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Following a series of moves by key White House leaders at the Office of Management and Budget (OMB) and the U.S. DOGE Service that are ostensibly designed to limit or dismantle the Consumer Financial Protection Bureau (CFPB), its former director appeared Friday morning on CNBC to discuss the upheaval while warning consumers about the risks of a diminished bureau.
During the interview, Rohit Chopra was asked about the bureau’s oversight authority he most hopes can be preserved. Chopra immediately identified the mortgage market as one with the greatest need.
“To me, a key piece is always having your eyes on the mortgage market,” he said. “The mortgage market is the biggest piece of consumer credit, and also has a lot of intersections with the financial system.”
This means that instability in the mortgage market can lead to broader economic impacts, he said.
“If there [are] problems in the mortgage market, they can quickly translate into the broader capital markets, and the CFPB was the only one looking at the mortgage servicers [and] the big, nonbank mortgage lenders. So there could be problems, and I personally feel, ‘Why bait a financial crisis?’”
While not explicitly warning about the prospect of a crisis, he said that “anytime you take cops off the Wall Street beat, you just add some more risk. Every time you delete this basic oversight, you distort competition in favor of those who cheat rather than compete.”
Hobbled or deleted CFPB
Chopra was asked about whether he would characterize the agency as “hobbled” or if it would go away entirely. He responded by saying it was difficult to tell.
“Who knows? What we’re seeing is that all of the investigators have been benched. The lawsuits, including against Capital One [and] Rocket Mortgage have essentially been pardoned.”
While Chopra acknowledged that state regulators have aimed to “jump in” due to the bureau’s changed posture, he added that their actions may not be enough or would create “real complications” as they go after some of the nation’s largest firms.
“You would ideally want the federal agency being able to prosecute for consumers who’ve been aggrieved across the country, not one-by-one lawsuits fought in courthouses all over,” he said. “But I really think if you don’t turn the CFPB back on, there will be costs to people who are borrowing for mortgages, using their credit card and much more.”
When asked about these costs, Chopra said that the CFPB was a facilitator of innovation. It ensured that larger companies with a market foothold did not use their positions to stifle upstarts and smaller companies from adding to the number of players or offered services.
“I think what you see is you really have a lot of innovation and competition with new players getting in,” Chopra said. “But we found all sorts of ways in which bigger firms could squeeze them out, in which bigger firms could bully or use their own power to stop them from gaining entry.
“So I think at the end of the day, we want lots of players offering lots of services, and we found a lot of wrongdoing in the past few years.”
Why the bureau was started
When asked if the agency paid for itself, Chopra said it’s a “great investment” in terms of billions of dollars returned to consumers. But he also cautioned people to remember what gave rise to the agency in the first place.
“We can’t forget that one of the reasons why the agency was started was because of a financial crisis,” he said. “No one [was] actually looking at some of these nonbank companies that were part of predatory mortgage lending for years, and it blew everything up.”
Some recent media reports have indicated that larger banks — longtime opponents of the CFPB in courtrooms and regulatory disputes — may not actually want the bureau to be dismantled.
“If you’re the big banks, you certainly don’t want a world in which the nonbanks have much greater degrees of freedom and much less regulatory oversight than the banks do,” David Silberman, a banking attorney who lectures at Yale Law School, said in an interview with CNBC.
When asked about this perspective, Chopra appeared skeptical of its veracity.
“I don’t know, I think they have always wanted to see the CFPB go away, but there are costs of having no one there,” he said. “There are costs when it comes to fair competition. This is a choice. I think it is heavily driven by some of the big tech companies.”
The Musk effect?
Major tech companies including Apple, Google and Meta have become more involved in credit, lending and banking with their own apps and other payment functionalities on their platforms. Scrutiny by the CFPB scrutiny gave these companies serious concerns, Chopra said.
“They were very worried when the CFPB started looking under the hood on how they were getting into payments, banking and lending,” he explained. “So I think this is not a good situation. For investors, I think it’s going to make it much trickier to figure out what some of the risks are when it comes to the state lawsuits and more. So, we are where we are, and I really hope that they reverse course on this.”
Chopra was also asked if there was an “Elon Musk effect” at play in terms of the regulation of tech companies.
“It was strange to me that he got so fixated with a relatively small agency, and particularly fixated on the fact that the CFPB was looking hard at tech’s entry into payments,” Chopra said. “There is a lot — Google Pay, Apple Pay, Venmo, PayPal — and certainly Twitter/X has expressed its desire to move money and payments through the economy.”
When a CNBC anchor asked if there were other agencies that might be able to pick up some of the investigatory slack created by the pullback of the CFPB, Chopra said no.
“The law is clear that the CFPB has exclusive enforcement and oversight authority when it comes to large banks on these consumer issues,” he said. “So, maybe there could be someone at the state level who steps up a little bit, but this is a pretty big, gaping hole and I think it’s a big mistake.”
