U.S. House to Vote on Arbitration Rule Repeal Tomorrow
As promised, Congressional Republicans have introduced joint Congressional Review Act resolutions to repeal the CFPB’s recently finalized rule on arbitration agreements. The House is expected to vote July 25 on its version of the resolution (HJR 111), which Rep. Keith J. Rothfus (R-Penn.) introduced in the House on July 20 with 33 co-sponsors.
The final rule on arbitration agreements bans mandatory arbitration clauses and ensures consumers “get their day in court,” according to the CFPB. But critics say arbitration is faster, cheaper and better for consumers than protracted litigation. The CRA resolutions, which would “disapprove” the final rule, require a simple majority in both houses before moving to the president’s desk.
The American Bankers Association applauded Republicans “for putting consumers first, and taking the first steps to overturn the CFPB’s misguided arbitration rule.”
“In moving forward with the rule, the CFPB chose to ignore the results of its own study—which found that consumers fare far better in arbitration—and instead promote class action lawsuits designed to benefit trial lawyers at consumers’ expense,” said Rob Nichols, ABA president and CEO, in a statement. “The CFPB’s study found that consumers receive nothing at all in nearly nine out of 10 class action lawsuits, while people who prevail in arbitration receive $5,389 on average compared to just $32.35 in litigation,” Nichols noted.
While all Republicans in the House Financial Services Committee support the resolution, Rep. Maxine Waters (Calif.), the ranking Democrat on the committee, said “there is no sound public policy rationale for repealing” the CFPB rule, according The Hill.
The resolution is expected to pass in the House, but the Senate version (SJR 47) may not be as easy to push through even though it’s got the support of the Senate Banking Committee, according to Washington insiders.
Lawmakers have 60 days after a rule is published in the Federal Register to employ CRA.
Despite calls from Acting Comptroller of the Currency Keith Noreika to delay publication (and implementation) of the rule until his office could review it for safety and soundness, the CFPB already submitted the rule and it was published on July 17 in the Federal Register. As of now, the effective date is Sept. 18, 2017, and financial services providers will have until March 19, 2018, to comply.