The Senate tonight voted to overturn the Consumer Financial Protection Bureau’s controversial final rule on arbitration by a vote of 51 to 50. With a tie-breaking vote by Vice President Mike Pence, the Senate exercised its authority under the Congressional Review Act to reject new federal regulations.
The House voted in July to overturn the rule, and once President Trump signs the resolution, as expected, tonight’s action by the Senate will stop the rule from taking effect and prevent government agencies from issuing any similar rule in the future.
“Today’s vote to overturn the CFPB’s arbitration rule is a win for consumers,” said American Bankers Association President and CEO Rob Nichols. “As we and others made clear in our multiple comments to the CFPB, the rule was always going to harm consumers and not help them. Today’s vote puts consumers first rather than class-action lawyers.”
The vote marks a hard-fought victory for the banking industry and for ABA, which has been vocally opposed to the rule since it was proposed in 2015. In comments to the CFPB and lawmakers, ABA has repeatedly pointed out that the arbitration rule would have imposed significant costs on consumers and banks of all sizes while enriching plaintiffs’ lawyers — a finding that was confirmed by a separate report issued by the Treasury Department on Monday. An additional study by the OCC estimated that the rule would have increased the cost of credit by approximately 25 percent, once lenders factored in the cost of class-action litigation.