Big Changes Expected at the CFPB

Redouble. Refresh. Ramp up.

Those are the directions that Acting CFPB Director Dave Uejio has been giving agency employees as Biden Administration officials take over a consumer bureau that they believe has been asleep at the wheel for the past four years.

In a series of emails to staff and policy statements, Uejio had made it clear that even before a permanent CFPB director – presumably, Rohit Chopra – takes office, he intends to overhaul the agency.

“I will be assessing regulatory actions taken by the previous leadership and adjusting as necessary and appropriate those not in line with our consumer protection mission and mandate,” he said in an email to agency employees.

He added that “a change in strategic direction is not a reflection on the quality of the work performed by Bureau staff over the past several years.”

President Biden’s selection of Chopra to head the agency is subject to Senate confirmation and Senate Banking Chairman Sherrod Brown (D-Ohio) has said he is pleased with the choice.

Uejio and Chopra are veterans of the CFPB under former Director Richard Cordray, an Obama Administration appointee. When President Trump took office, he initially appointed Mick Mulvaney as acting director until Director Kathleen Kraninger was confirmed.

Mulvaney and Kraninger dismantled much of the strict regulatory regime that Cordray had adopted. And credit union trade groups expressed their support for much of that effort.

But now that the Biden Administration has taken over the agency, Uejio has said he intends to reinvigorate the agency – particularly as consumers deal with the economic fallout from the pandemic.

“The Consumer Financial Protection Bureau (CFPB) was created for moments like this,” Uejio wrote in saying that the agency is hiring attorneys to join the bureau staff. “Born out of the Great Recession, the CFPB was forged in crisis to vigorously protect America’s consumers.”

Kraninger had signaled that the agency would be flexible with financial services companies, as they struggled with the impact of the pandemic.

“The Bureau specifically states that it does not intend to cite in an examination or bring an enforcement action against firms who exceed the deadlines to investigate such disputes as long as they make good faith efforts during the pandemic to do so as quickly as possible,” she said in April 2020, explaining how the agency would handle disputes over credit record reporting.

Those days are over, according to Uejio.

“Given the urgency of engaging consumers about their rights amidst the ongoing pandemic, the Bureau must move swiftly to reach those whose financial lives are most precarious in this moment,” he told agency employees.

In the closing days of the Trump Administration, Kraninger and then-NCUA Chairman Rodney Hood signed a Memorandum of Understanding promising a closer working relationship between the agencies as they supervise the largest financial institutions, including the largest credit unions.

The MOU remains in effect even after the new administration takes office, but Harper and a new CFPB director could amend, rescind or ignore it.

Uejio said he has two policy priorities at the bureau – first, helping consumers who are facing financial hardship due to the pandemic, and second, racial equity.

“Protecting economically vulnerable consumers is core to the mission of the CFPB and one of the reasons the agency was created,” Uejio said after meeting with the staff from the agency’s Division of Consumer Education and External Affairs. He said that part of that effort includes effectively responding to consumer complaints filed by the agency.

He said he understands that some companies have been lax in meeting their obligation to respond to consumer complaints. He also said that consumer advocates have said there are disparities in how companies respond to complaints made by people in Black, Brown and Indigenous communities.

He said that he has asked the consumer response division to prepare a report on those allegations.

“We will be publishing this analysis and the senior leadership of these companies can expect to be hearing from me,” he said.

He also said that the bureau must redouble its efforts to help homeowners through the pandemic by:

• Reaching struggling homeowners who are delinquent or at risk of foreclosure to make sure they understand their rights.
• Coordinating with other agencies to provide help and information to those homeowners.
• Working with coalitions of stakeholders, including consumer and civil rights advocates to make sure that homeowners receive information in languages and terminology they understand.

Uejio said he has asked the research office to prepare an analysis of housing insecurity, as well as the most pressing consumer financial barriers to racial equity. He added that all policy proposals should include the racial equity impact of the policy.

And he ordered the agency to resume data collections that were paused at the beginning of the pandemic, including Home Mortgage Disclosure Act reporting.

Consumer advocates have said they like the direction the Biden CFPB is heading, starting with the selection of Chopra, currently a member of the Federal Trade Commission, to head the agency.

“Commissioner Chopra has long fought for financial markets that are fair for consumers, including student loan borrowers,” Ashley Harrington, federal advocacy director and senior counsel at the Center for Responsible Lending, said. “We are encouraged that the CFPB will now return to its mission of protecting people’s finances, which has heightened significance in this economic downturn, and which includes a strong fair lending program.”

However, John Berlau, senior fellow at the Competitive Enterprise Institute, disagreed.

“During the tenure of CFPB director Richard Cordray, under whom Chopra served, lawmakers of both parties expressed concern about CFPB mandates on community banks and credit unions,” Berlau said.

During his previous tenure at the CFPB, Chopra had a run-in with the credit union community.

In 2011, he was appointed to serve as the CFPB’s student loan ombudsman, a new position established in the Dodd-Frank Act.

In that position, Chopra became embroiled in a controversy involving two Indiana credit unions. In 2014, he wrote a blog post that listed four credit unions and 10 banks that he said did not disclose the terms of the contracts under which they would market and sell financial products to their affiliated university’s partners.

Among those listed were Purdue Federal Credit Union ($1.5 billion in assets, West Lafayette, Ind.) and Indiana University Credit Union ($1.3 billion in assets, Bloomington, Ind.) – neither of which had marketing agreements with the universities.

As a result, the CFPB corrected the blog post, deleting the credit unions.