CFPB Nominee to Focus on Borrowers Struggling During Pandemic

Mr. Chopra, who currently serves on the Federal Trade Commission, has been nominated to lead a bureau that has been a flashpoint between Republicans and Democrats on Capitol Hill. Set up during the Obama administration in response to lending practices that contributed to the 2008 financial crisis, the bureau has stirred complaints of regulatory overreach.

“Americans need efficient and effective access to credit, and the bureau should not act to constrain our ability to serve customers in their time of need,” Richard Hunt, head of the Consumer Bankers Association, said in a letter to Mr. Chopra last week.

Mr. Chopra testified alongside Gary Gensler, Mr. Biden’s nominee to head the Securities and Exchange Commission.

Among Mr. Chopra’s priorities, industry officials said: ensuring credit reports are accurate, helping consumers behind on rent or mortgage payments, and ensuring that so-called payday lenders assess their customers’ ability to repay short-term, high-interest loans.

“A Chopra-led CFPB will be more active on all fronts including rule-making, supervision and enforcement,” said Isaac Boltansky, director of policy research at Compass Point Research & Trading, which serves large institutional investors.

In a report released Monday, the bureau said about 11 million households were significantly overdue on their rental or mortgage payments at the end of last year, putting them at risk of losing their homes once protections against foreclosures and evictions lapse over the coming months.

Mr. Chopra’s supporters say he won’t hesitate to use the tools at the CFPB’s disposal, including civil investigative demands—a form of administrative subpoena—and civil monetary penalties to act against lenders and loan servicers suspected of abuses.

The bureau is expected to scrutinize credit reporting, in particular erroneous information that appeared on consumers’ credit reports after they entered into deferment or forbearance programs during the pandemic.

“Consumers continue to discover serious errors on their credit reports or feel forced to make payments to debt collectors on bills they already paid or never owed to begin with, including for medical treatment related to Covid-19,” said Mr. Chopra, who is 39.

Industry officials and consumer advocates say they expect the CFPB to revive a rule that would require payday lenders to verify borrowers’ ability to repay high-interest, short-term loans.

He has also signaled a willingness to scrutinize bank mergers and push for a faster payments system under development by the Federal Reserve. The CFPB chief could advise fellow regulators and jawbone on both issues.

If confirmed, Mr. Chopra would be returning to the bureau. As its first student-loan ombudsman, from 2011 to 2015, he used his public stage to push student-loan companies to treat borrowers better.

Mr. Chopra helped to elevate recognition of student loans as a major financial burden in 2012, when the bureau announced that balances had exceeded $1 trillion to become the largest source of unsecured consumer debt. He warned student debt could ultimately slow the recovery of the housing market by putting mortgages further out of first-time buyers’ reach.

“It was just a tremendous burden of debt that was going to have consequences,” said Holly Petraeus, who overlapped with Mr. Chopra at the CFPB. “He presented it in a way that really did catch public attention.”

Private student lenders back then said Mr. Chopra’s criticism made them a scapegoat, noting that student loans provided by the federal government had higher default rates and looser underwriting standards than private loans. Mr. Hunt said at the time that there was more tension between banks and the bureau’s student-lending office than all other areas of the CFPB combined.

At the Federal Trade Commission, where he has served since 2018, Mr. Chopra often wrote separate statements saying he wished the commission had taken bolder action in a variety of cases. In 2019, he joined another Democrat in objecting to a $5 billion settlement with Facebook Inc. over a probe into the tech giant’s privacy missteps, contending it wasn’t tough enough.

Write to Andrew Ackerman at [email protected] and AnnaMaria Andriotis at [email protected]