Rohit Chopra, the director of the Consumer Finance Protection Bureau, made his opening statements to the Senate Committee on Banking, Housing and Urban Affairs on June 13, where he reported that the CFPB is continuing to ensure that consumers are protected while preparing for the future.
“I am pleased to report that the CFPB continues to deliver tangible results for the public today, ensuring that consumers are protected, while also preparing for the future as tech giants and artificial intelligence reshape the industry,” said Chopra, whose speech was included in a press release by CFPB. “I will share a few observations about the state of the American consumer, as well as some highlights of CFPB’s work.”
Chopra said that American families are benefiting from a resilient labor market, and added that consumer spending is high as borrowing has accelerated. He said that inflation in areas like vehicles has led to increased household debt, as well.
“Americans now owe $17 trillion in household debt, including mortgages, student loans, auto loans, and credit cards,” said Chopra. “Interest rates are substantially higher than they were a few years ago, and some families are paying much more on their credit cards and other loans. Overall, current indicators of distress on consumer credit remain muted, though there are modest signs of increased delinquency. We will continue monitoring the impact of changes in interest rates and home prices closely, as well as other changes that might impact large segments of the population, such as upcoming resumption of federal student loan payments.”
Chopra said that the CFPB is on “high alert” for aspects that could lead to household financial instability. He said the failures of Silicon Valley Bank, Signature Bank and First Republic Bank show that there are vulnerabilities in the banking system, and extreme measures have been taken by regulators. Chopra said policymakers need to take steps to avoid the need to have emergency measures in the future.
Chopra said major progress has been made to implement rules for credit reporting for human trafficking survivors, small business lending data collection, PACE lending and the LIBOR transition. He said they are reviewing old rules to simplify and change them for the better for the future.
“We are focusing more heavily on supervision of nonbank financial firms, which have not always been subjected to similar oversight as chartered banks and credit unions,” said Chopra. “We’ve activated unused authorities to limit regulatory arbitrage by nonbank firms. We have shifted the focus of our enforcement program away from targeting small businesses and putting more attention on repeat offenders. Since then, we’ve recovered $4.6 billion in refunds and penalties against violators.
Chopra told the committee the CFPB handles 10,000 consumer complaints each week on average, and they work to obtain successful resolutions outside of formal legal proceedings. He said one aspect of their work that is equally important is addressing how technology is transforming financial services.
“The United States has a choice: will we harness technology to maintain relationship banking, drive competition, and protect privacy? Or will we continue our lurch toward a system marked by surveillance that is fully automated and controlled by a handful of firms?
