by Gabe Kaminsky
Republican senators claimed in a Monday letter to Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra that he has returned the federal agency to its “lawless and unaccountable” Obama-era “roots.”
Led by Pennsylvania Sen. Pat Toomey, the 12 senators are taking aim at Chopra’s alleged “abuses of power” that are a “serious concern.” Chopra should “reverse course” and ensure the CFPB “stay[s] within the boundaries of law,” the senators wrote.
The Republicans criticized a number of the agency’s recent moves — including its February labeling of overdraft bank protection as “junk fees.” Doing so amounted to a “smear campaign” and will lead to lost revenues from mothballed overdrafting protection services being shifted elsewhere onto consumers, the lawmakers said in their letter.
“With overdraft protection, consumers willingly agree to pay a fee for the product’s flexibility and to have an alternative to short-term loans, and under current regulations, customers must affirmatively opt-in to the service after banks have provided them with a description of the product and fees,” wrote the senators.
Chopra claimed in July he was “gratified to see where the market has been shifting” in terms of overdraft fees and said the CFPB is “increasing” its scrutiny of the institutions that are most dependent on [overdraft fees] as part of their deposit account fee revenue.”
The CFPB is responsible for regulating consumer finance. The agency oversees over 5,000 banks and was created in 2011.
“Rather than operating as a tough, but fair and sensible regulator, the CFPB is again pursuing a radical and highly-politicized agenda unbounded by statutory limits,” the senators wrote to Chopra. “It has adopted an arrogant regulatory ethos: the CFPB can do whatever it wants.”
The lawmakers also slammed an April rule change allowing the agency to publish “previously confidential” information about non-banks, according to the letter. The Dodd-Frank Act gave CFPB the ability to “to supervise a nonbank if the agency determines that the nonbank was engaging in conduct that posed certain risks to consumers,” the Republicans say, but that ability has never been used.
“Since the CFPB has never used this authority, the change in rules appears to serve as a threat to nonbanks,” the letter said.
The U.S. Chamber of Commerce notably launched a June ad campaign targeting Chopra for trying to “radically” alter the financial services industry. The appointee is a long-time ally of Democratic Massachusetts Sen. Elizabeth Warren and has sought to crack down on social media companies as well as banks and credit-reporting groups by changing their handling of personal data and fees, Politico reported in June.
In July, a watchdog group filed a lawsuit against the CFPB for allegedly hiding records on its “hostile takeover” of the Federal Deposit Insurance Corporation (FDIC), the Daily Caller News Foundation reported. Chopra was criticized after trying to launch public comment on bank merger reforms in December 2021 without asking then-FDIC Chair Jelena McWilliams.
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Gabe Kaminsky is a reporter at Daily Caller News Foundation.
Photo “Pat Toomey” by United States Senate. Photo “Rohit Chopra” by Consumer Financial Protection Bureau. Background Photo “U.S. Capitol” by Martin Falbisoner. CC BY-SA 3.0.