Chopra Considers Credit-Card Rules, Defends Dormant Authority

Today’s HFSC hearing with CFPB Director Chopra plowed much ground broken yesterday before the Senate Banking Committee (see Client Report CONSUMER40), but several new furrows were also unearthed. As we noted yesterday, Mr. Chopra indicated that the agency will review rules inherited from the FRB; today, he signaled that his top priority here may be standards implementing 2009 credit-card reforms (see Client Report CREDITCARD34), a move doubtless fired up by his conclusions that credit-card fees are “junk.” Democrats strongly supported an array of Bureau actions while Republicans criticized their substance, process, and even inflationary impact. Rep. Andy Barr (R-KY) also challenged the “dormant” authority the Bureau has now claimed in a procedural rule expanding its ambit to all nonbank financial companies (see FSM Report CONSUMER41); Mr. Chopra argued that this power is expressly authorized but conceded that the Bureau’s reach ends when a customer is not a consumer (e.g., a merchant). Chairwoman Waters (D-CA) supported the Bureau’s repeat-offender campaign, singling out Wells Fargo along with Transunion and MoneyGram. She did not, however, bring up either her own longstanding legislation to sanction non-compliant big banks or draft legislation prepared for this hearing to do so still more broadly. This report assesses these issues along with the more detailed discussion of algorithmic underwriting and disparate impact at today’s session.