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Covid, payday loans, student debt — here are the issues Biden’s consumer bureau may tackle

  • The Consumer Financial Protection Bureau is expected to become a more aggressive consumer watchdog under the Biden administration.
  • Consumer advocates say the bureau was almost entirely declawed under former president Donald Trump. Biden nominated Rohit Chopra, a former student loan official at the Obama-era agency, to head the CFPB.
  • Likely focus areas include: Covid's financial impact, debt collection, student loans, payday loans, credit reporting, overdraft fees, racial equity and arbitration.

The headquarters of the Consumer Financial Protection Bureau in Washington, D.C.JHVEPhoto | iStock Editorial | Getty Images

The Consumer Financial Protection Bureau is expected to become a more aggressive consumer watchdog under the Biden administration and while the coronavirus pandemic hurls financial challenges at millions of Americans.

Consumer advocates say the bureau was almost entirely declawed under former president Donald Trump, and during his tenure enforcement action steeply declined. The agency was created in 2010 after the previous economic downturn to protect people from predatory lenders.

Now, it's anticipated that the CFPB will more aggressively investigate consumer complaints and take action against companies that violate the law. To lead it, President Biden has nominated 38-year-old Rohit Chopra, a longtime consumer advocate and a former student loan ombudsman at the CFPB.

Rohit Chopra, President Joe Biden's nominee to head the Consumer Financial Protection Bureau.Alex Edelman/Bloomberg via Getty Images

Of course, some were skeptical of the agency's work during the Obama administration, when Biden served as vice president. Mick Mulvaney, who served as Trump's acting CFPB director, at one time called the agency a "joke" in "a sick, sad kind of way."

But its work has never been more important, advocates say, as so many Americans try to rebuild their finances after almost a year of record job losses, evictions and increased debt. As people's money woes have increased, so have their issues with financial companies: Complaints to the CFPB were up 60% in 2020 from 2019.

"There are potentially a dozen, two dozen priorities," said Richard Cordray, who served as CFPB director from 2012 to 2017. "There's a lot that needs to get done."

These are some of the likely focus areas for Biden's consumer watchdog.

Covid crisis

The Covid crisis will likely be the bureau's top priority, according to consumer experts and former agency officials.

The pandemic tipped the U.S. economy into the deepest recession since the Great Depression, and with historic speed. Millions of families were estimated to have slipped into poverty by year's end.

"Covid has created a new set of problems, or emphasized and underscored ongoing problems for consumers," Cordray said.

Americans may turn to financial firms for help, whether to seek various relief or new loans to cover expenses.

The CFPB will likely implement more safeguards to ensure consumers get adequate (and promised) support. That work will fall in two primary areas, said Patricia McCoy, a professor at Boston College Law School.

For one, the agency could ensure financial firms and debt collectors honor government protections, like the national ban on evictions until March and the payment pause for student loan borrowers through September. It may also uphold firms' voluntary commitments to all types of borrowers, like homeowners, car buyers and credit-card users, for example.

"That will be a top, top, top priority," said McCoy, a former agency official during the Obama administration.

Debt collection

In a similar vein, the agency will also likely try to overturn or rewrite Trump-era rules around debt collection, according to consumer advocates.

The prior administration issued two related rules toward the end of Trump's term, one in October and another in December. Broadly, they addressed how debt collectors may communicate with and disclose information to consumers.

Kathy Kraninger, the former CFPB head during the Trump administration, said the measures helped keep consumers informed. However, consumer advocates believe the rules gave companies too much power.

"At their core, these were not rules for consumers," said Rachel Gittleman, financial services manager at the Consumer Federation of America.

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