House approves resolution to stop arbitration rule
Now it’s the Senate’s turn.
The House approved resolution on Tuesday leveraging authority provided under the Congressional Review Act (CRA) to stop the Consumer Financial Protection Bureau’s final rule prohibiting the use of class action waivers in arbitration clauses.
Despite all House Democrats and one Republican voting against H.J. Res 111, the resolution cleared the chamber by a vote of 231-190.
In order for the CFPB’s new mandate to keep from going into effect on Sept. 18, the Senate needs a simple majority vote approving a similar resolution; an action both the American Banking Association and Consumer Bankers Association hope happens soon.
“We applaud members of the House for taking a stand on behalf of consumers by voting to overturn the CFPB’s arbitration rule. Today’s action is critical to ensuring the Bureau doesn’t provide trial lawyers with a regulatory windfall at consumers’ expense,” ABA president and chief executive officer Rob Nichols said in a statement. “We thank House lawmakers for today’s vote, and urge members of the Senate to join them in overturning this anti-consumer rule.”
In a separate statement, CBA president and CEO Richard Hunt added, “Today’s House vote is a resounding victory for consumers. Consumers’ access to arbitration, which has long provided a faster, more cost-effective and higher recovery alternative to class action lawsuits, should not be undermined by a harmful rule resulting from an incomplete study by the CFPB.
“We encourage the Senate to follow the House’s lead and overturn this anti-consumer arbitration rule,” Hunt went on to say.
All cheering the House's action was Steve Jordan, CEO of the National Independent Automobile Dealers Association. Jordan said the House vote is "encouraging" to the association, which represents the more than 40,000 independent dealers doing business nationwide.
"It's encouraging to see Congress act so swiftly to oppose a rule that obviously disregards the best interests of consumers," Jordan said. "We urge members of the Senate to act just as swiftly and decisively to keep this unnecessary and harmful regulation from taking effect."
Members of the Senate Banking Committee filed their resolution last Thursday but information available through the upper chamber’s website doesn’t indicate when a vote might occur. When it does, Republican support appears strong.
“While I appreciate the need for strong consumer protections, this rule does not strike the right balance in helping consumers resolve disputes,” said Sen. Bob Corker of Tennessee.
And Sen. Ben Sasse of Nebraska took an even stronger position against what the bureau, led by director Richard Cordray, has done.
“Congress, not King Richard Cordray, writes the laws,” Sasse said. “This resolution is a good place for Congress to start reining in one of Washington’s most powerful bureaucracies.”
Meanwhile, Rep. Maxine Waters, a California Democrat and ranking member of the House Financial Services Committee, shared her disappointment that only one of the chamber’s Republican lawmakers opposed the arbitration resolution.
“Forced arbitration benefits large corporations and Wall Street banks to the detriment of consumers,” Waters said. “The Consumer Financial Protection Bureau’s rule helps to ensure that financial institutions are held accountable, and fully protects the legal rights of consumers, including servicemembers and veterans.
“Republicans have shamefully moved to nullify the Consumer Bureau’s good work, in a move that ultimately enables financial institutions to get off the hook when they commit wrongdoing, with less redress for consumers,” she continued. “This resolution steamrolls over the Consumer Bureau’s sensible rule, without regard for the harm that will result for American consumers and families.”
And consumer groups such as the Center for Responsible Lending (CRL) aren’t pleased with the House vote, either.
“Wall Street and predatory lenders want to cheat consumers out of their hard-earned money and get off scot-free. They want to stop Americans from exercising their seventh amendment right to have their day in court,” said Melissa Stegman, CRL’s senior policy counsel.