EDITORIAL
Elections have consequences, and after the flipping of the Georgia Senate seats to the Democratic Party and the certification of Joe Biden as President, the sustaining balance of power keeping a national repossession moratorium over the pandemic at bay are essentially gone. While the final coffin nail on this has yet to be put in place, rest assured, it’s most likely coming. What is just as concerning now, is what else could be coming from the shadows of a CFPB with a new Director and a new agenda.
The pendulum swings, to and fro. Under the Trump administration, the Consumer Financial Protection Bureau (CFPB) had been rather subdued, but with flipping of the White House to Biden, it is unknown who he will choose to be at it’s head or when.
“For consumers, replacing the CFPB director is the most important decision that can be made off the bat,” said Jeremy Kress, an assistant professor of business law at the University of Michigan’s business school. “The CFPB carries a level of symbolism and visibility that the OCC does not, and a Biden administration might want to highlight that role.”
Some are advocating for Senator Elizabeth Warren, it’s early advocate and who some thought would be it’s first Director. If this were to happen, expect open season on the repossession industry, who Warren once made reference to the repossession process as being “The wild-wild west, shoot first and ask questions later.” Warren had once claimed that she remembers her father’s car being repossessed and that it profoundly impacted her.
It is not unfathomable that under a Warren, or like-minded CFPB Director, we could see a barrage of sanctions and non-judicial actions taken against lenders over the self-help repossession process. While it may have seemed like a far-fetched tin foil hatted conspiracy theory ten or twelve years ago, in our new media driven pandemic hysteria society, it is not only more plausible, but more probable.
Many expect a CFPB director in a Biden administration would need the blessing of Warren, the agency’s architect. “Sen. Warren is going to have a say in who gets that seat,” said Isaac Boltansky, director of policy research for Compass Point Research & Trading. “The real caveat is how much of a majority the Dems have in the Senate.” With the Democrats taking fifty seats and the VP vote, they have just enough to do just about whatever they want.
Top names in consideration for the CFPB under the Biden administration include Rep. Katie Porter, D-Calif., a former law professor at the University of California, Irvine School of Law, who studied under Sen. Elizabeth Warren, D-Mass., when she was a law professor; and Rohit Chopra, a former assistant director at the CFPB who is currently a member of the Federal Trade Commission.
Both Porter and Chopra could hit the ground running. A major caveat for Porter is that she was also considered a contender for the Senate seat that would be vacated by vice presidential candidate Kamala Harris.
Chopra, meanwhile, has stood out as an FTC critic of the Trump administration and a vocal supporter of consumer rights. Chopra has been a vocal opponent of technology-based recognition systems like facial recognition and could also oppose license plate recognition technology. Because he already has been confirmed by the Senate, he also could fill the CFPB role on an acting basis.
While most everyones eyes have been set on Washington DC in recent days and weeks, we perhaps have taken for granted the current pace of actions coming out of the CFPB and taken for granted that this is normal. The reality is, the CFPB, being a self-financed, unelected entity, makes it’s budget and political “brownie points” via their autonomous sanctions. With this pit bull of self-created regulatory mandates soon unleashed, there is no telling just how ravenous this beast will be, but rest assured, it will be more aggressive and active than in recent years past.
It may seem to be something of a forgone conclusion that President-elect Biden would desire to replace standing CFPB Director, Kathy Kraninger, a Trump appointee, but doing so may not be a simple as it seems. Kraninger’s term does not expire until 2023 and if Biden were to fire her, he would be forced to obtain Senate confirmation to fill the position. A possibility with a democrat majority Senate, but not a sure thing if the still almost even GOP members object.
In the interim, under the rules of section 1011 of the Dodd-Frank Act, the position would have to be filled by the Deputy Director, Thomas Pahl,. Pahl has served in the CFPB in several roles since 2013 was appointed to the Deputy Director position by Kraninger in July of 2020. It is rather unknown what his regulatory temperament is, but he certainly is experienced and a person experienced enough not to run into the agency like a bull in a china shop.
Biden may however, have authority to make an appointment of his own under the Federal Vacancies Reform Act of 1998, which states that the President may bypass the default order of succession, but only if the previous officeholder dies, resigns, or is otherwise unable to serve in the office. Not if the previous officeholder is fired.
How much control the Trump administration really held over the CFPB in the last four years is yet to be known, but the outcome of the election could still hold sway over how aggressive the agency becomes in the coming years. Either way, we can expect some legal opposition and political chest thumping before a change is made.
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