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CFPB Director Rohit Chopra joined NAFCU President and CEO Dan Berger for a fireside chat during NAFCU’s Congressional Caucus yesterday. Berger asked Chopra several questions that are of heightened interest for credit unions, including questions on Regulation E, oversight on non-depository institutions, and overdraft and credit card fees.

Berger asked Chopra to explain his thinking on Regulation E and the disproportional burden placed on credit unions rather than peer-to-peer (P2P) payment providers. Chopra discussed the Bureau’s concerns around customer service and liability, noting that the Bureau has been heavily focused on this issue, sending inquiries to the Big Tech payment providers to better understand how they’re adhering to existing regulations to better inform future movement on the issue. In December, NAFCU submitted comments to the CFPB regarding its inquiry into these payment platforms. When discussing the timing of potential guidance or rulemaking, Chopra noted that “we don’t have a clock, but we want to move on it.” 

Continuing the conversation into oversight of non-depository financial institutions, Chopra highlighted that while the Bureau can’t license or charter, at a minimum he wants to ensure compliance with existing law so that there’s some degree of parity, including working with states to ensure they’re also playing their role as a watchdog. When discussing larger participant authority, Chopra said their work is limited but the Bureau is watching big tech firms “chomping at the bit” to get into the financial services industry, noting that it’s the “holy grail” to collect data that can identify and influence consumer spending habits. Chopra continued to note that this approach is a much different mindset than the history of banking services, which has been “more about protecting customer information and not comingling financial services with other commercial enterprises.”

In May, NAFCU offered support for the CFPB’s expanded supervision over fintechs and other nonbank entities, encouraging “all relevant regulators to ensure that when fintechs compete with traditional financial institutions, they do so on a level playing field where smart regulations and consumer protections apply to all actors in the consumer marketplace.”

When Berger and Chopra moved on to discuss overdraft fees, Chopra made it clear that it’s important to treat overdraft as a service, and not as a penalty or a way to drive up revenue. The Bureau is looking into institutions who rely heavily on overdraft fees to seek increased rationale. Citing their recently published data specific to credit unions, Chopra noted that the use of overdraft fees should be reviewed regularly with a “gut check,” especially as institutions are continuing to rapidly grow. Noting that being compensated for a service is a good thing, but as the market is moving in a much more competitive direction, the CFPB wants to ensure consumers aren’t surprised or shocked by overdraft fees.

In a similar conversation around credit card late fees, Chopra shared that the Bureau has opened up a large-scale review around the way the Federal Reserve Board crafted credit card rules as they pertain to late fees and collecting data. Noting that the law requires that penalties be proportional to the violation, the CFPB’s review, which will go through the rulemaking process by next year, will ensure that the credit card business model doesn’t become distorted by fees.

Concluding their conversation, Berger asked Chopra to discuss the Bureau’s relationship with the NCUA, to which Chopra noted that they work closely together both formally through the interagency process; but also communicate regularly, as most agencies are in a mindset of wanting to be prepared if macro-economic conditions change, especially if they deteriorate, and how they respond to particular “pain points” such as loan services, debt collecting, and credit reporting.

The NAFCU Board of Directors, along with several members of the association’s staff, met with Chopra in July to discuss several credit union related topics.

NAFCU’s Congressional Caucus came to a close Wednesday. Stay tuned to NAFCU Today for recaps and insights shared over the course of the event.