U.S. CFPB Chief Focuses On Pushing Competition, Scrutinizing Big Tech During Fiery Senate Appearance

The U.S. Consumer Financial Protection Bureau (CFPB) will focus on promoting industry competition and scrutinizing the outsized influence Big Tech firms have in the marketplace, its director told the Senate Banking Committee during a hearing on Tuesday.

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

"We are especially interested in ways that small financial institutions can leverage technology and systems ... to capture market share while still preserving their relationship banking model," Chopra told lawmakers.

He also committed to proposing a rule on open banking and small business lending data which will be issued in a "timely fashion." Open banking allows third-party internet-based applications to compete with big banks by accessing a customer's accounts to make payments, among other services.

Republican members of the panel rebuked Chopra for his agency's enforcement activity around repeat offenders as well as broad requests for information on new financial technology firms, arguing such moves can stifle innovation and burden companies.

After a public spat in December, Senator Pat Toomey, the panel's top Republican, scolded 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 board's new Democratic majority moved to advance agenda items over the objections of its Republican chairman, Jelena McWilliams.

The maneuver, which Chopra defended on Tuesday, sparked a public feud at the regulator and led to McWilliams' early exit as chair.

"It's was all very sad, but it was all pretty simple: Never before has a chair or a board member of the FDIC purported to be able to nullify a supermajority of the board of directors 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 board must make sure of it."

Chopra -- a longtime consumer advocate tapped by Democratic President Joe Biden to crack down on predatory lending and inequities in the consumer finance system -- also responded to Republican lawmaker criticism that extending a disparate impact theory to cover all financial services "effectively reversed Congress' legislative decisions."

The CFPB has been a political lightning rod since its creation following the 2009 financial crisis. Democrats believe the agency is critical to protecting consumers and bolstering Biden's agenda to address racial inequity and wealth inequality issues, while Republicans say the agency is too powerful and unaccountable.

Chopra also faced questions from Democrats on his competition push; his focus on lenders' junk fees, including services like overdrafts and credit card late payments; and his efforts to stamp out abuses around loan servicing and credit reporting.

"We need to preserve relationship banking, even as we need to use technology to serve people better. There's a broad range of issues from banking deserts, to appraisals and more," Chopra said. "We need to all figure out what we want to do to make sure that rural counties have access to small business credit to farm credit and consumer credit."