Senator Elizabeth Warren (D-Mass) has asked 16 chief executive officers whether they support or oppose the Consumer Financial Protection Bureau’s final mandatory arbitration rule. In her letters to the CEOs, Warren also asked for data on their firms’ use of arbitration clauses in consumer agreements and how they "have fared in arbitration during the past five years" and provided the CEOs with a list of specific questions geared toward eliciting that information.
The CFPB adopted the rule on mandatory arbitration clauses on July 10, 2017 (see Banking and Finance Law Daily, July 10, 2017). According to Warren’s letters, "A number of lobbying groups representing big banks and financial firms have condemned the rule, asserting that it will harm consumers. . . These organizations represent your bank and your industry, but you—and other CEOs of large banks—have remained silent on the rule." The lawmaker asked the CEOs, "If your lobbyists are taking such strong positions against the rule, is there a reason both you and your bank have been unwilling to take a public position?"
Resolution to reverse rule. Warren noted in her letters that the information that she is seeking is "particularly time-sensitive and important because the House passed a resolution to reverse the CFPB rule using the fast-track Congressional Review Act process" (see Banking and Finance Law Daily, July 26, 2017). The legislator told the CEOs that the information is necessary for the public and members of Congress "can better analyze" the effects of a reversal of the rule.
CFPB study. Warren referenced the study the Bureau had conducted prior to issuing the rule and noted the findings indicate a benefit to consumers. "The rule does not prevent a customer and a bank from agreeing to enter arbitration after a dispute arises; instead, it only prohibits financial firms from forcing customers to give up their right to a class action preemptively," she wrote. Further, according to Warren, the rule makes the individual arbitration process more transparent because companies are required to report data on claims and outcomes.
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