CFPB Institutes Rule as Congress Files Bills to Repeal It

Mere hours after the Consumer Financial Protection Bureau (CFPB) took its remaining steps to finalize a rule banning mandatory arbitration, House and Senate Republicans filed companion bills to repeal the arbitration rule through use of the Congressional Review Act. Congress now has 60 days to get the repeal on the President’s desk, or the rule will take effect. Chairman of the Senate Banking Committee, Mike Crapo (R- ID), noted that,

“The rule is based on a flawed study that leading scholars have criticized as biased and inadequate. Given the problems with the study and the Bureau’s failure to address significant concerns, it is not only appropriate but incumbent on Congress to vote to overturn this rule.” 

The “flawed study” referenced by the Banking Chair is a 2015 report by the CFPB in which it found that consumers on average received higher payouts in less time through arbitration than class action lawsuits. Beyond Congress, the CFPB is also receiving significant criticism from major trade groups and fellow financial regulators. Congress currently has a full plate regarding budget matters, tax reform, healthcare, and Russian sanctions, with the President encouraging the legislature to cancel their scheduled August recess. Any effort to repeal the arbitration rule will need to navigate a very crowded Congressional agenda in a short time span.