Biden’s CFPB nominee puts loan servicers, credit bureaus on notice

President Biden’s nominee to lead the Consumer Financial Protection Bureau vowed the bureau would come to the aid of student loan borrowers, consumers trying to correct inaccurate credit reports and homeowners hit hard by the coronavirus pandemic.

The comments by Rohit Chopra before the Senate Banking Committee on Tuesday were among the highlights of a wide-ranging confirmation for him and Gary Gensler, a veteran regulator nominated to lead the Securities and Exchange Commission.

Democrats raised concerns about the lack of student loan monitoring by the CFPB during the Trump era. And lawmakers raised questions about mortgage lending rules and issues with consumer credit reports.

The hearing also highlighted partisan divisions over the direction of the federal financial regulatory agencies and the scope of their responsibilities. Republican lawmakers questioned whether it is appropriate for the SEC to regulate activities such as environmental impact that are outside of shareholders’ economic interests, while Democrats pushed Gensler to incorporate political-giving and climate-related disclosures in SEC rules.

Here are five key areas where Chopra and Gensler were pressed by lawmakers about the actions they would take or the way they would conduct themselves.

Enforcement philosophy

A few senators raised specific issues about the rule of law and whether Chopra planned to break from a previous Democratic nominee, former CFPB Director Richard Cordray, who was often excoriated by Republican lawmakers and businesses for what they termed “regulation by enforcement.”

And Sen. Pat Toomey, R-Pa., wanted to know whether Chopra plans to rescind a rule finalized in January by then CFPB Director Kraninger that clarified the difference between regulations and supervisory guidance.

“Are you committing to complying with this law, with this rule or do you intend to revisit and attempt to change this rule that was passed this year?” Toomey asked.

Chopra replied: “Supervisory guidance is really supposed to be there to help institutions be able to understand how to best comply.”

At another point, when questioned about his views on unfair, deceptive or abusive acts or practices, Chopra said: “We have to enforce the law as written.”

Mortgages, credit reporting

The 2008 financial crisis and regulators’ responses to it loomed large in questions to both Chopra and Gensler.

Sen. Jon Tester, D-Mont., asked how the CFPB will help service members that suffered harm and how the bureau plans to decide which companies merit enforcement actions. The CFPB typically looks at consumer complaints, referrals from other agencies and issues raised in supervisory exams to identify and investigate wrongdoing.

Chopra several times drew on crisis-era lessons to explain how the bureau should respond to consumers’ financial stress in the current economy.

“We learned from the last crisis that regulators missed some of the linkages between the mortgage market and our economy,” Chopra said. “We saw not too long ago the illegal foreclosures of active-duty service members. It’s going to be critical for the CFPB to monitor those markets … so we do not see a deja vu of that crisis again.”

Sen. John Kennedy, R-La., asked whether mortgage executives were held accountable for the rash of foreclosures and ensuing economic crisis. Gensler served as chairman of the Commodity Futures Trading Commission from 2009 to 2014.

“You were there in ‘08 and ‘09.” Kennedy said. “Why didn’t anybody go to jail? Who made the call? Somebody in Justice had to have said we are not going to put these thieves in jail?”

Gensler replied…