Will the Biden CFPB clamp down on innovation and regulatory sandboxes?
In his confirmation hearing, Rohit Chopra, President Biden’s nominee to head up the Consumer Financial Protection Bureau (CFPB), strongly signaled that things would change under his watch. After a perceived abdication of responsibility by the Bureau during the Trump administration, he expects the agency to become more aggressive when he takes control. However, presumptive Director Chopra should pay careful attention not to throw one thing out with the bathwater: the Bureau’s increased openness to innovation.
Dating from Director Richard Cordray and increasing under Director Laura Kraninger, the Bureau has supported innovation, both among market participants and among the states. The states, through the use of regulatory innovations like regulatory sandboxes, have worked hard to make their markets friendlier to innovation and competition. In many cases, their efforts show particular promise.
But the Bureau could stymie this work if it isn’t careful. Such an outcome would not only frustrate constructive federalism, but also the Bureau’s own mission of promoting competition that benefits consumers.