American Consumer Watchdog Targets To Tackle Repetition Of Corporate Ills
The Consumer Financial Protection Bureau (CFPB) of the United States aims to create “dedicated units” in its enforcement and supervision divisions to better discover repeat corporate violators, the agency has said.
Rohit Chopra, who became director of the Consumer Financial Protection Bureau in October, said regulators have failed to hold major banks and their executives to the same standards as their smaller counterparts in his first address on enforcement strategy.
He added at a University of Pennsylvania law school event that the bureau is looking at “structural remedies” to make major firms more accountable for recurrent misconduct, such as reducing a company’s leverage, withdrawing government-granted privileges, and outlawing specific business practices.
Democrats have long contended that authorities rely too heavily on fines to punish corporate wrongdoing, which major corporations often see as a cost of doing business, a viewpoint shared by Chopra.
“While headline-driven penalties give the guise of deterrence, they do not work for dominant, powerful firms,” Chopra said.
Critics have also said that while authorities are eager to go after tiny businesses, sometimes closing them down completely, they are hesitant to go after large firms and their armies of well-paid lawyers.
President Joe Biden’s administration has made combating corporate recidivism a top focus, with the Justice Department announcing a series of policy reforms last year aimed at better preventing recurrent misbehavior.
Republicans have blasted the Consumer Financial Protection Bureau (CFPB) under Biden’s administration and Chopra’s leadership. Senator Pat Toomey, a Republican, claimed last year that the agency had “disregarded its jurisdictional constraints” and “returned to regulating through enforcement actions rather than regulations.”
Chopra also stated that the CFPB will work more closely with state licensing officials to determine if a company’s business licenses should be suspended or assets should be liquidated.
“Regulators in the U.S. have a history of being able to terminate charters and licenses,” Chopra said. “Today, this should be considered for all institutions when the facts and circumstances warrant it, not just when it happens to a small firm.”