Chopra Plans Crackdown on Repeat Offenders

In a recent speech at the University of Pennsylvania Law School, Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra announced plans to rein in repeat industry offenders by potentially forcing the divestiture of business lines, collaborating with state agencies to rescind licenses, and banning business practices. 

“How do we stop large dominant firms from violating the law over and over again with seeming impunity?” Chopra said in the speech. “Corporate recidivism has become normalized and calculated as the cost of doing business; the result is a rinse-repeat cycle that dilutes legal standards and undermines the promise of the financial sector and the entire market system.”

American Banker noted that Chopra had previously discussed doing more than charging fines and restitution to consumers, and instead targeting individual executives. He also mentioned repealing government-provided privileges, specifically ending deposit insurance from the Federal Deposit Insurance Corp. (FDIC). 

In the speech, Chopra argued that many large companies see the financial penalties from agency and court orders as a cost of doing business, not as a punishment.

“While small firms can get hit hard with penalties that threaten their viability and their operators fear imprisonment, many large institutions see the law as mere expenses on their income statements,” he said. “We must forcefully address repeat lawbreakers to alter company behavior and ensure companies realize it is cheaper, and better for their bottom line, to obey the law than to break it.”

Chopra cited specific big bank repeat offenders like Citigroup, who the CFPB has taken action against five times, as well as JPMorgan Chase and Wells Fargo, who the Bureau has taken action against each four times. He also mentioned American Express and Discover, both of which the CFPB has taken action against three times. 

Additionally, Chopra cited an issue in 2011 with Facebook deceiving consumers, and the Federal Trade Commission (FTC) settling the matter for no money. He criticized how the FTC held Facebook accountable, stating that the company had violated the FTC’s orders and that regulators should hold large firms accountable as much as smaller companies. 

“We need to learn from these lessons to think about not only how to halt recidivism, but also how to treat small and big firms equally when it comes to enforcement actions,” he said.