California Pursues Its Own Arbitration Rule

Similar to the final arbitration rule recently published by the federal Consumer Financial Protection Bureau (CFPB), Democrats in the California State Senate have advanced their own arbitration law (California Senate Bill 33) to the General Assembly for a vote. California Democrats noted the current problems with Wells Fargo as an impetus for the law.

The CFPB rule in which the California law is modeled may not survive the year. After the Office of Comptroller of the Currency’s Acting Director Keith Norieka threatened to bring the rule before the Financial Stability Oversight Council last month, Congressional Republicans began the process of voiding the rule through the Congressional Review Act. The House has already voted to nullify the rule and awaits a companion bill in the Senate, introduced by Senate Banking Committee chair Mike Crapo (R- ID), to go to vote. The CFPB’s arbitration rule, which would limit mandatory arbitration in favor of class action lawsuits, has come under intense scrutiny as a rule that would benefit class action attorneys while leaving consumers with significantly less than if the issue had gone to arbitration.