Inside California's BCSA: Rohit Chopra's Expanding Role in Consumer Protection

Chris Willis (0:05)

Welcome to this special crossover edition of The Consumer Finance Podcast and Regulatory Oversight. I'm Chris Willis, the co-leader of Troutman Pepper Locke's Consumer Financial Services Regulatory Group. And I'm joined today by my colleague, Stefanie Jackman, who's a very frequent contributor to our podcast, as well as Mike Yaghi for our nationally ranked State Attorneys General Team and our firm's Regulatory Investigation Strategy and Enforcement Practice Group. And Mike is a frequent guest on the Consumer Finance Podcast as well. But we're doing this as a joint podcast because this is an area of interest to both of us. And we and the Consumer Financial Services Group work very, very closely with our nationally ranked State Attorneys General Group. And we're really glad that Mike is here to join us today. And today we're going to be talking about California Governor Gavin Newsom's appointment of Rohit Chopra, the former CFPB Director, to lead California's new Business and Consumer Services Agency. What that moves signals for the financial services industry both today in California and potentially in the future at the federal level.

So before we jump into that though, let me just give you a quick reminder to visit and subscribe to our blogs at troutmanfinancialservices.com, consumerfinancialserviceslawmonitor.com and regulatoryoversight.com. And don't forget about all of our other podcasts, the FCRA Focus, the Crypto Exchange, Moving the Metal and Payments Pros, all of which are available on all popular podcast platforms.

So, Stefanie, Mike, welcome to the podcast again for both of you. Glad to have both of you here.

Stefanie Jackman (1:33)

Thanks for having us. Great to be here.

Mike Yaghi (1:35)

Agree. It's great to be here with both of you. Thank you.

Chris Willis (1:38)

Well, this is a pretty interesting development, I have to say, because Rohit Chopra, of course, was the director of the CFPB through the end of the Biden administration, and then he was replaced by Acting Director of Brussels Vote. And it was interesting to see where Mr. Chopra was going to land. He first took a job with the Democratic Attorney General's Association, as I recall, leading a sort of research group that was going to research potential cases to feed to the constituents of that association, the Democratic State Attorney General's. But now he's gotten a new job in the state of California, and I think it's a pretty important one for us to take notice of. Mike, if you don't mind, let's start with you. Can you just tell the audience, what exactly has happened in California, and what is former Director Chopra's new sort of sphere of influence or authority?

Mike Yaghi (2:26)

Yes, thanks for the question. It's a good one, Chris, and basically dates back to when Governor Newsom, our governor in California, broke up and divided the Business, Consumer Services and Housing Agency into effectively two separate agencies. And it created what's now the California Business and Consumer Services Agency, the BCSA.

And Rohit Chopra is the secretary, the very first inaugural secretary of the BCSA, which now sits over several state agencies, starting with the Department of Financial Protection and Innovation, the Department of Consumer Affairs, the Department of Real Estate, the Department of Cannabis Control, and the Department of Alcoholic Beverage Control, the ABC. And the goal is to sort of bring all of these consumer protection agencies under one umbrella focusing on consumer protection specifically, and separating out state housing and homelessness and other issues to the second and separate agency that was created. Today, I think we want to focus on the DFPI, the Department of Financial Protection and Innovation, as it really is going to bring a lot of, we think over the next short-term and long-term regulatory oversight in the consumer financial services area in California. And with Secretary Chopra's background, we think that the DFPI's agenda will be to really police the marketplace, conduct examinations of consumer financial services companies, and focus on consumer protection from their perspective in terms of any of those financial products provided and sold, services and products provided and sold in the state of California.

Chris Willis (4:17)

And Mike, just to be clear, this BCSA secretary position, that's a cabinet-level position in the California government, right?

Mike Yaghi (4:26)

It is a cabinet-level position, reports to the governor, and it's an important distinction because it does not change the California attorney general's authority, which is established under the state constitution. So the attorney general in California is a constitutional officer, whereas to your point, Chris, Secretary Chopra is a cabinet-level secretary, reports to the governor, and will have sort of parallel consumer protection authority and power to police the marketplace alongside, and in addition to, the state attorney general here in California.