of Democratic Senator Elizabeth Warren to helm the agency whose creation she championed.
Chopra, a commissioner at the Federal Trade Commission, helped launch the CFPB after the 2008 financial crisis and served as deputy director, where he sounded the alarm about skyrocketing levels of student loan debt.
The pick comes as Democrats are eyeing ways to provide student loan relief to millions of Americans as part of a COVID-19 relief package.
Biden announced the move on Monday, along with his intent to nominate Gary Gensler, a former chairman of the Commodity Futures Trading Commission, as the next chair of the Securities and Exchange Commission.
Gensler, a former Goldman Sachs banker, tightened oversight at the CFTC of the complex financial transactions that helped cause the Great Recession.
Biden’s choice of Gensler to lead the SEC signals a goal of turning the Wall Street watchdog agency towards an activist role after a deregulatory stretch during the Trump administration.
Now a professor of economics and management at MIT’s Sloan School of Management, Gensler was an assistant Treasury secretary in the Clinton administration and later headed the Commodities Futures Trading Commission during Barack Obama’s term.
With a background of having worked nearly 20 years at Wall Street powerhouse Goldman Sachs, Gensler surprised many by being a tough regulator of big banks as CFTC chairman.
Fluent in the nexus between politics and economic policy, Gensler was chief financial officer for Hillary Clinton’s 2016 presidential campaign against Donald Trump and an economic adviser to Barack Obama in his 2008 presidential bid.
Gensler has been a leader and adviser of Biden’s transition team responsible for the Federal Reserve, banking issues and securities regulation.
Gensler replaces Jay Clayton, a Former Wall Street lawyer who has headed the SEC during the Trump administration. When he took office Trump had pledged to soften rules affecting Wall Street and financial markets, and Clayton has presided over a deregulatory push.
Rules were loosened under the landmark 2010 Dodd-Frank Wall Street reform law that had tightened the reins on banks and investment firms in the wake of the 2008-09 financial crisis and the Great Recession.
The CFPB was created at Warren’s behest as an independent agency by the Dodd-Frank law. Its director was given broad latitude to act alone, without winning agreement from members of an agency board.
While it enforces consumer-protection laws, the CFPB also gained powers to scrutinise the practices of virtually any business selling financial products and services: credit card companies, payday lenders, mortgage servicers, debt collectors, for-profit colleges, auto lenders and money-transfer agents.
Chopra was a deputy to its first director, Richard Cordray, as the agency undertook enforcement actions against an array of companies large and small, and returned tens of billions of dollars to consumers harmed by illegal practices.
The CFPB became a target of conservative Republicans. President Donald Trump named then-White House budget director Mick Mulvaney as acting director of the CFPB when Cordray left in November 2017.
Mulvaney had been a vocal critic of the consumer agency and made deep changes to it, softening regulations on payday loans and pulling back on enforcement efforts. The agency has been led by Trump appointee Kathy Kraninger since December 2018.
As one of two Democratic commissioners on the five-member Federal Trade Commission, Chopra has been an outspoken critic of practices by big companies, especially tech giant Facebook.
He has lodged strong dissents on FTC actions against the company for privacy violations and alleged anti-competitive conduct, saying they did not go far enough.