Arbitration can be looked at in two ways when it comes to the Consumer Financial Protection Bureau’s (CFPB) recent rule. In the way the CFPB looks at it, they are helping the consumer by allowing them to take banks to court when they’re wrongly charged and not given a refund, but Senators are seeing it in a completely different way and have filed a resolution disapproving of the rule.
“Members of Congress previously expressed concerns with the proposed version of the rulemaking—concerns that were not addressed in the final rule,” said U.S. Senate Committee on Banking, Housing, and Urban Affairs Chairman Mike Crapo (R-Idaho). “The rule is based on a flawed study that leading scholars have criticized as biased and inadequate, noting that it could leave consumers worse off by removing access to an important dispute resolution tool. By ignoring requests from Congress to re-examine the rule and develop alternatives between the status quo and effectively eliminating arbitration, the CFPB has once again proven a lack of accountability.”
According to Crapo, because the Bureau didn’t heed warnings from Congress, it is incumbent on Congress to overturn the ruling—and it’s not just Crapo—eight other Senators commented on the rule saying, at its basics, it just doesn’t make sense.
“If finalized, this rule would actually cost consumers more in the long run by pushing consumers into class action lawsuits as opposed to arbitration,” said Senator Mike Rounds (R-South Dakota). “According to the CFPB’s own studies, consumers receive, on average, $32 in relief through class action lawsuits compared to $5,389 in arbitration. Additionally, the Office of the Comptroller of the Currency has said that this rule could increase the risk of litigation so much that it could adversely affect the safety and soundness of the banking system – the cost of which will ultimately be handed down to consumers."
Among Senator Crapo and Senator Rounds, Senator Corker (R-Tennessee), Senator Cotton (R-Arkansas), Senator Perdue (R-Georgia), Senator Sasse (R-Nebraska), Senator Tillis (R-North Carolina), and Senator Toomey (R-Pennsylvania) commented on the rule. Per the Congressional Review Act, Congress can overturn an agency rule within 60 legislative days after submission with a simple majority vote.
To see all comment and the co-sponsors of the bill, click here.