The Big Story

Back at the CFPB

Rohit Chopra's confirmation as the new boss of the Consumer Financial Protection Bureau sets the stage for his return to the watchdog agency he helped build about a decade ago.

One company may cheer the move: Facebook, the tech giant he repeatedly accused of abuse when he served on the Federal Trade Commission, a post he's now giving up.

Chopra is expected to "restore the CFPB to its former glory," Catherine Brown, a partner at Klaros Group, told Protocol. Not all fintechs will find that glorious.

Banks and fintechs should brace themselves for what Facebook endured: intense scrutiny and aggressive enforcement. Chopra's hard-charging style made him known as one of the most pugnacious regulators in Washington.

"A kind of adversarial relationship is necessary." That's how Chopra described his leadership style — not as a regulator, but as Harvard student council president. He frequently butted heads with the campus administration in the early 2000s. "There's no advantage to being a pushover," he once declared.

• Chopra overlapped with another famous Harvard student, Mark Zuckerberg. They agreed on one thing: It would be great if there were a digital student directory, a facebook, as it were. "This is something students have been talking about for years," he told the Harvard Crimson.
• That view had changed dramatically by the time he became an FTC commissioner. He ripped into the social network for breaching the early promises about privacy that lured him and his classmates to sign up.
• When the FTC imposed a $5 billion penalty against Facebook in 2019 in connection with the Cambridge Analytica data breach, Chopra thought it was a slap on Team Zuckerberg's wrist. In his dissent, he argued that the settlement "imposes no meaningful changes to the company's structure or financial incentives, which led to these violations."
• Now that he's in charge of the CFPB, fintechs could reasonably expect him to raise similar questions about their business models and practices.

"Chopra's going to be driving the train faster," said Allyson Baker, a former CFPB attorney. Critics said the agency had pulled back from its original mission under a Trump-appointed director who resigned in January. Chopra is expected to revive the bureau's watchdog role.

• That worries Republicans like Sen. Pat Toomey, who warned that Chopra could "return the CFPB to the lawless, overreaching, highly politicized agency it was during the Obama administration."
• But Chopra has many supporters, led by Sen. Elizabeth Warren, who brought him on to help launch the CFPB and called him "a terrific champion" for consumers. Bill Pearce, assistant dean and chief marketing officer of UC Berkeley's Haas School of Business, called Chopra "absolutely the right person to reestablish the mission of the [bureau] in a post-Trump era."
• Klaros Group's Brown said fintech companies "should be prepared for the CFPB to apply existing laws and regulations to previously unexplored operational areas, and possibly in novel ways not previously contemplated."
• Chopra is interested in making executives and board members of companies found to hurt consumers personally liable for causing or negligently ignoring those harms. That echoes his 2019 dissent at the FTC: He argued that "the grant of immunity for Facebook's officers and directors is a giveaway."

"I hear the panic in their voices as they worry about their financial future,"Chopra said seven years ago of his role as the CFPB's student loans ombudsman. He said he routinely got calls and emails from people "drowning in debt." He's back to deal with an even more dire situation as the economy recovers unevenly from the pandemic: At a confirmation hearing in March, he noted: "We must not forget that the financial lives of millions of Americans are in ruin."

-- Benjamin Pimentel

Protocol Event

Global payments: challenge and opportunity

Business is more global than ever, but cross-border payments remain mired in older systems. Can new technologies leapfrog the past? Protocol | Fintech editor Owen Thomas speaks with Patreon's Priya Sanger and Wise's Ryan Zagone about the challenges and opportunities ahead. Also, don't miss the launch of our first Fintech Power Index, which ranks the key players in payments. Tune in at 10 a.m PT / 1 p.m. ET on Oct. 20. RSVP here.

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Public.com is adding crypto. The online brokerage said it will let users buy, sell and hold cryptocurrencies.

Banks want to cut Apple Pay fees. They're pushing Visa to reduce the surcharge they have to pay Apple for recurring transactions.

Overheard

• "The core of all of this and the source of our most significant concerns is we look at everything that she has said or written publicly, there are bold ideas that essentially look at eliminating the banking system as we know it today." —Rebeca Romero Rainey, president of the Independent Community Bankers of America, on the organization's opposition to the Saule Omarova, Biden's nominee to head up the OCC.
• "All-in sounds like throwing all your chips on the table. Well, it isn't. It's about being committed to the position you've taken." —Abbey Perkins, CIO at StoneX Group, talking about Power Poker's draw for women in finance.
• "I truly believe it is my data and I don't have to share it, and I don't have to give it to my customers if I don't want to." —Michael Bilski, CEO of North American Banking Company, on his Minnesota community bank's view of sharing data with fintech companies.
• "To the extent that there are securities on these trading platforms, under our laws they have to register with the Commission unless they qualify for an exemption." —SEC Chairman Gary Gensler, in prepared remarks at a House hearing discussing crypto tokens that need to register with the SEC as securities.

3 Questions With …

Lindsay Davis, Head of Markets, Atomic

What fintech trend are you most excited about?

Financial inclusion! I am so excited to see the next generation of fintech creating more onramps for marginalized consumers. COVID-19 revealed major gaps in our financial infrastructure, such as capital markets and ACH payments distribution. This was a wakeup call for banks and financial institutions to accelerate their digital transformation roadmap.

What's your advice to younger technologists who want to build a career in this field?

When I was pivoting from internal audit to startups, I built a simple framework to keep me focused on breaking in. Am I passionate about the mission and vision? Is this an entrepreneurial place? Is this the right role?

It took 100 cold emails, 50 rejections and a handful of final rounds to get to the offer that mattered at CB Insights.

While my framework has evolved over the course of my career, persistence, patience and embracing pivots are still the ultimate triple threat, and the most important qualities for breaking in and sustaining a career in fintech.

What's one piece of reading that you think should be a requirement for those in the industry?

Clay Christensen's "How Will You Measure Your Life?" is about finding what motivates you and remaining true to those values. I am not in fintech because I am motivated by money; rather, I'm motivated by the economic impact I can have by building accessible financial services and leveling the playing field for marginalized consumers.

Need to Know

• Klarna and mall owner Simon are linking up. The deal puts Klarna's in-store payments options in Simon's shopping centers. (For more on why in-store retail is critical and other things you need to know about "buy now, pay later," check out our latest manual.)
• "We're in a constant beta state": How Citizens Bank is adapting to the post-COVID needs of young consumers.
• Circle is being investigated by the SEC. The stablecoin provider has received an investigative subpoena.
• A testing ground for real-time payments in Colorado. A local bank is experimenting with both FedNow and The Clearing House's RTP.
• Tether has loaned $1 billion to a crypto lender and has invested its reserves in China. That's one of the revelations in a Bloomberg Businessweek story on the closely scrutinized stablecoin issuer, whose holdings are large enough to worry the Fed.

Making Moves

• Stacey Abrams' fintech raises $29 million. Now Corp.'s funding came from Brigade Capital Management LP and Virgo Investment Group. The one-time candidate for governor of Georgia co-founded the business-to-business payments company.
• Jenny Johnston joined Better Tomorrow Ventures as a venture partner. She previously worked on bank partnerships at Modern Treasury.
• Natalie Rix joined Gemini to run institutional communications. She was previously at Dave.
• Julia Duzon is River Financial's new chief growth officer. She was previously at First Republic Bank.
• Vartika Ambwani is going to Silicon Valley Bank's New York team as director of fintech. She was previously a vice president in San Francisco.

Deal Flow

• Ladder is now worth $900 million. The term-life insurance provider raised $100 million co-led by Thomvest Ventures and OMERS Growth Equity.
• Sure was valued at $550 million. The insurtech startup raised $100 million led by Declaration Partners and Kinnevik.
• Australia's Till Payments raised $80 million. It's expanding in North America and elsewhere.

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Data Point

4.5%

That's how much value some Coinbase bonds have lost since the crypto marketplace issued $2 billion in debt in September.