Trying to keep the names straight of all the government’s financial regulators can feel a lot like spooning your way through a bowl of boring alphabet soup.
But here’s one agency you — as a de facto participant in our capitalist system — should probably memorize: the CFPB, short for the Consumer Financial Protection Bureau.
“A lot of these government agencies can sound like strange acronyms,” CFPB Director Rohit Chopra says. “What's different about the CFPB is: We do rules. We do oversight. We do enforcement, but most importantly, we are a clearinghouse for people to get help.”
Created by the 2010 Dodd-Frank Act in the aftermath of the Great Recession, the CFPB is tasked with protecting families from deceptive and abusive financial practices. The implicit goal is to make sure nothing like the 2008 financial crisis ever happens again. In addition to providing guides for products like credit cards and student loans, the CFPB accepts complaints against companies that flout laws that are in place to protect consumers.
What stands out from the other alphabet-soup agencies is that the CFPB doesn’t only use these complaints to craft new rules — it actually helps the everyday folks who are getting taken advantage of. When you file a complaint, it “doesn't go into a black hole,” Chopra says. It gets sent to the company in question, which then fixes the problem — often purely “because they know we're watching,” he adds.
Having helmed the agency since only October 2021, Chopra is the new kid on the block heading the new regulatory agency on the block.
Despite his short tenure, the Biden-appointed director has already made an outsized impact on the wallets of Americans all across the country by helping overhaul how medical debt affects our credit, reduce “junk fees” charged by banks, creditors and lenders and tighten rules for consumer reporting agencies that compile and sell dossiers of sensitive financial data.
As far as financial regulators go, 40-year-old Chopra is young, though he’s certainly not inexperienced. In fact, he’s a bit of a financial Forrest Gump.
In the leadup to and during the 2008 financial crisis, Chopra was studying housing finance and banking regulation as part of the MBA program at the University of Pennsylvania’s Wharton School. (In a recent lecture at Penn, he referenced that some of his classmates and colleagues there ended up convicted felons for their roles in the financial crisis.)
In 2010, Chopra served as the agency’s first assistant director and student loan ombudsman. (He even contributed an article to Money about managing student debt in 2015.) And in 2018, Chopra became a commissioner at the Federal Trade Commission, where he worked behind the scenes on some of the largest data scandal cases in recent memory, including the Equifax breach and Facebook’s Cambridge Analytica fiasco. He served as an FTC commissioner until October 2021, the month he was sworn in as the CFPB’s third director.
Chopra’s background is key to understanding his approach to being one of the most powerful financial regulators in the country. In short, it culminates into a philosophy that the CFPB should be a “financial first responder,” as he calls it, with the ability to act quickly and decisively in response to economic changes.
It’s not all fun and games. While Chopra has a throng of fans, especially in consumer advocacy circles, his strong-arm approach has garnered criticism from many Republicans and business lobbyists. For example, Rep. Ann Wagner, R-Mo., a vice ranking member of the House Committee on Financial Services, has said “the CFPB is out of control” under his leadership, suggesting that Democrats are using Chopra (and other Biden-appointed regulators) to achieve their goals because they're unable to pass laws through Congress.
Similarly, the U.S. Chamber of Commerce — a business lobbying organization that’s long been skeptical of the CFPB — launched in June a six-figure ad campaign to “rein in out-of-control CFPB Director Chopra,” who they say has unlawful plans to change rules without accountability, which may lead to uncertainty, limited competition and fewer choices for customers.
When asked about the criticism, Chopra brushed it off, saying he focuses more on consumer complaints in the CFPB’s database than on complaints made by politicians and lobbyists.
Chopra’s leadership aside, the agency has long been a punching bag for conservatives who prefer a hands-off financial system. Many opponents say the agency should be more beholden to Congress. Currently, the CFPB receives its funding through the Federal Reserve; that doesn’t currently require congressional approval.
But that could soon change: A federal appeals court ruled in October that the agency’s funding structure violates the appropriations clause of the Constitution, which mandates that all government spending be authorized by Congress.
The federal agency petitioned the Supreme Court in November, stating that the lower court’s decision was based on “an unprecedented and erroneous understanding” of the appropriations clause — the Federal Reserve, Medicare and Social Security are all funded similarly — and that the ruling potentially "calls into question virtually every action the CFPB has taken in the 12 years since it was created.”
At time of publication, it was not yet clear whether the Supreme Court would hear the case. For now, it’s business as usual for the CFPB.
Since Chopra became director, the CFPB has largely been playing whack-a-mole with pandemic-related crises (think: tackling the medical debt crisis and reining in overdraft fees). But Chopra sees the agency soon entering into a new phase where it can focus on bigger-picture initiatives.
This agenda echoes back to Chopra’s time at the FTC. If there’s anything he learned working on the data scandals at Facebook and Equifax, he says it’s that “companies are thirsty for our financial data, and it’s extremely valuable.”
“The amount of data that is collected on all of us, it’s not just used to sell us products,” Chopra adds. “It's really becoming a way to manipulate people.”
He worries the U.S. could be lurching toward a system of financial surveillance similar to that in China. In other words, without a course correction, the U.S. may be barreling into a system where a handful of massive financial technology companies have records of not only everything you purchase but also your location data, your credit data and all sorts of other sensitive information that could be used to discriminate against your applications for jobs, loans or homes. (Indeed, this is beginning to happen already in the U.S.)
That’s why he’s made it his mission to protect Americans against such manipulation.
“What keeps me up at night,” Chopra says, “is constantly making sure we are prepared and ready to respond.”