Chopra Addresses ‘Abusive’ Standard, Enforcement, 1033 Rulemaking in First Hill Appearance

In his first appearance before the House Financial Services Committee today, CFPB Director Rohit Chopra told lawmakers that although he agreed with Acting Director David Uejio’s decision to rescind a policy statement on “abusive” conduct issued by former Director Kathy Kraninger, he has “huge aspirations to create durable jurisprudence” regarding the definition of “abusive” in the Dodd-Frank Act. He noted that “it could be a mix” of the judicial decisions and “how the CFPB may use rules and guidance to help articulate those standards.”

During the hearing, Chopra also discussed his approach to enforcement, noting that “markets work well when rules are easy to follow and easy to enforce.” He also expressed his view that “we need to focus our resources against large players engaged on wide-scale harms,” and that under his leadership, the bureau will pay particular attention to repeat offenders. Chopra added that “I don’t believe in strong-arming small businesses into settlements to create some sort of law.”

Chopra also encouraged companies to self-report compliance violations, nothing that “when companies have come forward, remediated and fixed issues, these things can be solved often without public enforcement action,” though he cautioned that “where [firms]have flagrantly violated the law and not taken steps to fix things, enforcement action is usually appropriate.”

As the CFPB looks to implement Section 1033 of the Dodd Frank Act—which addresses consumers’ rights to access and control information about their accounts—Chopra noted that the rulemaking could “aspirationally unlock more competition,” but that “at the same time, we also need to make sure that banks and nonbanks are operating under the same set of rules, that there’s not regulatory arbitrage.”

While Chopra did not specify a timeline, he noted that “there is a process underway,” with the issuance of an advance notice of proposed rulemaking issued last fall and that the bureau is “assessing more and consulting with experts.” In particular, he said he “trying to learn about the U.K.’s open banking system” and how other jurisdictions are approaching data access issues, but added that he isn’t “looking to replicate” what another country has adopted. “I want to learn from all of those countries, but we have to do something that works for our people. We have a much more diverse country, we have a large country,” Chopra said. “We need to do something that is uniquely ours and that suits our people and our financial system.”

The American Bankers Association has long supported consumers’ ability to share their financial data but continues to emphasize the importance ensuring that it is done in a secure way that gives consumers bank-level security, transparency, and control. Chopra also addressed a broad range of topics during the hearing, including the CFPB’s role in safeguarding the payments system, cryptocurrencies and digital assets, the Qualified Mortgage rules and small-dollar lending.