Idziak says Chopra views his role not as calling balls and strikes but as remaking the game, and California's brokers are now in his jurisdiction
Rohit Chopra is back in a regulatory role. California Governor Gavin Newsom has appointed the former Consumer Financial Protection Bureau director to lead the state's new Department of Business and Consumer Services Agency, a consumer finance superagency that launches July 1.
The new agency will sit atop most of California's consumer and business regulatory bodies, including the Department of Financial Protection and Innovation and the Department of Real Estate, the agencies that license mortgage loan officers and brokers in the state. For brokers doing business in California, one attorney said the appointment is a signal worth acting on now rather than waiting to see what Chopra does first.
Peter Idziak (pictured top), principal at Polunsky Beitel Green, a law firm specializing in mortgage lending, said the Chopra appointment is one that should have the full attention of California brokers.
"You know, there are several large lenders that are headquartered in California, and there are many, many lenders and brokers that do business in California," Idziak told Mortgage Professional America. "So to the extent that California is looking to fill the federal void and become sort of the new regulator and enforcer of federal consumer financial law, I think it's an important appointment."
What brokers should watch
The federal pullback in consumer finance supervision has created a temptation, Idziak said, that brokers need to resist. Fewer enforcement actions at the federal level do not mean the rules have changed.
"What I would say is that lawyers like myself have, I think, been almost universal in advising our clients that until the rules change, you need to continue to follow them, even if it looks like there are fewer cops on the beat," he said.
Chopra's appointment signals that California intends to step into the space the federal government has vacated, Idziak said. The existing body of consumer financial law from the Biden administration remains in effect, he said, and Chopra does not need new rules to be aggressive.
Idziak said AI enforcement is the area he would watch most closely. The CFPB under Chopra published guidance urging caution on AI tools due to fair lending and UDAAP concerns, and he said that regulatory instinct is likely to follow him to California.
"I could see that being an area where Chopra chooses to focus," he said. "There is just a lot going on. There's a lot of experimentation. A majority of brokers are using AI in some fashion in their day-to-day. And you know, the potential issues — are you using AI to communicate with borrowers, are you using it to market? What governs the use of NPI? There's a lot there that really hasn't seen a lot of action from regulators yet."
How Chopra sees his role
Understanding how Chopra approaches regulation matters, Idziak said, because it shapes what kind of enforcement activity to expect. He is not, in Idziak's view, a regulator content to call balls and strikes inside a strike zone set by someone else.
"He has ideas about the way the game of baseball should be played, and he uses his position to sort of force that through," Idziak said.
That view played out at the CFPB, where some rulemakings moved forward even when the bureau's own analysis showed costs to industry exceeding savings to consumers, Idziak said.
Newsom has made no secret of his presidential ambitions, and Chopra's appointment gives him a well-credentialed enforcer at a moment when other states are watching California's posture toward financial services regulation closely. However, Idziak said he does not see the appointment as a purely political move for Chopra.
"I don't think that he's cynical or just using this position for politics," he said. "I think that from his perspective, he legitimately believes that consumer enforcement and consumer financial protection need to be stronger and that there is a long-standing situation where industry incentives do not align with protecting consumers."
The Trump administration has also issued an executive order asserting federal preemption on AI regulation, an area where Idziak said Chopra is likely to test the boundaries at the state level. Idziak said that dynamic creates a practical argument for getting the CFPB functioning under Brian Johnson's expected leadership.
"If he's seeking to enforce federal consumer financial protection law, it's important to have an active federal regulator who may disagree with his interpretation involved in any kind of litigation," he said. "Because that can be very persuasive with courts."
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