US CFPB chief focuses on promoting competition, scrutinizing Big Tech in fiery Senate appearance

Signage is seen at the Consumer Financial Protection Bureau (CFPB) headquarters in Washington, DC, U.S., May 14, 2021. REUTERS/Andrew Kelly/File Photo

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WASHINGTON, April 26 (Reuters) – The U.S. Consumer Financial Protection Bureau (CFPB) will focus on promoting competition in the industry and examining the outsized influence of big tech companies in the market, said its director told the Senate Banking Committee on Tuesday during a hearing.

Rohit Chopra, who was sworn in as director of the CFPB in October, plans initiatives that will identify ways to lower barriers to entry and expand the pool of companies competing for customers based on quality , price and service, he said.

“We are particularly interested in ways in which smaller financial institutions can leverage technology and systems … to capture market share while preserving their relationship banking model,” Chopra told lawmakers.

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He also pledged to propose a rule on open banking and small business lending data to be released “in a timely manner”. Open banking allows internet-based third-party applications to compete with big banks by accessing a customer’s accounts to make payments, among other services.

Republican members of the panel chastised Chopra for his agency’s law enforcement activities regarding repeat offenders as well as extensive requests for information about new fintech companies, arguing that such measures can stifle innovation. and weigh on businesses.

After a public spat in December, Senator Pat Toomey, the panel’s top Republican, chastised Chopra for his “hostile takeover” of banking watchdog, the U.S. Federal Deposit Insurance Corporation (FDIC) – which Chopra serves on the board of directors — in which the board’s new Democratic majority decided to move agenda items forward despite objections from its Republican chairwoman, Jelena McWilliams.

The move, which Chopra defended on Tuesday, sparked a public row with the regulator and led to McWilliams’ early exit as chairman. Read more

“It was very sad, but it was quite simple: never before has an FDIC chairman or board member claimed to be able to overrule a board supermajority without any legal justification. other than because ‘I say so.'” Chopra said.

“I am disappointed that the rule of law was not followed, and it is important that this never happens again, and the council must make sure of that.”

Chopra — a longtime consumer advocate tapped by Democratic President Joe Biden to crack down on predatory lending and inequality in the consumer credit system — also responded to criticism from Republican lawmakers that extending a theory of the disparate impact to cover all financial services “effectively overturned Congress” legislative decisions. »

The CFPB has been a political lightning rod since its inception following the 2009 financial crisis. Democrats say the agency is key to protecting consumers and bolstering Biden’s agenda to address issues of racial inequality and gender inequality. wealth, while Republicans say the agency is too powerful and irresponsible.

Chopra also faced questions from Democrats about his competitive campaign; its focus on unwanted lender fees, including services like overdrafts and late credit card payments; and its efforts to eradicate abuses around loan servicing and credit reporting.

“We need to preserve banking relationships, even as we need to use technology to serve people better. There’s a wide range of issues from banking deserts to ratings and more,” Chopra said. “We all have to figure out what we want to do to make sure rural counties have access to small business credit, farm credit, and consumer credit.”

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Reporting by Katanga Johnson in Washington; Editing by Michelle Price, Aurora Ellis and Jonathan Oatis

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