Republicans in the House and Senate are taking steps to overturn the Consumer Financial Protection Bureau’s final rule prohibiting mandatory arbitration clauses. The action would happen under the Congressional Review Act, which gives Congress the ability to vote to reject new federal regulations within 60 legislative session days of publication in the Federal Register.
While several members indicated their desire to use CRA to overturn the rule, Senate Banking Committee Chairman Mike Crapo (R-Idaho) indicated he would lead the effort. Senate Majority Leader Mitch McConnell (R-Ky.) also signaled his willingness to move forward with the process, and ABA intends to launch a grassroots campaign in support of it.
As Congress weighs broader reforms of the CFPB, American Bankers Association President and CEO Rob Nichols yesterday urged lawmakers to “overturn this rulemaking,” which ABA believes hurts rather than helps consumers. The final rule prohibits customers from waiving their ability to participate in class action suits and limits drastically the use of mandatory arbitration agreements for financial products and services. Banks of all sizes often include these clauses in their credit card and deposit account agreements in order to manage the unpredictable costs of class action lawsuits and ensure prompt resolution of disputes.