Perry Bacon: Good morning. This is Perry Bacon. I’m here, right now, for The New Republic’s show about politics and policy. I’m honored to be joined today by Rohit Chopra. He was the head of the Consumer Financial Protection Bureau until earlier this year, so a great guest to have [with] so much news happening in terms of the economy. Let me start off with what’s going, what’s happening in the news right now. There was some court wrangling last week. Basically, the Trump administration wants to turn the number of CFPB employees from around 1,700 now to something like 200. They want to really dramatically shrink this agency. So talk about where we are in the process of the legal wranglings about the agency.
Now, granted, those employees really haven’t been doing the work they’re supposed to do under the law, but we’re now in a situation where it’s not just the CFPB but agencies across the government are pardoning big companies—whether it’s the transportation department, the Federal Trade Commission—and they’re suspending law enforcement over all sorts of companies. So we will see what the next steps are in this saga. But I remember Donald Trump campaigning on capping credit card interest rates and doing things to hold Wall Street accountable. We have not seen a single piece of evidence. In fact, some of the biggest players on Wall Street have gotten off scot-free.
Chopra: When the subprime mortgage crisis crashed the economy, there was a wake-up call—that a lot of the regulators, like the Federal Reserve Board and obscure offices like the Office of the Comptroller of the Currency, [had] all of the authorities to protect consumers and make sure that financial products did not explode, [but] there was really no one accountable. So in the law, this was a way to create some efficiency and eliminate the scattered nature of consumer protection and create a single point of accountability. That’s the CFPB. And over its years, just during my term, we collected about $9.5 billion or $10 billion in refunds and penalties against big financial actors and, I think, have stopped some of the worst practices from becoming systemic. So this is a new agency really created out of the ashes of the financial crisis that got huge bang for the buck for consumers and the taxpayer, but essentially it’s not doing anything.
Chopra: I actually always like to think of the things we should have done more of, but I think there were some great achievements including stopping some of the scourge of all of these junk fees in our economy [like] overdraft fees. We uncovered banks manipulating the order of payments in order to trigger more overdraft fees or sometimes concocting up completely weird and bizarre fees—a paper statement fee where the bank didn’t even print or mail it at all, hoping that people wouldn’t notice. And we kept going and really brought together a lot of law enforcement and policymakers to really crack down on it. Another big piece was really starting to aggressively go after medical bills and medical debt. On people’s credit reports, when I took office, the number one item wasn’t credit cards or student loans. It was allegedly unpaid medical bills. And we found so much errors and abuse. Today, even despite all the deregulation, the vast majority of that medical debt is off of people’s credit reports, which has helped so many. And honestly the list goes on and on—but Perry, I really feel like we should all be thinking about what the agency’s missed out on doing.
Chopra: Across the government, we have to learn and have the courage to learn about where we move to slow or where we didn’t go far enough in service of people across the country.
Chopra: I used to serve on the Federal Trade Commission, and one of the things that has really bugged me so much: This was an agency, for years and years under Republicans and Democrats, that really just completely missed the mark. They missed the opioid crisis. They missed the for-profit college, run-up in student debt. They missed some of the core issues that caused the financial crisis. And most importantly, they missed and avoided doing anything about all the harms related to privacy and surveillance by big tech companies. They rubber-stamped mergers and allow these firms to get bigger and more powerful while abusing our data in the process. Now, of course, things got a lot better under people like Lina Khan when she became chair, but I really think a lot about those missed opportunities including under the Biden administration, whether it’s the Department of Agriculture, the Department of Commerce, the Department of Health and Human Services. And I hope that in the future when we rebuild the government away from this post–Elon Musk mania, we don’t just snap back to the old ways but really chart a different course forward.
Chopra: What often happens is this: When you find serious crime and law breaking, yeah, you can enter into a settlement. But often, the most appropriate form of justice is to take it to court and have it be heard in front of a judge and even a jury to get that guilty verdict or to get that sense of public justice. So across the government but especially at the CFPB, we were in litigation against some really big companies. Wells Fargo, J.P. Morgan Chase, Bank of America, Capital One, Rocket Mortgage, the list goes on and on. But what has happened is that the new regime has actually just terminated all of those lawsuits and let those firms off. We’ve seen it at the Department of Transportation against Southwest Airlines, with the Federal Trade Commission against Pepsi and other big firms. And this, to me, reeks of something that just smells so bad—because it’s not all the cases that have been dropped or there wasn’t a real explanation. It was some of the companies. And a lot of defendants are now wondering, Is there some sort of alternate process—
Chopra: —that they should be doing? Who should they be hiring to lobby for one of these pardons? A lot of them are getting it, and a lot of them are still in the process and wondering how are they in it. So I think this is really serious and something we need to pay closer attention to. And really, we have to have judges who are looking closely at these withdrawals of litigation and dismissals to see if it’s truly in the public interest.
Chopra: That’s a great question. I really wonder—
Chopra: It was interesting. Around Thanksgiving after Election Day, Elon Musk had tweeted, “Delete CFPB.”
Chopra: And there was other big players that I think were pretty focused on it. And I don’t know, but many people have suggested to me that of course, the CFPB was scrutinizing closely large tech firms that were looking to create their own currency and payment systems. And of course we know that Twitter, now X, inked a deal in January to launch eventually X money. And we have a lot of other examples of this. I can’t know for sure, but it does feel like consumer protection to many of them was really a roadblock for their empire building.
Chopra: Well, I think that’s going to require a lot of work. And my worry is that a lot of people will simply want to snap back to the old way of doing things. Things are now permanently different. There is now a precedent set that you can shut down agencies and remove all the lawsuits and rules that they were pursuing. And that’s going to really change how we think about things. I, for example, really want to see states and others pass laws and create more rights for consumers, workers, and others to go to court themselves and vindicate their rights. Right now, when federal law enforcement has a monopoly to check big corporations, that’s not going to cut it, I think. We will need states and private citizens to be able to go to court as well. But you ask about the civil service. You’re right. What are we going to do to make sure that … if we need citizens serving their country to do really important things—making sure Social Security works, IT systems, our Defense Department? We’re going to need to really rethink how we do that so that we don’t have another situation like we have today.
Chopra: So I’ve served in several agencies in leadership positions, and here’s my personal experience with it. There is a lot of timidity in taking on those with power who are abusing it. When I worked at the Education Department to help clean up the broken student loan system, a lot of the considerations were about these student loan contractors, loan servicers, debt collectors, and gigantic forces like Sallie Mae and Navient. When I was at the Federal Trade Commission, the big problem with drug prices was abuse of patents and concocting fake patents in order to block generics from getting in. But that requires government officials who are willing sometimes to clash with the companies that are making billions of dollars off of this.
Now, look, at the CFPB, we were pretty aggressive. We wanted to make sure rules were bright-line, simple, clear—simplify them, make them easy to understand, easy to enforce. I think all of that is so important, but I don’t think we should go down a road of simply removing consumer protection, removing basic principles of fair dealing, and assuming that big, powerful firms are just going to be nice to everybody. Unfortunately, there has to be a little bit of standing up to those with power, and I think people sense that both parties are not fully willing to do that.
Chopra: Yeah, that’s exactly right. I really found this pretty striking: Both in the recent events surrounding the tariffs and during the pandemic, we see some strange economic indicators where companies are allegedly facing higher prices on input costs but their margins are sometimes growing. During the pandemic, we saw CEOs boast about big profits they were able to earn during the pandemic and blaming the pandemic as an excuse for raising prices. And I think we’ve just seen too much of sectors across our economy controlled by a small clique of companies who have the power to jack up prices, to lower wages, and really distort our political system in their favor.
Chopra: Yeah, but Perry, no one likes this.
Chopra: Yeah. Left and right, no one likes this.
Chopra: And I think when people saw the front row of the inauguration—all of the tech barons and others—it just raised so many questions of who really controls Washington. And we’ve seen this in our history before. For those of you watching right now The Gilded Age on HBO, it’s like we’re reliving that. And in some ways, the statistics are bearing it out where we have almost as much inequality as we did then—or France did when it was going through its own struggles with monarchy and oligarchy. So I think that there’s lots of people trying to see how you fix the economy so that actually it works for everybody. But again, that’s going to require looking hard at how the financial system works, at how intellectual property works, at how tech works—and with AI really potentially serving as a transformative way that could reduce a lot of white-collar jobs [and] concentrate a lot of wealth. Every day that we delay is going to be more costs potentially for the entire economy and the democracy writ large.
Chopra: I’ve been in constant communication with our state attorneys general. And they’ve been bringing cases that the current regime at the CFPB has dropped. And it’s no real full replacement.
Chopra: But that being said, it’s important that our states not simply sue to stop bad things from happening; they have to step up too. They need to give their citizens and consumers and workers more rights. And I think they, too, should be passing a series of laws. I wrote about how states can pass laws to kill off these junk fees. Many states have already passed laws to ban medical bills from credit reports. So in some ways, the work we did is still living on. But I think it is important that if you’re angry about what you’re seeing in Washington, don’t just call Washington. Call also those who are in your states who can do some real work. Now, that being said, states are going to be no replacement. The big banks, for example, hide behind certain laws to say they don’t have to respond to states when they ask them for information—but we really have to make sure we keep rowing forward.
Chopra: I’ll post it. It’s part of a journal about what states can do, run by The States Project in the States forum. And I think that we all have to give more ideas to what states can do—and we’re seeing it, whether it comes to drug prices and local pharmacies, whether it comes to what’s facing family, farmers, or really what’s facing workers. We’ve got to do more of that. It’s just so important that we learn. Last time there was a lot of people focused on a resistance—but we can’t just resist. We have to also learn and do something very different from what we did in the past.
Chopra: @ChopraUSA, and it should be in my bio.
Chopra: Alright, thanks again.
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