Acting Comptroller Warns of Rising Costs with Arbitration Rule

Speaking to a fintech conference at the Federal Reserve Bank of Philadelphia earlier this week, Acting Comptroller of the Currency Keith Norieka informed attendees that the Consumer Financial Protection Bureau’s (CFPB) recently published arbitration rule would increase the cost of credit by 25 percent. His assessment comes from a study conducted by the Office of the Comptroller of the Currency (OCC)  factoring in the cost for creditors combating class action lawsuits that will likely arise from the rule. Acting Comptroller Norieka had previously threatened to scuttle the rule by invoking the Financial Stability Oversight Council, a group of federal regulators and Presidential cabinet members with the power to correct risks in the financial market.

The fate of the rule, one that seeks to limit mandatory arbitration in credit transaction in favor of class action lawsuits, remains up in the air with a challenge from a coalition of trade groups led by the U.S. Chamber of Commerce in federal court and Republicans in Congress pressing to repeal the rule through the Congressional Review Act.