ARI SHAPIRO, HOST:
President Biden's picks to be the nation's top financial watchdogs faced lawmakers in the Senate today. Compared to their Trump-era predecessors, they're expected to be much tougher on Wall Street, debt collectors and other financial firms. NPR's Chris Arnold reports.
CHRIS ARNOLD, BYLINE: The Trump administration was all about loosening rules for businesses. Gary Gensler, the nominee to head the Securities and Exchange Commission, has a very different mantra. He told the senators that companies need strong oversight.
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GARY GENSLER: When there are clear rules of the road and a cop on the beat to enforce them, our economy grows, and our nation prospers.
ARNOLD: Gensler, early in his career, made a fortune at Goldman Sachs but then went on to earn a reputation as a tough federal regulator, overseeing particularly risky types of trading.
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GENSLER: When we take our eyes off the ball, when we fail to root out wrongdoing or adapt to new technologies or to really understand novel financial instruments, things can go very wrong. And when that happens, people get hurt.
ARNOLD: Republicans at the hearing were concerned about proposals to require companies to disclose things that they say aren't central to business - their impact on climate change or their political spending. Gensler, though, seemed open to new rules like that for publicly traded companies when that's what investors want.
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GENSLER: Disclosures are critical to investors. They want to see what the companies they own are doing in the political arena. So if confirmed, it is something that I think the commission should consider in light of the strong investor interest.
ARNOLD: In the wake of the recent wild GameStop stock episode, critics say free trading platforms like Robinhood make investing feel too much like a video game. And Gensler talked about needing to balance innovation with protecting inexperienced investors.
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GENSLER: I think technology has provided greater access, but it also raises interesting questions. What does it mean when balloons and confetti are dropping and you have behavioral prompts to get investors to do more transactions?
ARNOLD: Biden's pick to run the Consumer Financial Protection Bureau also fielded questions from lawmakers. Many Republicans don't like the bureau and say that during the Obama years, it levied unfair penalties and was too aggressive. Senator Steve Daines of Montana questioned the nominee Rohit Chopra about that, pointing out that while Chopra was at the Federal Trade Commission, he also wanted to hit businesses with big penalties.
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STEVE DAINES: Well, a concern I have is you dissented regularly because you complained the penalties weren't punishing enough. So your record at the FTC has, I know, raised some concern for many on this committee.
ARNOLD: During the Obama years, the young Consumer Bureau returned some $12 billion to millions of people who the bureau determined had been cheated by financial firms. That fell off dramatically during the Trump years, leading critics to say that the watchdog agency had been put to sleep. Chopra signaled that would change on his watch.
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ROHIT CHOPRA: When you rip someone off and don't have to pay them back, how is that really much of a sanction? So restitution is a critical part of the CFPB's enforcement work.
ARNOLD: Chopra said he was also worried about foreclosures related to the pandemic. Millions of homeowners have been skipping mortgage payments due to financial hardship. Congress has set up rules that protect many of them who are in so-called forbearances. But Chopra said he would have the bureau making sure that lenders follow those rules.
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CHOPRA: We have to be ready when it comes to forbearances that might flip to foreclosures. I don't want to see another foreclosure crisis in this country.
ARNOLD: Overall, most Democrats pushed for tougher oversight. Republicans warned not to go too far. And both nominees basically said they would strike the right balance to let businesses function well while also protecting everyday Americans.
Chris Arnold, NPR News. Transcript provided by NPR, Copyright NPR.
