September 12, 2022

Republican Senators to Chopra: Stop Abusing Your Power to Advance Liberal Policy Preferences

The CFPB Must Stay Within the Boundaries of the Law

Washington, D.C. – U.S. Senate Banking Committee Republicans today blasted Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra for pursuing a radical and highly-politicized agenda unbounded by statutory limits, and deploying inappropriate and legally dubious tactics to unfairly damage financial institutions’ reputations and customer relationships.

In a new letter, Banking Republicans wrote:

“Rather than operating as a tough, but fair and sensible regulator, the CFPB is again pursuing a radical and highly-politicized agenda unbounded by statutory limits. It has adopted an arrogant regulatory ethos: the CFPB can do whatever it wants. On at least one occasion, the CFPB has been criticized by a federal judge and former regulator for deploying inappropriate and legally dubious tactics that have unfairly damaged financial institutions’ reputations and customer relationships. The CFPB’s actions, which have been uncontrolled and unwarranted, will ultimately lead to costlier credit, or no credit at all, for millions of Americans.”

As the senators point out, the CFPB has abused its authority by using name-and-shame tactics to pressure companies into eliminating overdraft fees. In February 2022, the CFPB published a chart listing the top 20 banks by revenue from overdraft fees, and boasted that its campaign led some banks to change their overdraft policies. In July 2022, Director Chopra stated he was “gratified to see where the market has been shifting” on overdraft fees and publicly warned that the CFPB is “increasing our supervisory scrutiny of the institutions that are most dependent on [overdraft fees] as part of their deposit account fee revenue.”

“It is hard to view your statement as anything other than a threat that banks who do not bow to the CFPB’s pressure campaign could expect the agency to unfairly target them for increased supervision,” the senators wrote.

Banking Republicans also criticized the CFPB’s recent modification of its own rules of adjudication, which allows the CFPB Director to bypass administrative law judges, making it easier for Director Chopra to act as both prosecutor and judge.

“At the best of times, an agency’s own adjudication of an enforcement action brought by the agency itself blurs the constitutional separation of executive and judicial powers. The CFPB’s new rules of adjudication further disregard that separation in order to enable the CFPB Director to avoid even the most modest checks on his power to engage in regulation by enforcement.”

The senators also raised concerns over the CFPB’s highly unusual and improper actions to harm the customer relationships of a bank involved in litigation with the agency. In March 2022, the CFPB sent an unsolicited mass email to the bank’s customers with a survey that referenced the lawsuit and asked prejudicial questions about whether the bank was acting against its customers’ best interests.

“While the CFPB has a responsibility to investigate potential fraud, this mass email was not a legitimate investigative or litigation tool, but rather a means to damage the bank’s customer relationships. Not surprisingly, the CFPB’s actions have been widely criticized. A former career CFPB enforcement director criticized the agency’s behavior while a federal judge called the CFPB’s actions ‘a poor choice . . . that looks to the Court to be designed to create a wedge between Fifth Third and its customers.’ The CFPB, however, arrogantly defended its actions by responding, as the judge put it, ‘we’re the CFPB so, essentially, we can do whatever we want.’”

The letter concludes by urging Director Chopra to stop using improper tactics to harm the reputations of financial institutions and to stay within the boundaries of the law.

To read Banking Republicans’ full letter to Director Chopra, click here.