House revokes new CFPB arbitration rule
July 26, 2017 / Source: HOUSINGWIRE
July 25, 2017
The U.S. House of Representatives passed a “resolution of disapproval” to revoke a controversial new rule by the Consumer Financial Protection Bureau that bans companies from using mandatory arbitration clauses.
The House voted 231-190 on Tuesday, using authority provided under the Congressional Review Act to block the rule.
Under the Congressional Review Act, Congress may overturn a broad range of regulatory rules issued by federal agencies by enacting a joint resolution of disapproval within 60 days of the rules being announced.
The dispute centers on the CFPB’s arbitration rule, which deals with consumer financial products like credit cards and bank accounts that contain arbitration clauses in their contracts that prevent consumers from joining together to sue their bank or financial company for wrongdoing.
Mortgages are not included because arbitration agreements are already prohibited in the residential mortgage market.
Last week, Republicans in the House of Representatives introduced a “resolution of disapproval” to revoke the CFPB rule. The resolution was co-sponsored by all 34 Republicans on the House Financial Services Committee and mirrored a similar resolutionthat introduced in the Senate.
Rep. Keith Rothfus, R-Pennsylvania, who sponsored H.J. Res 111, makes use of Congress’ authority under the Congressional Review Act to “repeal this harmful rule and prevent the Bureau from issuing any similar rule relating to arbitration.”
House Financial Services Chairman Jeb Hensarling, R-Texas, said on the passing vote, “Hardworking Americans want something different in their nation’s capital. They want to change the toxic culture in Washington, DC that for far too long has allowed unaccountable bureaucrats to overreach and overregulate. The best way we can change Washington is to begin to drain the bureaucratic swamp. But it’s not easy, because as we’ve seen over the last six months, the swamp fights back.”
Hensarling criticized the bureau, saying, “What the Bureau and the wealthy trial lawyers want is to take away arbitration for consumers and instead force them into class action lawsuits – which, just so happens, to require consumers to hire the very trial lawyers who will benefit most from this rule.”
“Americans were promised a Consumer Financial Protection Bureau but instead they obviously got a Trial Lawyer Enrichment Bureau,” he stated.
House Democrats, to no surprise, disagreed with Republicans, defending the bureau and the rule. Ranking Member of the Committee on Financial Services Maxine Waters, D-Calif., said in her opening remarks, “H.J.Res 111 is an affront to hardworking Americans across the country. Using the Congressional Review Act, this Joint Resolution repeals the Consumer Financial Protection Bureau’s final rule to curb forced arbitration clauses in contracts for consumer financial products.”
“Let’s be clear: there is absolutely no valid public policy rationale for repealing this rule. It is part of a pattern from Congressional Republicans of irrational hostility toward the Consumer Bureau and its work and a callous disregard for the issues facing America’s consumers,” she said. “But just as they have with the Wrong Choice Act, Republicans are pushing an anti-consumer agenda that puts profits over people. Enough is enough.”