For the first four months of the Biden Administration the Consumer Financial Protection Bureau (CFPB), under the leadership of Acting Director David Uejio, set a blistering pace of proposed and final rules, recission of rules from the Trump Administration, and other actions. Since the beginning of May the agency has been quiet. The confirmation of Biden’s nominee for the Director, Rohit Chopra, has stalled. What is action is expected next?
CFPB Leadership
Mr. Chopra’s nomination has moved out of committee and is ready for a floor vote in the Senate. The Biden administration is holding the Chopra confirmation until the FTC vacancy created by the resignation of former FTC Chair Joseph Simons is filled. Mr. Chopra is currently an FTC commissioner. His departure before Mr. Simon’s replacement is in place would leave Republican FTC commissioners with a 2-1 majority. To avoid this outcome, Chopra’s confirmation will follow the confirmation of Columbia Law School Professor Lina Khan, President Biden’s nominee to replace Mr. Simons at the FTC.
2021 CFPB Research Conference
On May 6, 2021, the CFPB’s Office of Research held its 5th Research Conference . The presentations included research by academics and policymakers covering various topics in household and consumer finance. A quick scan of the agenda reveals the topics of interest to the CFPB.
COVID-19 – The conference covered timely issues related to the effects of the COVID-19 pandemic on consumer finances and credit markets in its opening session. Lauren Lambie-Hansen from the Federal Reserve Bank of Philadelphia presented analysis on the supply of mortgage credit during the pandemic , including the relationship between intermediation markups and the pass through of interest rate decreases to consumers. Michaela Pagel from Columbia Business School presented results using daily, transaction-level data to analyze consumer spending during the pandemic . And Chen Zhao from the JPMorgan Chase Institute presented findings on income and asset profiles of mortgage borrowers during the pandemic.
Racial Disparities – Another theme of the conference was racial disparities in consumer and household finance, with papers in this area presented throughout the two-day conference. Sasha Indarte from the University of Pennsylvania’s Wharton School presented findings on racial disparities in personal bankruptcy outcomes. David Zhang from Harvard Business School presented research on how refinancing patterns vary across borrower race , along with the implications of these differences. Erik Mayer from Southern Methodist University’s Cox School of Business presented research findings on racial discrimination in the auto loan market .
Bankruptcy – With nearly one million filings per year, personal bankruptcy is also an important topic to the CFPB that serves as an important indicator of severe financial distress. Carlos Parra from Pontificia Universidad Catolica de Chile presented evidence on the benefits to consumers of combining personal bankruptcy with mortgage cramdown , while Bronson Argyle from Brigham Young University presented findings on the relationship between personal bankruptcy wage garnishment rules, moral hazard, and shadow debt .
Mortgage Credit and Housing Security – The CFPB is also interested in access to mortgage credit and housing security given that mortgage balances make up the largest component of household debt and housing equity accounts for the majority of wealth for the median homeowner. Papers on mortgages and housing were included in order advance understanding of these markets. Denis Sosyura from the W.P. Carey School of Business presented on the effects of financial media on mortgage refinancing decisions . Eirik Brandsaas from the University of Wisconsin-Madison presented on the role of parental wealth transfers on homeownership among young households . Asaf Bernstein from the Leeds School of Business presented findings on the relationship between mortgage amortization and wealth building among homeowners . Nate Pattison from Southern Methodist University presented his findings on the role of late housing payments in adjusting personal finances in response to unemployment or income shortfalls. Finally, Matthew Plosser from the Federal Reserve Bank of New York presented findings on the effect of regulatory policy on access to mortgage credit .
Credit Use and Spending Patterns – Understanding credit use and spending patterns among the economically vulnerable is another area where the CFPB hopes to expand its research and policy agenda. Kuan Liu from the University of Arkansas presented on changes in borrower behavior pattern when the repayment period on payday loans is lengthened . Donald Morgan from the Federal Reserve Bank of New York presented new evidence on the effects of overdraft fees on financial inclusion . Scott Nelson from the University of Chicago’s Booth School of Business presented on the relationship between tax refund uncertainty and welfare among low-to-moderate income consumers .
Disclosures and Consumer Decision-Making – The CFPB also has an extensive research agenda on disclosure and consumer decision-making. The conference included a session on experimental and survey evidence on consumer behavior. Simon Blanchard from Georgetown University presented experimental evidence on how consumers respond to labeling debt as “ordinary” as opposed to “exceptional” . Paolina Medina from Texas A&M University presented findings from a field experiment that looked at how nudges to increase savings affected consumer debt and discretionary spending .
The research gathered at the conference places the spotlight on numerous topics that will likely be subjects of future rule making.