Together with state bankers associations representing all 50 states and Puerto Rico, the American Bankers Association today wrote to House leaders urging them to support a resolution that would overturn the Consumer Financial Protection Bureau’s controversial final arbitration rule.
The resolution — which was introduced last week by House Financial Services Committee Chairman Jeb Hensarling (R-Texas), Rep. Keith Rothfus (R-Pa.) and other members of the committee — would exercise Congress’ authority under the Congressional Review Act to overturn new federal regulations within 60 days of publication in the Federal Register. The House is expected to vote on the measure tomorrow, and a similar resolution has also been introduced in the Senate.
The associations pointed out that the new rule would drastically limit the use of mandatory arbitration agreements for financial services products and services to the detriment of bank customers. For example, without arbitration, consumers will face going to court over minor, non-systemic disputes that cannot be resolved through a class action suit. “If allowed to take effect, the proposed arbitration rule would create a windfall for class-action attorneys, provide little or no relief to harmed consumers, and effectively eliminate an accessible alternative to the often-daunting judicial system,” the associations said.
ABA offered additional comments on the rule in a separate letter to members of Congress today. Together with several other financial trade associations, ABA raised concerns about the rulemaking process, noting that the CFPB conducted an incomplete study on arbitration and issued a final rule that undermined the bureau’s own findings, which showed that arbitration is a faster, more cost-effective alternative to class action litigation in resolving consumer disputes.