In fiery Senate hearing, US CFPB chief focuses on Big Tech influence and competition

The headquarters of the Consumer Financial Protection Bureau in Washington, DC, USA REUTERS/Andrew Kelly

WASHINGTON, April 26 (Reuters) – The U.S. Consumer Financial Protection Bureau (CFPB) will encourage competition and examine the outsized market influence of big tech companies, its director told the Senate Banking Committee on Tuesday. an audition.

Rohit Chopra, who was sworn in as CFPB director in October, pushed back against attacks from Republicans over his role in a regulatory spat.

It 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.

In October, just weeks into his work, Chopra made his mark by ordering Amazon.com Inc, Apple Inc and Facebook Inc to hand over information about how they collect and use consumer payment data, citing that there were many places where regulators should promote competition and innovation to benefit small businesses and families, not just corporations.

On Tuesday, he provided the first update on what his exam will yield. He also pledged to propose a rule on open banking and small business lending data, which will 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 row in December, Republicans chastised Chopra for his “hostile takeover” of banking watchdog the U.S. Federal Deposit Insurance Corporation (FDIC) – of which Chopra is a board member – in which the council’s new Democratic majority moved to advance agenda items over 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

“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 called upon 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 after the agency expanded in March. a standard targeting racial discrimination in lending.

“The CFPB has asserted the power to sue financial service providers for discrimination without any evidence of discriminatory intent,” said Republican Sen. Pat Toomey, who is the most Republican on the banking panel.

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.

During the hearing, progressive Senator Elizabeth Warren called on Chopra to help break up scandal-hit lender Wells Fargo, arguing that repeat offenders should not only be fined, but should be penalized more severely.

Although Chopra did not directly comment on Warren’s suggestion, he did agree that tougher penalties were needed for repeat big lenders.

“We need to look at structural solutions that prevent the violation of the law from continuing. Fines will not solve this problem with the biggest players,” he said.

Analysts said the hearing reaffirms a handful of themes, including enforcement and the agency’s policy directions.

“While Chopra’s emphasis on the role of big tech in payments may be an issue that has conceptually received bipartisan support, it remains to be seen what we will go beyond reporting and jawbone “said Isaac Boltansky, director of policy for brokerage BTIG.

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

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