Following the President’s signature of the resolution overturning the Consumer Financial Protection Bureau’s rule on arbitration agreements, Acting Comptroller of the Currency Keith A. Noreika touted the action for protecting consumers and small and midsize banks.
The action "stops a rule that likely would have significantly increased the cost of credit" and "taken away a valuable tool for resolving differences among banks and their customers," Noreika said. The elimination of the CFPB rule allows consumers to choose among financial providers that offer services with arbitration clauses and those that don’t, in his view.
The Senate voted on Oct. 24, 2017, to disapprove the Bureau’s regulation on arbitration clauses in contracts for consumer financial products and services. The resolution was passed by the Senate under the Congressional Review Act and was passed by the House of Representatives on July 25, 2017. The President’s signature deprives the Bureau’s regulation of any force.
The resolution narrowly passed the Senate along largely partisan lines. A 50-to-50 tie was broken by Vice President Mike Pence. Under the CRA rules, the resolution not only halts the regulation from taking effect, but it also bars federal agencies from adopting enacting similar rules without congressional action.
The CFPB’s regulation was intended to ban the use of mandatory predispute arbitration clauses unless they permit consumers to participate in class actions. It also would have imposed disclosure and information filing requirements on companies.
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