By Selina Stoller, Summit AmeriFirst Holdings, LLC
Congressional Republicans have vowed to use the Congressional Review Act to overturn a long-awaited arbitration rule released by the Consumer Financial Protection Bureau (CFPB).
The rule targets credit card companies and banks that use arbitration clauses in customer contracts to block lawsuits over alleged wrongdoing or fraud. These clauses often force consumers to settle complaints with financial companies through mediated arbitration instead of filing a class-action lawsuit.
CFPB director, Richard Cordray believes that lawmakers are more than likely going to challenge the rule since it could “provide new fuel for President Donald Trump” to fire him before his term ends in 2018.
Cordray also expressed his support for the added rule.
“Arbitration clauses in contracts for products like bank accounts and credit cards make it nearly impossible for people to take companies to court when things go wrong,” Cordray said.
“These clauses allow companies to avoid accountability by blocking group lawsuits and forcing people to go it alone or give up. Our new rule will stop companies from sidestepping the courts and ensure that people who are harmed together can take action together.”
Sen. Tom Cotton (R-Ark.) said last week that he would seek the repeal of the CFPB rule, stating that the agency had “gone rogue.”
Cotton told The Hill that the CFPB’s new rule ignores consumer benefits of arbitration and treats citizens like “helpless children,” incapable of making decisions in their interests.
“The last thing Americans need is more anti-business regulation that will prompt frivolous lawsuits while hurting consumers,” Cotton said.
Cotton already has the support of Financial Services Committee Chairman Jeb Hensarling, R-Texas.
“This bureaucratic rule will harm American consumers but thrill class action trial attorneys. In releasing this rule today, Director Cordray ignored a prior request by the acting Comptroller of the Currency that he work with the OCC to resolve its potential safety and soundness concerns,” Hensarling said in a statement.
The Congressional Review Act was established to “fast track” procedures by which Congress may disapprove of a broad range of regulatory rules issued by federal agencies by enacting a joint resolution of disapproval.
- 1 Aug, 2017
- Summit Alternative Investments