House lawmakers today voted to overturn the Consumer Financial Protection Bureau’s controversial final arbitration rule by a vote of 231 to 190, exercising their authority under the Congressional Review Act to reject new federal regulations within 60 legislative days of publication in the Federal Register.
Leading the effort in the House were House Financial Services Committee Chairman Jeb Hensarling (R-Texas), Rep. Keith Rothfus (R-Pa.), and other members of the House Financial Services Committee. A similar measure has been introduced in the Senate by Banking Committee Chairman Mike Crapo (R-Idaho).
The rule — which was finalized earlier this month — drastically limits the use of mandatory arbitration clauses for financial products and services, which are frequently used by banks of all sizes to manage the unpredictable costs of class action lawsuits and ensure prompt resolution of disputes. The American Bankers Association previously pointed out that this could impose a significant burden on customers whose claims cannot be resolved through class actions, as it would require them to go to court for minor, non-systemic disputes.
ABA President and CEO Rob Nichols welcomed today’s action, calling it a win for consumers. “In class-action lawsuits, the spoils go overwhelmingly — and sometimes exclusively — to a small group of highly motivated trial lawyers who specialize in filing a large volume of often frivolous litigation,” Nichols said, adding that overturning the rule “is critical to ensuring the bureau doesn’t provide trial lawyers with a regulatory windfall at consumers’ expense.”