Biden’s financial watchdogs would be tougher cops: NPR
Susan Walsh / AP
The Trump administration aimed to ease the rules for business. But Gary Gensler, President Biden’s candidate for head of the Securities and Exchange Commission, has a very different mantra.
“When there are clear rules of the road and a cop on hand to enforce them, our economy grows and our nation thrives,” Gensler told members of the Senate Banking Committee.
The need for a tough cop during the pandemic is clear to Rohit Chopra – Biden’s choice to head the Consumer Financial Protection Bureau.
“The financial lives of millions of Americans are in ruins,” Chopra said at the hearing. He said experts were anticipating “an avalanche of defaults and automatic foreclosures.”
Chopra said he is also concerned about unfair treatment of people with student loans and a potential wave of foreclosures. Millions of owners have been skip mortgage payments due to financial difficulties. Congress has passed rules that give many borrowers legal leeway through what is called forbearance.
But Chopra says he would ask the bureau to make sure lenders follow those rules.
“We need to be prepared for abstentions that could turn into foreclosures,” Chopra said. “I don’t want to see another foreclosure crisis in this country.”
However, many Republicans do not like the CFPB. They say that during the Obama years he imposed unfair sanctions and was too aggressive.
Senator Steve Daines, a Republican from Montana, asked Chopra about it, noting that while serving in the Federal Trade Commission, Chopra also wanted to hit companies with heavy penalties.
“You complained that the sanctions weren’t punishing enough,” Daines told Chopra. “So your record at the FTC has raised concerns for many members of this committee. “
During the Obama years, the fledgling Consumer Financial Protection Bureau returned some $ 12 billion to millions of people the bureau said had been cheated by financial firms.
It declined dramatically during the Trump years. On the one hand, the money that the office gave to consumers fell 96%. Critics said the watchdog agency had been put to sleep.
But Chopra has signaled that will change on his watch.
“When you rip someone off and you don’t have to pay them back, how is that really a penalty? Said Chopra. “Restitution is an essential part of the enforcement work in order to make the victims whole, as Congress intended.”
As for Gensler, the SEC’s choice, some see him as an unlikely watchdog. Early in his career, he made his fortune at Goldman Sachs. But he then carved out a reputation as a tough federal regulator overseeing particularly risky types of trading at the Commodity Futures Trading Commission.
“When we take our eyes off the ball, when we fail to eliminate wrongdoing, adapt to new technology or truly understand new financial instruments, things can go very wrong,” Gensler told lawmakers. “And when that happens, people get hurt.”
Republicans at the hearing were concerned about proposals to require companies to disclose things they say are not essential to business: their impact on climate change – or their political spending.
Gensler, however, seemed open to these kinds of rules for publicly traded companies when that is what investors want.
“Disclosures are essential for investors,” Gensler said. “They want to see what the companies they own are doing in the political arena.”
If confirmed, he said, “I think this is something the commission should consider in light of the strong investor interest.”
In the wake of the wild stock market episode of Game Stop, critics say free trading platforms like Robinhood make investing look too much like a video game. And Gensler spoke about the need to balance innovation with protecting inexperienced investors.
“I think the technology has provided better access, but it also raises some interesting questions,” Gensler said. “What does it mean that the balloons and confetti are falling and you have behavioral prompts to get investors to trade more? “
Overall, during the hearing, most Democrats called for tighter oversight. Republicans have warned not to go too far. And both candidates said they would strike the right balance to keep businesses running smoothly, while protecting ordinary Americans.