Rohit Chopra, Biden's pick to run the Consumer Financial Protection Bureau, told lawmakers at a remote hearing,
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Rohit Chopra, Biden's pick to run the Consumer Financial Protection Bureau, told lawmakers at a remote hearing, "the financial lives of millions of Americans are in ruin." He's pictured here at a hearing in 2019.

The Trump administration was all about loosening rules for businesses. But Gary Gensler, President Biden's nominee to head the Securities and Exchange Commission, has a very different mantra.

"When there are clear rules of the road and a cop on the beat to enforce them—our economy grows and our nation prospers," Gensler told members of the Senate Banking Committee.

The need for a tough cop on the beat during the pandemic is clear to Rohit Chopra - Biden's pick to head the Consumer Financial Protection Bureau.

"The financial lives of millions of Americans are in ruin," Chopra said at the hearing. He said experts anticipate, "an avalanche of loan defaults and auto repossessions."

Chopra said he's also worried about unfair treatment of people with student loans and a potential wave for home foreclosures. Millions of homeowners have been skipping mortgage payments due to financial hardship. Congress has passed rules providing many borrowers with legal breathing room through what's known as forbearance.

But Chopra says he would have the bureau making sure lenders follow those rules.

"We have to be ready when it comes to forbearances that might flip to foreclosures," Chopra said. "I don't want to see another foreclosure crisis in this country."

Many Republicans though don't like the CFPB. They say during the Obama years it levied unfair penalties and was too aggressive.

Senator Steve Daines, a Montana Republican, questioned Chopra about that, pointing out that while serving at the Federal Trade Commission, Chopra also wanted to hit businesses with big penalties.

"You complained the penalties weren't punishing enough," Daines told Chopra. "So your record at the FTC has raised concerns for many on this committee."

During the Obama years, the young Consumer Financial Protection Bureau returned some $12 billion dollars to millions of people who the bureau determined had been cheated by financial firms.

That fell off dramatically during the Trump years. By one count, the money the bureau returned to consumers dropped by 96%. Critics said the watchdog agency had been put to sleep.

But Chopra signaled that would change on his watch.

"When you rip someone off and don't have to pay them back, how is that really much of a sanction?" Chopra said. "Restitution is a critical part of the enforcement work in order to make victims whole, as Congress intended."

As for Gensler, the pick for the SEC, some see him as an unlikely watchdog. Early in his career he made a fortune at Goldman Sachs. But then went on to earn 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 root out wrongdoing, or to adapt to new technologies, or to really understand novel financial instruments—things can go very wrong," Gensler told the lawmakers. "And when that happens, people get hurt."

Republicans at the hearing were concerned about proposals to require companies to disclose things that they say aren't central to business: their impact on climate change — or their political spending.

Gensler though seemed open those kinds of rule for publicly traded companies when that's what investors want.

"Disclosures are critical to investors," Gensler said. "They want to see what the companies they own are doing in the political arena."

If confirmed, he says, "I think it is something the commission should consider in light of the strong investor interest."

In the wake of the wild Game Stop stock episode, critics say free trading platforms like Robinhood make investing feel too much like a video game. And Gensler talked about needing to balance innovation with protecting inexperienced investors.

"I think technology has provided greater access, but it also raises interesting questions," Gensler said. "What does it mean that balloons and confetti are dropping and you have behavioral prompts to get investors to do more transactions?"

Overall at the hearing, most Democrats pushed for tougher oversight. Republicans warned not to go too far. And both nominees said they would strike the right balance to let businesses function well, while protecting everyday Americans.

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