U.S. regulator seeks to halt financial contract rule as officials spar
July 19, 2017 / Source: Reuters
WASHINGTON (Reuters) - A feud over a proposal to bar financial firms from requiring customers to arbitrate disputes escalated on Monday when a banking regulator appointed by President Donald Trump called on an appointee of his predecessor to halt the rulewriting project.
In a letter sent on Monday, acting U.S. Comptroller of the Currency Keith Noreika requested the Consumer Financial Protection Bureau halt a new regulation that would bar financial firms including the mandatory arbitration clause in contract.
Noreika, a Trump appointee, argued that his agency had not had the chance to ensure the rule would not pose a threat to the safety and soundness of banks, and complained the CFPB has note provided the data it used to build its rule.
"I know that significant time has been spent in developing the final rule during the past several years," wrote Noreika. "A few additional weeks to address the prudential concerns that I have raised seem a sound investment."
A CFPB spokesman said the agency was reviewing the letter. But CFPB Director Richard Cordray, who is an appointee of former President Barack Obama, has previously resisted efforts by Noreika to slow the regulation,
In a letter to Noreika last week, Cordray said the OCC had ample time to review its work and raise any concerns.
The CFPB announced a final version of the rule earlier this month and was expected to formally publish the rule by the end of July. Unless the rule is stopped, firms would have about eight months from when it is published to remove mandatory arbitration language from contracts.
The two federal regulators are seemingly pursuing competing goals. Noreika, appointed by Trump in May, has laid out an aggressive plan for easing financial rules. Meanwhile, Cordray can continue to serve as CFPB director until July 2018, although his position is undergoing a court challenge.
Noreika contended in his letter that while the CFPB insists a ban on mandatory arbitration clauses in financial contracts would not pose a threat to bank stability, it is not Cordray's call to make.
"As you know, the CFPB is, by design, not a safety and soundness prudential regulator," he wrote.
Reporting by Pete Schroeder; Editing by Cynthia Osterman