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US consumer watchdog to push competition and scrutinize Big Tech


Signage is seen at the Consumer Financial Protection Bureau (CFPB) headquarters in Washington, DC, U.S., May 14, 2021. REUTERS/Andrew Kelly/File Photo

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WASHINGTON, April 26 (Reuters) – The U.S. Consumer Financial Protection Bureau (CFPB) will encourage competition in the industry and examine the outsized influence of big tech companies in the market, its director told the Senate Banking Committee on Tuesday. during a hearing. prepared testimony that the committee released on Monday afternoon.

Rohit Chopra, who was sworn in as director of the CFPB in October, plans initiatives that will identify ways to lower barriers to entry and increase the pool of companies competing for customers based on quality , price and service, according to the testimony.

“We are particularly interested in ways in which smaller financial institutions can leverage technology and systems…to capture market share while preserving their relationship banking model,” he said.

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He will also tell lawmakers that a proposal on open banking and small business lending data will be released “in due course.” Open banking allows internet-based third-party applications to compete with big banks by accessing a customer’s accounts to make payments, among other services.

Chopra, a longtime consumer advocate hired by Democratic President Joe Biden to crack down on predatory lending and inequality in the consumer credit system, will appear before members of the Banking Senate on Tuesday at 10:00 a.m. EDT (2:00 p.m. GMT). He will also appear before the House Financial Services Committee on Wednesday for another round of testimony.

The CFPB has been a political lightning rod since its inception following the 2009 financial crisis. Democrats say the agency is key to protecting consumers and bolstering Biden’s agenda to address racial and wealth inequality, while Republicans say the agency is too powerful and irresponsible.

Chopra is likely to face questions from Democrats about her competitive push; its focus on unwanted lender fees, including services like overdrafts and late credit card payments; and its efforts to eradicate abuses around loan servicing and credit reporting.

Republican members of the Senate Banking Panel are expected to rebuke Chopra for his agency’s law enforcement activities regarding repeat offenders as well as extensive demands for information about new fintech companies, arguing that such moves can stifle innovation and weigh on businesses, analysts say.

“I would anticipate questions from lawmakers about the actions the CFPB has taken thus far regarding medical debt, overdraft fees, credit report errors and other issues facing consumers,” said Michael Litt, director of US PIRG, a Washington-based consumer advocate. group.

Republicans are also likely to criticize Chopra for his involvement in a public fight in December over who should set the agenda for the banking watchdog, the US Federal Deposit Insurance Corporation (FDIC), of which Chopra is a member of the board. board of directors. The row led to the Republican president’s premature resignation from the banking regulator. Read more

Isaac Boltansky, director of policy research for financial firm BTIG, said he expects Chopra to stress the need for more scrutiny of fast-growing products such as “buy now, buy now, pay later” (BNPL) after the CFPB requested information in December from five such companies about their business practices. Critics said the finance products put consumers at risk. Read more

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Reporting by Katanga Johnson in Washington; Editing by Michelle Price and Aurora Ellis

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